OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion of our operating and financial condition and prospects in conjunction with the financial statements and the notes thereto included els

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

following discussion of our operating and financial condition and prospects in conjunction with the financial statements and the

notes thereto included elsewhere in this 6-K, as well as in our Form 6-K filed on August 8, 2018. Our financial statements are

prepared in accordance with IFRS as issued by the International Accounting Standards Board, and reported in U.S. dollars. We maintain

our accounting books and records in U.S. dollars and our functional currency is the U.S. dollar. Certain amounts presented herein

may not sum due to rounding.

requires otherwise, references in this report to "Can-fite," the "Company," "we," "us"

and "our" refer to Can-fite BioPharma Ltd, an Israeli company and our consolidated subsidiaries. "NIS"

means New Israeli Shekel, and "$," "US$,""U.S. dollars" and "USD" mean United States

Forward Looking Statements

The following discussion

contains "forward-looking statements," including statements regarding expectations, beliefs, intentions or strategies

for the future. These statements may identify important factors which could cause our actual results to differ materially from

those indicated by the forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance

on such forward-looking statements. Factors that could cause our actual results to differ materially from those expressed or implied

in such forward-looking statements include, but are not limited to:

statements attributable to us or persons acting on our behalf speak only as of the date of the 6-K to which this discussion is

attached and are expressly qualified in their entirety by the cautionary statements included herein. We undertake no obligations

to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect

the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.

Glossary of Certain Terms

As used herein, unless

the context otherwise requires:

We are a clinical-stage

biopharmaceutical company focused on developing orally bioavailable small molecule therapeutic products for the treatment of autoimmune

inflammatory indications, oncology and liver diseases as well as sexual dysfunction. Our platform technology utilizes the Gi protein

associated A3AR as a therapeutic target. A3AR is highly expressed in inflammatory and cancer cells, and not significantly expressed

in normal cells, suggesting that the receptor could be a unique target for pharmacological intervention. Our pipeline of drug candidates

are synthetic, highly specific agonists and allosteric modulators, or ligands or molecules that initiate molecular events when

binding with target proteins, targeting the A3AR.

Our strategy is to build

a fully integrated biotechnology company that discovers, in-licenses and develops an innovative and effective small molecule drug

portfolio of ligands that bind to a specific therapeutic target for the treatment of autoimmune-inflammatory, oncological, ophthalmic

diseases and more. We continue to develop and test our existing pipeline, while also testing other indications for our existing

drug candidates and examining, from time to time, the potential of other small molecules that may fit our platform technology of

utilizing small molecules to target the A3AR. We generally focus on drugs with global market potential and we seek to create global

partnerships to effectively assist us in developing our portfolio and to market our products.

an allosteric modulator of the A3AR, CF602 from Leiden University. In addition, we have out-licensed the following:

Our product candidates,

CF101, CF102 and CF602 are being developed to treat cancer, inflammatory disease and sexual dysfunction. CF101, also known as Piclidenoson,

is in an advance stage of clinical development for the treatment of autoimmune-inflammatory diseases, including rheumatoid arthritis

and psoriasis. CF102, also known as Namodenoson, is being developed for the treatment of HCC and has orphan drug designation for

the treatment of HCC in the U.S. and Europe. Namodenoson was granted Fast Track designation by the FDA as a second line treatment

to improve survival for patients with advanced hepatocellular carcinoma who have previously received Nexavar (sorafenib). Namodenoson

is also being developed for the treatment of NASH, following our study which revealed compelling pre-clinical data on Namodenoson

in the treatment of NASH, a disease for which no FDA approved therapies currently exist. CF602 is our second generation allosteric

drug candidate for the treatment of sexual dysfunction, which has shown efficacy in the treatment of erectile dysfunction in preclinical

studies and we are investigating additional compounds, targeting A3AR, for the treatment of sexual dysfunction. Preclinical

studies revealed that our drug candidates have potential to treat additional inflammatory diseases, such as Crohn's disease,

oncological diseases and viral diseases, such as the JC virus.

We are currently: (i)

conducting a Phase III trial for Piclidenoson in the treatment of rheumatoid arthritis, (ii) preparing to commence a Phase III

trial for Piclidenoson in the treatment of psoriasis, (iii) conducting a Phase II study with respect to the development of Namodenoson

for the treatment of HCC and completed enrollment of 78 patients in the third quarter of 2017 with results expected in the second

half of 2018, (iv) conducting a Phase II trial of Namodenoson in the treatment of NASH with completion of patient enrollment expected

toward the end of 2018 and data release expected in the first half of 2019, and (v) investigating additional compounds, targeting

the A3 adenosine receptor, for the treatment of sexual dysfunction and have therefore postponed a planned Investigational New Drug

(IND) submission for this indication.

have incurred significant losses in connection with our research and development. At June 30, 2018, we had an accumulated deficit

of approximately $97 million. Although we have recognized revenues in connection with our existing out-licensing agreements with

KD, Cipher, CKD and Gebro and our historic out-licensing agreement with Seikagaku Corporation, or SKK, we expect to generate losses

in connection with the research and development activities relating to our pipeline of drug candidates. Such research and development

activities are budgeted to expand over time and will require further resources if we are to be successful. As a result, we expect

to incur operating losses, which may be substantial over the next several years, and we will need to obtain additional funds to

further develop or research and development programs.

We have funded our operations

primarily through the sale of equity securities (both in private placements and in public offerings) and payments received under

our existing out-licensing agreements with KD, Cipher, CKD Gebro, and CMS Medical and our historic out-licensing agreement with

SKK. We expect to continue to fund our operations over the next several years through our existing cash resources, potential future

milestone payments that we expect to receive from our licensees, interest earned on our investments, if any, and additional capital

to be raised through public or private equity offerings or debt financings. As of June 30, 2018, we had approximately $5.8 million

of cash and cash equivalents.

Results of Operations

Revenues for the six

months ended June 30, 2018 were $0.9 million compared to $0.1 million in the first six months of 2017. The increase in revenue

was mainly due to due to the recognition of a portion of the U.S. $2.2 million advance payment received in January 2018 under the

distribution agreement with Gebro.

Research and development expenses

Research and development

expenses for the six months ended June 30, 2018 were $2.6 million compared with $2.4 million for the same period in 2017. Research

and development expenses for the first six months of 2018 comprised primarily of expenses associated with the Phase II studies

for Namodenoson as well as expenses for ongoing studies of Piclidenoson. The increase is primarily due to increased costs associated

with the initiation of the Phase III clinical trial of Piclidenoson for the treatment of rheumatoid arthritis. We expect that the

research and development expenses will increase through 2018 and beyond.

General and administrative expenses

General and administrative

expenses were $1.8 million for the six months ended June 30, 2018, compared to $1.3 million for the same period in 2017. The increase

is primarily due to an increase in professional services and investor relations expenses. We expect that the annual general and

administrative expenses for 2018 will be higher compared to 2017.

Financial income, net

Financial income, net

for the six months ended June 30, 2018 aggregated $0.6 million compared to financial income, net of $0.2 million for the same period

in 2017. The increase in financial income, net was mainly due to fair value revaluation of our long-term investment.

Liquidity and Capital Resources

Since inception, we have

funded our operations primarily through public (in Israel and US) and private offerings of our equity securities and payments received

under our strategic licensing arrangements. At June 30, 2018, we had approximately $5.8 million in cash and cash equivalents, and

have invested most of our available cash funds in ongoing cash accounts. In January 2018, we received approximately $2.2 million