<SEC-DOCUMENT>0001144204-12-009380.txt : 20120215
<SEC-HEADER>0001144204-12-009380.hdr.sgml : 20120215
<ACCEPTANCE-DATETIME>20120215162053
ACCESSION NUMBER:		0001144204-12-009380
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20120215
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Regulation FD Disclosure
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20120215
DATE AS OF CHANGE:		20120215

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Protalix BioTherapeutics, Inc.
		CENTRAL INDEX KEY:			0001006281
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				650643773
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-33357
		FILM NUMBER:		12616283

	BUSINESS ADDRESS:	
		STREET 1:		2 SNUNIT ST
		STREET 2:		SCIENCE PARK, POB 455
		CITY:			CARMIEL
		STATE:			L3
		ZIP:			20100
		BUSINESS PHONE:		972-4-988-9488

	MAIL ADDRESS:	
		STREET 1:		2 SNUNIT ST
		STREET 2:		SCIENCE PARK, POB 455
		CITY:			CARMIEL
		STATE:			L3
		ZIP:			20100

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ORTHODONTIX INC
		DATE OF NAME CHANGE:	19980422

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	EMBASSY ACQUISITION CORP
		DATE OF NAME CHANGE:	19960124
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v302770_8k.htm
<DESCRIPTION>8-K
<TEXT>
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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;<B>UNITED STATES</B></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;<B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<HR ALIGN="CENTER" NOSHADE SIZE="1" STYLE="color: Black; width: 15%; margin-top: 3pt; margin-bottom: 3pt">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CURRENT REPORT </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>the Securities Exchange Act of 1934 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Date of Report (Date of Earliest Event Reported):
February 15, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 24pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Protalix BioTherapeutics, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Exact name of registrant as specified in
its charter) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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    <TD STYLE="width: 32%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 2%; vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 32%; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">Florida</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">001-33357</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">65-0643773</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(State or other jurisdiction</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>of incorporation)</B></P></TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">(Commission File Number)</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(IRS Employer</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>Identification No.)</B></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR>
    <TD STYLE="width: 48%; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 4%; vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="width: 48%; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">2 Snunit Street</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">20100</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">Science Park, POB 455</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">Carmiel, Israel</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0">(Address of principal executive offices)</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center; padding: 0; text-indent: 0"><B>(Zip Code)</B></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Registrant&rsquo;s telephone number, including
area code +972-4-988-9488</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Former name or former address, if changed
since last report.) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<HR ALIGN="CENTER" NOSHADE SIZE="1" STYLE="color: Black; width: 15%; margin-top: 3pt; margin-bottom: 3pt">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; font-family: Wingdings; padding: 0; text-indent: 0">&uml;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; font-family: Wingdings; padding: 0; text-indent: 0">&uml;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; font-family: Wingdings; padding: 0; text-indent: 0">&uml;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; font-family: Wingdings; padding: 0; text-indent: 0">&uml;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in"><B>Item 2.02. Results of Operations and
Financial Condition</B></P>

Our cash and cash equivalents were $27,001,000 as of December 31, 2011. Our audited consolidated financial statements
will not be available until after the offering described under Item 7.01 below is complete.<BR> <BR> </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in"><B>Item 7.01. Regulation FD Disclosure</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 15, 2012, Protalix BioTherapeutics, Inc. (the
&ldquo;Company&rdquo;) issued a press release announcing that it intends, subject to market conditions, to offer and sell shares
of its common stock in an underwritten public offering (the &ldquo;Offering&rdquo;). Jefferies &amp; Company, Inc. is acting as
the sole book-running manager for the Offering and each of Canaccord Genuity Inc. and Oppenheimer &amp; Co. Inc. are acting as
co-managers for the Offering. The Company expects to grant the underwriters a 30-day option to purchase additional shares of its
common stock to cover over-allotments, if any. The Offering is subject to market conditions, and there can be no assurance as
to whether or when the Offering may be completed, or as to the actual size or terms of the Offering. A copy of the press release
is attached hereto as Exhibit 99.1.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in">The information contained in
Item 2.02, Item 7.01 and in Exhibit 99.1 shall not be deemed &ldquo;filed&rdquo; for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by
specific reference in such a filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Item 8.01. Other Events</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">In connection with the Offering described in Item 7.01, the Company
has updated the risk factors in its periodic reports filed under the Securities Exchange Act of 1934, as amended. A copy of the
updated risk factors is attached as Exhibit 99.2 to this Form 8-K and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in"><B>Item 9.01. Financial Statements and
Exhibits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in"><B>(d) &#9;Exhibits </B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">99.1</TD><TD STYLE="text-align: justify">Press release, dated February 15, 2012.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font-size: 10pt; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">99.2</TD><TD STYLE="text-align: justify">Risk Factors.<BR STYLE="mso-special-character: line-break"></TD>
</TR></TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt; text-align: justify">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 hereunto
duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="padding: 0; text-indent: 0"><B>PROTALIX BIOTHERAPEUTICS, INC.</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0; width: 48%">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0; width: 5%">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0; width: 32%">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0; width: 15%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">Date: February 15, 2012</TD>
    <TD STYLE="padding: 0; text-indent: 0">By: </TD>
    <TD STYLE="padding: 0; text-indent: 0; border-bottom: Black 1pt solid"><U STYLE="text-decoration: none">/s/ David Aviezer</U></TD>
    <TD STYLE="padding: 0; font-weight: bold; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Name: </TD>
    <TD STYLE="padding: 0; text-indent: 0">David Aviezer, Ph.D.</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Title:</TD>
    <TD COLSPAN="2" STYLE="padding: 0; text-indent: 0">President and&nbsp;Chief Executive Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0"></TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&nbsp;</P>

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<FILENAME>v302770_ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"><B>Protalix BioTherapeutics Announces Proposed Public Offering
of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">CARMIEL, Israel, February 15, 2012 /PR
Newswire/Protalix BioTherapeutics, Inc. (NYSE-AMEX:PLX, TASE:PLX) announced today that it intends, subject to market
conditions, to offer and sell shares of its common stock in an underwritten public offering. Jefferies &amp; Company, Inc. is
acting as the sole book-running manager and each of Canaccord Genuity Inc. and Oppenheimer &amp; Co. Inc. are acting
as co-managers for the offering. The offering is subject to market conditions, and there can be no assurance as to whether
or when the offering may be completed, or as to the actual size or terms of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">The Company expects to use the net proceeds from the sale
of the shares primarily to fund clinical trials for the Company&rsquo;s product candidates, to fund the Company&rsquo;s research
and development activities, to enhance the Company&rsquo;s manufacturing capacity, for working capital and general corporate purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">The offering is being made pursuant to an effective shelf
registration statement. Before you invest, you should read the base prospectus in such shelf registration statement, the preliminary
prospectus supplement, when available, and other documents the Company has filed with the U.S. Securities and Exchange Commission,
or the SEC, for more complete information about the Company and this offering. The offering may be made only by means of a prospectus
supplement and the accompanying prospectus, copies of which may be obtained by sending a request to the offices of Jefferies &amp;
Company, Inc., Attention: Equity Syndicate Prospectus Department, 520 Madison Avenue, 12th Floor, New York, NY 10022, or by telephone
at 877-547-6340, or by email at Prospectus_Department@Jefferies.com.
Alternatively, you may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">This press release shall not constitute an offer to sell,
or the solicitation of an offer to buy, any of the securities, nor shall there be any sale of these securities, in any state or
other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under
the securities laws of any such state or other jurisdiction.</P>

<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>About Protalix</B></P>

<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">Protalix is a biopharmaceutical company focused on
the development and commercialization of recombinant therapeutic proteins expressed through its proprietary plant cell based expression
system, ProCellEx<SUP>(R)</SUP>.<BR>
<BR></P>

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<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>Forward Looking Statements</B></P>

<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">To the extent that statements in this press release
are not strictly historical, all such statements are forward-looking, and are made pursuant to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. The terms &quot;anticipate,&quot; &quot;believe,&quot; &quot;estimate,&quot;
&quot;expect&quot; and &quot;intend&quot; and other words or phrases of similar import are intended to identify forward-looking
statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual future
experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations
as to such future outcomes. Drug discovery and development involve a high degree of risk. Factors that might cause material differences
include, among others: risks relating to our ability to complete the proposed offering in a timely manner, if at all; risks relating
to the sufficiency of the funds raised in the proposed offering, if any; risks relating to our use of the net proceeds from the
proposed offering; risks relating to the review process of the FDA, the European Medicines Agency, or theEMA, other foreign regulatory
bodies and other governmental regulatory bodies, including the risk that regulatory authorities may find that the data from our
clinical trials and other studies is insufficient for regulatory approval; risks relating to delays in the FDA's, the EMA's or
other foreign regulatory authorities' approval of any applications we file or refusals to approve such filings, including the
NDA we filed with the FDA for taliglucerase alfa for the treatment of Gaucher disease; the risk that applicable regulatory authorities
may refuse to approve the marketing and sale of a drug product even after acceptance of an application we file for the drug product;
risks relating to potential restrictions on the marketing and sale of certain of our product candidates in certain territories
due to the orphan drug status that may be granted to competing products, including the risk that the orphan drug designation granted
by the EMA to VPRIV<SUP>&reg;</SUP> in the European Union may prevent the marketing of taliglucerase alfa, our lead product candidate,
in the European Union; risks relating to the completion of our clinical trials; and other factors described in our filings with
the SEC. Companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced or late-stage
clinical trials, even after obtaining promising earlier trial results or in preliminary findings for such clinical trials. Further,
even if favorable testing data is generated from clinical trials of drug products, the FDA, EMA or any other foreign regulatory
authority may not accept or approve an NDA filed by a pharmaceutical or biotechnology company for such drug product. Failure to
obtain approval from the FDA, EMA or any other foreign regulatory authority of any of our drug candidates in a timely manner,
if at all, will severely undermine our business and results of operations by reducing our potential marketable products and our
ability to generate corresponding product revenues. The statements in this release are valid only as of the date hereof and we
disclaim any obligation to update this information.</P>

<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>Investor Contact</B></P>

<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">Marcy Nanus<BR>
The Trout Group, LLC<BR>
646-378-2927<BR>
mnanus@troutgroup.com</P>

<P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>Media Contact</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">Jennifer Conrad or Kari Watson<BR>
MacDougall Biomedical Communications<BR>
781-235-3060<BR>
jconrad@macbiocom.com<BR>
kwatson@macbiocom.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Risks Related to Our Financial
Condition and Capital Requirements </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We currently have no significant
product revenues and will need to raise additional capital to operate our business, which may not be available on favorable terms,
or at all, and which will have a dilutive effect on our shareholders.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">To date, we have generated
no significant revenues from product sales and only minimal revenues from research and development services and other fees, other
than the milestone payments we received in connection with our license and supply agreement with Pfizer. For the nine months ended
September 30, 2011 and the years ended December 31, 2010 and 2009, we had net losses of $27.6 million, $29.0 million and $31.4
million, respectively, primarily as a result of expenses incurred through a combination of research and development activities
and expenses supporting those activities, which includes share-based compensation expense. Drug development and commercialization
is very capital intensive. Until we receive approval from the FDA and other regulatory authorities for our drug candidates, we
cannot generate significant sales from our drugs and will not have product revenues, except for certain regulatory-related milestone
payments under the Pfizer Agreement which we expect to earn prior to any sales of taliglucerase alfa. Therefore, until we generate
significant sales, we will have to fund all of our operations and capital expenditures from our cash on hand, potential regulatory-related
milestone payments under the Pfizer Agreement, other licensing fees and grants and the net proceeds of any equity or debt offerings.
Our ability to continue as a going concern is dependent on either gaining regulatory approval or through raising additional capital.
There can be no assurance that we will be able to raise the necessary funds if and when needed to finance our ongoing costs. These
factors raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments
that may be necessary should we be unable to continue as a going concern.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We may seek additional financing
to implement and fund product development, preclinical studies and clinical trials for the drugs in our pipeline, as well as additional
drug candidates and other research and development projects. If we are unable to secure additional financing in the future on acceptable
terms, or at all, we may be unable to commence or complete planned preclinical and clinical trials or obtain approval of our drug
candidates from the FDA and other regulatory authorities. In addition, we may be forced to reduce or discontinue product development
or product licensing, reduce or forego sales and marketing efforts and other commercialization activities or forego attractive
business opportunities in order to improve our liquidity and to enable us to continue operations which would have a material adverse
effect on our business and results of operations. Any additional source of financing will likely involve the issuance of our equity
securities, which will have a dilutive effect on our shareholders.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We are not currently profitable
and may never become profitable which would have a material adverse effect on our business and results of operations and could
negatively impact the value of our common stock. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We expect to incur substantial
losses for the foreseeable future and may never become profitable. We also expect to continue to incur significant operating and
capital expenditures, and we anticipate that our expenses will increase substantially in the foreseeable future as we:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">seek regulatory approvals
for our drug candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">continue to undertake
preclinical development and clinical trials for our current and new drug candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">hire additional personnel;
</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">implement additional
internal systems and infrastructure; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">seek to license-in
additional technologies to develop.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We also expect to continue
to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result,
we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these
revenues or achieve profitability in the future. Any failure to achieve or maintain profitability may have a material adverse effect
on our business and results of operations and may negatively impact the value of our common stock.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Risks Related to Our Business</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We have a limited operating history
which may limit the ability of investors to make an informed investment decision. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We are a clinical stage biopharmaceutical
company. To date, we have not commercialized any of our drug candidates or received any FDA or other approval to market any drug.
The successful commercialization of our drug candidates will require us to perform a variety of functions, including:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">continuing to undertake
preclinical development and clinical trials;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">participating in regulatory
approval processes;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">formulating and manufacturing
products; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">conducting sales and
marketing activities.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">Our
operations have been limited to organizing and staffing our company, acquiring, developing and securing our proprietary technology
and undertaking, through third parties, preclinical trials and clinical trials of our principal drug candidates. To date, we have
commenced a phase III clinical trial in connection with only one drug candidate, taliglucerase alfa, which trial was completed
in August 2009, and we have not commenced any additional clinical trial for any of our other drug candidates, except for our </FONT>acetylcholinesterase
product candidate<FONT STYLE="color: black">. These operations provide a limited basis for investors to assess our ability to commercialize
our drug candidates and whether to invest in our company. </FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Our ProCellEx protein expression
system is based on our proprietary plant cell-based expression technology which has a limited history and any material problems
with the system, which may be unforeseen, may have a material adverse effect on our business and results of operations.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Our ProCellEx protein expression
system is based on our proprietary plant cell-based expression technology. Our business is dependent upon the successful development
and approval of our product candidates produced through our protein expression system. <FONT STYLE="color: black">Our</FONT> <FONT STYLE="color: black">ProCellEx
protein expression system is novel and is still in the early stages of development and optimization, and, accordingly, is subject
to certain risks. Mammalian cell-based protein expression systems have been used in connection with recombinant therapeutic protein
expression for more than 20 years and are the subject of a wealth of data; in contrast, there is not a significant amount of data
generated regarding plant cell-based protein expression and, accordingly, plant cell-based protein expression systems may be subject
to unknown risks. In addition, the protein glycosilation pattern created by our protein expression system is not identical to the
natural human glycosilation pattern and its long term effect on human patients is still unknown. Lastly, as our protein expression
system is a new technology, we cannot always rely on existing equipment; rather, there is a need to design custom-made equipment
and to generate specific growth media for the plant cells, which may not be available at favorable prices, if at all. </FONT>Any
material problems with the technology underlying our plant cell-based protein expression system may have a material adverse effect
on our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We currently depend heavily on
the success of taliglucerase alfa, our lead product candidate. Any failure to commercialize taliglucerase alfa, or the experience
of significant delays in doing so, will have a material adverse effect on our business, results of operations and financial condition.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We have invested a significant
portion of our efforts and financial resources in the development of taliglucerase alfa. Our ability to generate product revenue,
depends heavily on the successful development and commercialization of taliglucerase alfa. In November 2009, we granted to Pfizer
an exclusive worldwide license to develop and commercialize taliglucerase alfa except in Israel. We retained such rights in Israel.
The successful commercialization of taliglucerase alfa will depend on several factors, including the following:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">obtaining marketing
approvals from the FDA and other foreign regulatory authorities;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">successful completion
of our ongoing studies of taliglucerase alfa;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the successful audit
of our facilities by additional regulatory authorities;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">maintaining the cGMP
compliance of our manufacturing facility or establishing manufacturing arrangements with third parties;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Pfizer&rsquo;s efforts
under the Pfizer Agreement;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">our development of
a successful sales and marketing organization for taliglucerase in Israel;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">a continued acceptable
safety and efficacy profile of our product candidates following approval;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the availability of
reimbursement to patients from healthcare payors for our drug products, if approved; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">other risks described
in these Risk Factors.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Any failure to commercialize
taliglucerase alfa or the experience of significant delays in doing so will have a material adverse effect on our business, results
of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Our strategy, in certain cases,
is to enter into collaboration agreements with third parties to leverage our ProCellEx system to develop product candidates. If
we fail to enter into these agreements or if we or the third parties do not perform under such agreements or terminate or elect
to discontinue the collaboration, it could have a material adverse affect on our revenues. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">Our
strategy, in certain cases, is to enter into arrangements with pharmaceutical companies to leverage our ProCellEx system to develop
additional product candidates</FONT>. <FONT STYLE="color: black">Under these arrangements, we may grant to our partners rights
to license and commercialize pharmaceutical products developed under the applicable agreements. Our partners may control key decisions
relating to the development of the products and we may depend on our partners&rsquo; expertise and dedication of sufficient resources
to develop and commercialize our product candidates. The rights of our partners limit our flexibility in considering alternatives
for the commercialization of our product candidates. </FONT>To date, we have entered into a license and supply agreement with Pfizer
relating to the development and commercialization of taliglucerase alfa and an agreement with Teva, which relates to the development
by us of two proteins, and the licensing by Teva of such proteins in consideration for royalties and milestone payments. <FONT STYLE="color: black">
</FONT>Subsequently, two proteins were identified to be researched and developed under the agreement but in 2009, both of the projects
were terminated for commercial reasons. We may not identify any additional proteins to be developed through a collaboration between
us and Teva under the agreement, which may have a material adverse effect on our business, results of operations and financial
condition. <FONT STYLE="color: black">If we or any of our partners breach or terminate the agreements that make up such arrangements,
our partners otherwise fail to conduct their obligations under such arrangements in a timely manner, there is a dispute about their
obligations or if either party terminates the applicable agreement or elects not to continue the arrangement, we may not enjoy
the benefits of the agreements or receive a sufficient amount of royalty or milestone payments from them, if any, which may have
a material adverse effect on our business, results of operations and financial condition.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>All of our product candidates
other than taliglucerase alfa and our acetylcholinesterase product are in preclinical or research stages. If we are unable to develop
and commercialize our product candidates, our business will be adversely affected. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">A key element of our strategy is
to develop and commercialize a portfolio of new products in addition to taliglucerase alfa. We are seeking to do so through our
internal research programs and strategic collaborations for the development of new products. Research programs to identify new
product candidates require substantial technical, financial and human resources, whether or not any product candidates are ultimately
identified. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product
candidates for clinical development for many reasons, including the following:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">a product candidate
is not capable of being produced in commercial quantities at an acceptable cost, or at all;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">a product candidate
may not be accepted by patients, the medical community or third-party payors; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">competitors may develop
alternatives that render our product candidates obsolete; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the research methodology
used may not be successful in identifying potential product candidates; or</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">a product candidate
may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective
or otherwise does not meet applicable regulatory approval.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.5in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Any failure to develop or commercialize
any of our other product candidates may have a material adverse effect on our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>Clinical
trials are very expensive, time-consuming and difficult to design and implement and may result in unforeseen costs which may have
a material adverse effect on our business and results of operations.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">Human
clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory
requirements. The clinical trial process is also time-consuming. Other than taliglucerase alfa and our acetylcholinesterase product,
our drug candidates are in the preclinical studies or research stages. Other, ongoing clinical trials of taliglucerase alfa and
our acetylcholinesterase product, and anticipated clinical trials of our other potential drug candidates which have not yet been
initiated, will take at least several years to complete. Preliminary and initial results from a clinical trial do not necessarily
predict final results, and failure can occur at any stage of the trials. We may encounter problems that cause us to abandon or
repeat preclinical studies or clinical trials. Companies in the pharmaceutical and biotechnology industries have suffered significant
setbacks in advanced clinical trials, even after obtaining promising results in earlier trials. Data obtained from tests are susceptible
to varying interpretations which may delay, limit or prevent regulatory approval. Failure or delay in the commencement or completion
of our clinical trials may be caused by several factors, including</FONT></P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">unforeseen safety
issues;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">determination of dosing
issues;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">lack of effectiveness
during clinical trials;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">slower than expected
rates of patient recruitment;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">inability to monitor
patients adequately during or after treatment;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">inability or unwillingness
of medical investigators and institutional review boards to follow our clinical protocols; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">lack of sufficient
funding to finance the clinical trials.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Any failure or delay in commencement
or completion of any clinical trials may have a material adverse effect on our business, results of operations and financial condition.
In addition, we or the FDA or other regulatory authorities may suspend any clinical trial at any time if it appears that we are
exposing participants in the trial to unacceptable safety or health risks or if the FDA or such other regulatory authorities, as
applicable, find deficiencies in our IND submissions or the conduct of the trial. Any suspension of a clinical trial may have a
material adverse effect on our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B></B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>If
the results of our clinical trials do not support our claims relating to any drug candidate or if serious side effects are identified,
the completion of development of such drug candidate may be significantly delayed or we may be forced to abandon development altogether,
which will significantly impair our ability to generate product revenues.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="background-color: white">The
results of our clinical trials with respect to any drug candidate might not support our claims of safety or efficacy, the effects
of our drug candidates may not be the desired effects or may include undesirable side effects or the drug candidates may have other
unexpected characteristics.&nbsp;&nbsp;Further, success in preclinical testing and early clinical trials does not ensure that later
clinical trials will be successful, and the results of later clinical trials may not replicate the results of prior clinical trials
and preclinical testing.&nbsp;&nbsp;The clinical trial process may fail to demonstrate that our drug candidates are safe for humans
and effective for indicated uses.&nbsp;&nbsp;In addition, our clinical trials may involve a specific and small patient population.&nbsp;&nbsp;Results
of early clinical trials conducted on a small patient population may not be indicative of future results.&nbsp;&nbsp;Adverse or
inconclusive results may cause us to abandon a drug candidate and may delay development of other drug candidates.&nbsp;&nbsp;Any
delay in, or termination of, our clinical trials will delay the filing of NDAs with the FDA, or other filings with other foreign
regulatory authorities, and, ultimately, significantly impair our ability to commercialize our drug candidates and generate product
revenues which would have a material adverse effect on our business, results of operations and financial condition.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>We
may find it difficult to enroll patients in our clinical trials, which could cause significant delays in the completion of such
trials or may cause us to abandon one or more clinical trials.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">Many
of the diseases or disorders that our drug candidates are intended to treat are relatively rare and we expect only a subset of
the patients with these diseases to be eligible for our clinical trials.&nbsp;&nbsp;Given that each of our drug candidates, other
than taliglucerase alfa and our acetylcholinesterase product, is in the preclinical or research stages, we may not be able to initiate
clinical trials for any of our drug candidates if we are unable to locate a sufficient number of eligible subjects to participate
in the clinical trials required by the FDA and/or other foreign regulatory authorities.&nbsp;&nbsp;The requirements of our clinical
trials generally mandate that a patient cannot be involved in another clinical trial for the same indication.&nbsp;&nbsp;We are
aware of certain companies that have ongoing clinical trials for products that are competitive with our drug candidates, and subjects
who would otherwise be eligible for our clinical trials may be involved in such trials, rendering them unavailable for testing
of our drug candidates.&nbsp;&nbsp;Our inability to enroll a sufficient number of patients for any of our current or future clinical
trials would result in significant delays or may require us to abandon one or more clinical trials altogether, which will have
a material adverse effect on our business, results of operations and financial condition.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>Patients
may discontinue their participation in our clinical trials, which may negatively impact the results of these studies and extend
the timeline for completion of our development programs.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><FONT STYLE="background-color: white">Patients
enrolled in our clinical studies may discontinue their participation at any time during the study as a result of a number of factors,
including withdrawing their consent or experiencing adverse clinical events, which may or may not be judged related to our drug
candidates under evaluation.&nbsp;&nbsp;If a large number of patients in any one of our studies discontinue their participation
in the study, the results from that study may not be positive or may not support a filing for regulatory approval of the applicable
drug candidate, which would have a material adverse effect on our business, results of operations and financial condition.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Because our clinical trials depend
upon third-party researchers, the results of our clinical trials and such research activities are subject to delays and other risks
which are, to a certain extent, beyond our control, which could impair our clinical development programs and our competitive position.
</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We depend upon independent investigators
and collaborators, such as universities and medical institutions, to conduct our preclinical and clinical trials. These collaborators
are not our employees, and we cannot control the amount or timing of resources that they devote to our clinical development programs.
The investigators may not assign as great a priority to our clinical development programs or pursue them as diligently as we would
if we were undertaking such programs directly. If outside collaborators fail to devote sufficient time and resources to our clinical
development programs, or if their performance is substandard, the approval of our NDA, MAAs and other applications, and our introduction
of new drugs, if any, may be delayed which could impair our clinical development programs and would have a material adverse effect
on our business and results of operations. The collaborators may also have relationships with other commercial entities, some of
whom may compete with us. If our collaborators also assist our competitors, our competitive position could be harmed.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>The manufacture of our products
is an exacting and complex process, and if we or one of our materials suppliers encounter problems manufacturing our products,
it will have a material adverse effect on our business and results of operations.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">The
FDA and foreign regulators require manufacturers to register manufacturing facilities. The FDA and foreign regulators also inspect
these facilities to confirm compliance with cGMP or similar requirements that the FDA or foreign regulators establish. We or our
materials suppliers may face manufacturing or quality control problems causing product production and shipment delays or a situation
where we or the supplier may not be able to maintain compliance with the FDA&rsquo;s cGMP requirements, or those of foreign regulators,
necessary to continue manufacturing our drug candidates. Any failure to comply with cGMP requirements or other FDA or foreign regulatory
requirements could adversely affect our clinical research activities an</FONT>d our ability to market and develop our products.
To date, our current facility has passed audits by the FDA, the Israeli MOH, ANVISA and the IMB on behalf of the EMA but remains
subject to audit by other foreign regulatory authorities. There can be no assurance that we will be able to comply with FDA or
foreign regulatory manufacturing requirements for our current facility or any facility we may establish in the future, which would
have a material adverse effect on our business, <FONT STYLE="color: black; background-color: white">results of operations and financial
condition</FONT>.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B></B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We rely on third parties for
final processing of taliglucerase alfa, which exposes us to a number of risks that may delay development, regulatory approval and
commercialization of our product candidates or result in higher product costs.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We have no experience in the final
filling and freeze drying steps of the drug manufacturing process. According to our license and supply agreement with Pfizer, we
currently are responsible for the fill and finish activities for taliglucerase alfa, but such functions will be transferred to
Pfizer in the future. In addition, we have engaged a European contract manufacturer to act as an additional source of fill and
finish activities for taliglucerase alfa. We currently rely primarily on other third-party contractors to perform the final manufacturing
steps for taliglucerase alfa on a commercial scale. We may be unable to identify manufacturers and/or replacement manufacturers
on acceptable terms or at all because the number of potential manufacturers is limited and the FDA and other regulatory authorities,
as applicable, must approve any manufacturer and/or replacement manufacturer, including us, and we or any such third party manufacturer
might be unable to formulate and manufacture our drug products in the volume and of the quality required to meet our clinical and
commercial needs. If we engage any contract manufacturers, such manufacturers may not perform as agreed or may not remain in the
contract manufacturing business for the time required to supply our clinical or commercial needs. In addition, contract manufacturers
are subject to the rules and regulations of the FDA and comparable foreign regulatory authorities and face the risk that any of
those authorities may find that they are not in compliance with applicable regulations. Each of these risks could delay our clinical
trials, the approval, if any, of taliglucerase alfa and our other potential drug candidates by the FDA and other regulatory authorities,
or the commercialization of taliglucerase alfa and our other drug candidates or could result in higher product costs or otherwise
deprive us of potential product revenues.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If physicians, patients, third
party payors and others in the medical community do not accept and use our drugs, our ability to generate revenue from sales of
our products under development will be materially impaired. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Even if the FDA or other
foreign regulatory authorities approve any of our drug candidates for commercialization, physicians and patients, and other healthcare
providers, may not accept and use such candidates. Future acceptance and use of our products will depend upon a number of factors
including:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">perceptions by physicians,
patients, third party payors and others in the medical community about the safety and effectiveness of our drug candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the willingness of
the target patient population to try new therapies and of physicians to prescribe these therapies;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the prevalence and
severity of any side effects, including any limitations or warnings contained in our products&rsquo; approved labeling;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">pharmacological benefits
of our products relative to competing products and products under development;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the efficacy and potential
advantages relative to competing products and products under development;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">relative convenience
and ease of administration;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">effectiveness of education,
marketing and distribution efforts by us and our licensees and distributors, if any;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">publicity concerning
our products or competing products and treatments;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">coverage and reimbursement
of our products by third party payors; and </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the price of our products,
if approved, and of competing products.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">Because
we expect sales of our current drug candidates, if approved, to generate substantially all of our product revenues for the </FONT>foreseeable<FONT STYLE="color: black">
future, any lack of market acceptance of our drug candidates would have a material adverse effect on our business and financial
condition, and revenues from sales of our products would be materially impaired. </FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We have no experience selling,
marketing or distributing products and no internal capability to do so. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We currently have very limited sales,
marketing or distribution capabilities and no experience in building a sales force and distribution capabilities. To be able to
commercialize taliglucerase alfa upon approval, if at all, in Israel, and to commercialize any of our other product candidates,
we must either develop internal sales, marketing and distribution capabilities, which will be expensive and time consuming, or
make arrangements with third parties to perform these services. In November 2009, we granted to Pfizer an exclusive, worldwide
right to develop and commercialize taliglucerase alfa, but retained such rights in Israel. If we decide to market any of our products
directly, we must commit significant financial and managerial resources to develop a marketing and sales force with technical expertise
and with supporting distribution capabilities. Factors that may inhibit our efforts to commercialize our products directly and
without strategic partners include:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">our inability to recruit
and retain adequate numbers of effective sales and marketing personnel; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the inability of sales
personnel to obtain access to an adequate numbers of physicians or to pursuance them to prescribe our products; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the lack of complementary
products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive
product lines;&nbsp;and </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">unforeseen costs and
expenses associated with creating and sustaining an independent sales and marketing organization.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We may not be successful in recruiting
the sales and marketing personnel necessary to sell any of our products upon approval, if at all, and even if we do build a sales
force, it may not be successful in marketing our products, which would have a material adverse effect on our business, results
of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We may enter into distribution
arrangements and marketing alliances for certain products and any failure to successfully identify and implement these arrangements
on favorable terms, if at all, may impair our ability to commercialize our product candidates.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">While we intend to build
a sales force to market taliglucerase alfa in Israel and other product candidates worldwide, we do not anticipate having the resources
in the foreseeable future to develop global sales and marketing capabilities for all of the products we develop, if any. We may
pursue arrangements regarding the sales and marketing and distribution of one or more of our product candidates, such as our license
and supply agreement with Pfizer, and our future revenues may depend, in part, on our ability to enter into and maintain arrangements
with other companies having sales, marketing and distribution capabilities and the ability of such companies to successfully market
and sell any such products. <FONT STYLE="color: black">Any failure to enter into such arrangements and marketing alliances on favorable
terms, if at all, could delay or impair our ability to commercialize our product candidates and could increase our costs of commercialization.
Any use of distribution arrangements and marketing alliances to commercialize our product candidates will subject us to a number
of risks, including the following: </FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">we may be required
to relinquish important rights to our products or product candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">we may not be able
to control the amount and timing of resources that our distributors or collaborators may devote to the commercialization of our
product candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">our distributors or
collaborators may experience financial difficulties;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">our distributors or
collaborators may not devote sufficient time to the marketing and sales of our products; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">business combinations
or significant changes in a collaborator&rsquo;s business strategy may adversely affect a collaborator&rsquo;s willingness or ability
to complete its obligations under any arrangement.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We may need to enter into
additional co-promotion arrangements with third parties where our own sales force is neither well situated nor large enough to
achieve maximum penetration in the market. We may not be successful in entering into any co-promotion arrangements, and the terms
of any co-promotion arrangements we enter into may not be favorable to us.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If the market opportunities for
our current product candidates are smaller than we believe they are, our revenues may be adversely affected and our business may
suffer.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">A substantial focus of our
current clinical pipeline is on relatively rare disorders with small patient populations, in particular Gaucher disease and Fabry
disease. Currently, most reported estimates of the prevalence of these diseases are based on studies of small subsets of the population
of specific geographic areas, which are then extrapolated to estimate the prevalence of the diseases in the broader world population.
As new studies are performed, the estimated prevalence of these diseases may change. There can be no assurance that the prevalence
of Gaucher disease or Fabry disease in the study populations, particularly in these newer studies, accurately reflect the prevalence
of these diseases in the broader world population. If the market opportunities for our current product candidates are smaller than
we believe they are, our revenues may be adversely affected and our business may suffer.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Developments by competitors may
render our products or technologies obsolete or non-competitive which would have a material adverse effect on our business, results
of operations and financial condition. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">We
compete against fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical
companies, academic institutions, government agencies and other public and p</FONT>rivate research organizations. Our drug candidates
will have to compete with existing therapies and therapies under development by our competitors. In addition, our commercial opportunities
may be reduced or eliminated if our competitors develop and market products that are less expensive, more effective or safer than
our drug products. Other companies have drug candidates in various stages of preclinical or clinical development to treat diseases
for which we are also seeking to develop drug products. Some of these potential competing drugs are further advanced in development
than our drug candidates and may be commercialized earlier. Even if we are successful in developing effective drugs, our products
may not compete successfully with products produced by our competitors.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 16.5pt 10pt 0; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 16.5pt 10pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 16.5pt 10pt 0; text-align: left">We specifically face competition
from companies with approved treatments of Gaucher disease, including Genzyme, Shire and to a much lesser extent, Actelion. In
February 2010, the FDA approved VPRIV, Shire&rsquo;s enzyme replacement therapy for the treatment of Gaucher disease, and the European
Commission granted marketing authorization to VPRIV in August 2010. In addition, we are aware of other early stage, experimental,
small molecule, oral drugs which are being developed for the treatment of Gaucher disease by each of Genzyme and Amicus Therapeutics.
According to Amicus Therapeutics, its trial of a small molecule, oral drug for the treatment of Gaucher disease has been suspended.
We also face competition from companies with approved treatments of Fabry disease, including Genzyme and Shire, and we are aware
of other early stage drugs which are being developed for the treatment of Fabry disease, including a drug being developed by Amicus
Therapeutics. Amicus Therapeutics reports that it has suspended its development of its Gaucher disease treatment. We also face
competition from companies with approved enzyme treatments of Fabry disease, including Genzyme and Shire, and we are aware of other
early stage drugs which are being developed for the treatment of Fabry disease, including a drug being developed by Amicus Therapeutics.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We also face competition from companies
that are developing other platforms for the expression of recombinant therapeutic pharmaceuticals. We are aware of companies that
are developing alternative technologies to develop and produce therapeutic proteins in anticipation of the expiration of certain
patent claims covering marketed proteins. Competitors developing alternative expression technologies include Crucell N.V. (which
was acquired by Johnson &amp; Johnson), Shire and GlycoFi Inc. (which was acquired by Merck). Other companies are developing alternate
plant-based technologies, include Biolex, Inc., Chlorogen, Inc., iBIO, Medicago, Greenovation Biotech GmbH and Dow Agroscience.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Several biogeneric companies are
pursuing the opportunity to develop and commercialize follow-on versions of other currently marketed biologic products, including
growth factors, hormones, enzymes, cytokines and monoclonal antibodies, which are areas that interest us. These companies include,
among others, Novartis AG/Sandoz Pharmaceuticals, BioGeneriX AG, Stada Arzneimittel AG, BioPartners GmbH and Teva.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0; text-align: left">Most of our competitors, either
alone or together with their collaborative partners, operate larger research and development programs, staff and facilities and
have substantially greater financial resources than we do, as well as significantly greater experience in:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">developing drugs;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">undertaking preclinical
testing and human clinical trials;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">obtaining marketing
approvals form the FDA and other regulatory authorities;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">formulating and manufacturing
drugs; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">launching, marketing
and selling drugs.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">These organizations also compete
with us to attract qualified personnel, acquisitions and joint ventures candidates and for other collaborations. Activities of
our competitors may impose unanticipated costs on our business which would have a material adverse effect on our business, results
of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If we in-license drug candidates,
we may delay or otherwise adversely affect the development of our existing drug candidates, which may negatively impact our business,
results of operations and financial condition. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">In addition to our own internally
developed drug candidates, we proactively seek opportunities to in-license and advance other drug candidates that are strategic
and have value-creating potential to take advantage of our development know-how and technology. If we in-license any additional
drug candidate, our capital requirements may increase significantly. In addition, in-licensing additional drug candidates may place
a strain on the time of our existing personnel, which may delay or otherwise adversely affect the development of our existing drug
candidates or cause us to re-prioritize our drug pipeline if we do not have the necessary capital resources to develop all of our
drug candidates, which may delay the development of our drug candidates and materially and adversely impact our business, results
of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If we are unable to successfully
manage our growth, there could be a material adverse impact on our business, results of operations and financial condition. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We have grown rapidly and
expect to continue to grow. We expect to hire more employees, particularly in the areas of drug development, manufacturing, regulatory
affairs and sales and marketing, and increase our facilities and corporate infrastructure, further increasing the size of our organization
and related expenses. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational
and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited
resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel.
The expansion of our operations may lead to significant costs and may divert our management and business development resources.
Any inability on the part of our management to manage growth could delay the execution of our business plans or disrupt our operations.
If we are unable to manage our growth effectively, we may not use our resources in an efficient manner, which may delay the development
of our drug candidates and materially and adversely impact our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If we acquire companies, products
or technologies, we may face integration risks and costs associated with those acquisitions that could negatively impact our business,
results of operations and financial condition. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">If we are presented with
appropriate opportunities, we may acquire or make investments in complementary companies, products or technologies. We may not
realize the anticipated benefit of any acquisition or investment. If we acquire companies or technologies, we will face risks,
uncertainties and disruptions associated with the integration process, including difficulties in the integration of the operations
of an acquired company, integration of acquired technology with our products, diversion of our management&rsquo;s attention from
other business concerns, the potential loss of key employees or customers of the acquired business and impairment charges if future
acquisitions are not as successful as we originally anticipate. In addition, our operating results may suffer because of acquisition-related
costs or amortization expenses or charges relating to acquired intangible assets.<FONT STYLE="color: black"><B> </B></FONT>Any
failure to successfully integrate other companies, products or technologies that we may acquire may have <FONT STYLE="color: black">a
material adverse effect on our business and results of operations</FONT>. Furthermore, we may have to incur debt or issue equity
securities to pay for any additional future acquisitions or investments, the issuance of which could be dilutive to our existing
shareholders.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We depend upon key employees
and consultants in a competitive market for skilled personnel. If we are unable to attract and retain key personnel, it could adversely
affect our ability to develop and market our products.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">We
are highly dependent upon the </FONT>principal members of our management team, especially our President and Chief Executive Officer,
Dr. David Aviezer, Ph.D., as well as the Interim Chairman of our Board of Directors, Zev Bronfeld, our other directors, our scientific
advisory board members, consultan<FONT STYLE="color: black">ts and collaborating scientists. Many of these people have been involved
with us for many years and have played integral roles in our progress, and we believe that they will continue to provide value
to us. A loss of any of these personnel may have a material a</FONT>dverse effect on aspects of our business, clinical development
and regulatory programs. We have employment agreements with Dr. Aviezer and five other officers that may be terminated by us or
the applicable officer at any time with varying notice periods of 60 to 90 days. <FONT STYLE="color: black">Although these employment
agreements generally include non-competition covenants and provide for severance payments that are contingent upon the applicable
employee&rsquo;s refraining from competition with us, the applicable noncompetition provisions can be difficult and costly to monitor
and enforce. The loss of any of these persons&rsquo; services may adversely affect our ability to develop and market our products
and obtain necessary regulatory approvals. Further, we do not maintain key-man life insurance.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We also depend in part on
the continued service of our key scientific personnel and our ability to identify, hire and retain additional personnel, including
marketing and sales staff. We experience intense competition for qualified personnel, and the existence of non-competition agreements
between prospective employees and their former employers may prevent us from hiring those individuals or subject us to suit from
their former employers. While we attempt to provide competitive compensation packages to attract and retain key personnel, many
of our competitors are likely to have greater resources and more experience than we have, making it difficult for us to compete
successfully for key personnel.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Our collaborations with outside
scientists and consultants may be subject to restriction and change. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left; background-color: white">We
work with chemists, biologists and other scientists at academic and other institutions, and consultants who assist us in our research,
development, regulatory and commercial efforts, including the members of our scientific advisory board. These scientists and consultants
have provided, and we expect that they will continue to provide, valuable advice regarding our programs. These scientists and consultants
are not our employees, may have other commitments that would limit their future availability to us and typically will not enter
into non-compete agreements with us. If a conflict of interest arises between their work for us and their work for another entity,
we may lose their services. In addition, we will be unable to prevent them from establishing competing businesses or developing
competing products. For example, if a key scientist acting as a principal investigator in any of our clinical trials identifies
a potential product or compound that is more scientifically interesting to his or her professional interests, his or her availability
to remain involved in our clinical trials could be restricted or eliminated.</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Under current U.S. and Israeli
law, we may not be able to enforce employees&rsquo; covenants not to compete and therefore may be unable to prevent our competitors
from benefiting from the expertise of some of our former employees.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We have entered into non-competition
agreements with all of our employees. These agreements prohibit our employees, if they cease working for us, from competing directly
with us or working for our competitors for a limited period. Under current U.S. and Israeli law, we may be unable to enforce these
agreements against most of our employees and it may be difficult for us to restrict our competitors from gaining the expertise
our former employees gained while working for us. <B> </B>If we cannot enforce our employees&rsquo; non-compete agreements, we
may be unable to prevent our competitors from benefiting from the expertise of our former employees.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If product liability claims are
brought against us, it may result in reduced demand for our products and product candidates or damages that exceed our insurance
coverage.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">The clinical testing, marketing
and use of our products and product candidates exposes us to product liability claims if the use or misuse of those products or
product candidates cause injury, disease or results in adverse effects. Use of our products or product candidates, whether in clinical
trials or post approval, could result in product liability claims. We presently carry clinical trial liability insurance with coverages
of up to $10.0 million per occurrence and $10.0 million in the aggregate, an amount we consider reasonable and customary . However,
this insurance coverage includes various deductibles, limitations and exclusions from coverage, and in any event might not fully
cover any potential claims. We may need to obtain additional clinical trial liability coverage prior to initiating additional clinical
trials. We expect to obtain product liability insurance coverage before commercialization of our product candidates; however, such
insurance is expensive and insurance companies may not issue this type of insurance when we need it. We may not be able to obtain
adequate insurance in the future at an acceptable cost. Any product liability claim, even one that was not in excess of our insurance
coverage or one that is meritless and/or unsuccessful, may adversely affect our cash available for other purposes, such as research
and development, which may have a material adverse effect on our business, results of operations and financial condition. Product
liability claims, even if without merit, may result in reduced demand for our products, if approved, which would have a material
adverse effect on our business, financial condition and results of operations. In addition, the existence of a product liability
claim could affect the market price of our common stock.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Coverage and reimbursement may
not be available for our product candidates, which could diminish our sales or affect our ability to sell our products profitably.
</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Market acceptance and sales of our
product candidates will depend on worldwide coverage and reimbursement policies. Government authorities and third-party payors,
such as private health insurers and health maintenance organizations, decide which drugs they will pay for and establish reimbursement
levels. We cannot be sure that coverage and reimbursement will be available for any of our product candidates, if approved for
marketing and sale. Obtaining reimbursement approval for an approved product from governments and other third party payors is a
time consuming and costly process that requires us to provide supporting scientific, clinical and cost-effectiveness data for the
use of our products, if and when approved, to every payor. We may not be able to provide data sufficient to gain acceptance with
respect to coverage and reimbursement or we might need to conduct post-marketing studies in order to demonstrate the cost-effectiveness
of approved products, if any, to such payors&rsquo; satisfaction. Such studies might require us to commit a significant amount
of management time and financial and other resources. Even if a payor determines that an approved product is eligible for reimbursement,
the payor may impose coverage limitations that preclude payment for some uses that are approved by the FDA or other regulatory
authorities. In addition, there is a risk that full reimbursement may not be available for high priced products. Moreover, eligibility
for coverage does not imply that any approved product will be reimbursed in all cases or at a rate that allows us to make a profit
or even cover our costs. Also, limited reimbursement amounts may reduce the demand for, or the price of, our product candidates.
Except with respect to taliglucerase alfa, we have not commenced efforts to have our product candidates covered and reimbursed
by government or third-party payors. If coverage and reimbursement are not available or are available only to limited levels, the
sales of our products, if approved may be diminished or we may not be able to sell such products profitably.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Reforms in the healthcare industry
and the uncertainty associated with pharmaceutical pricing, reimbursement and related matters could adversely affect the marketing,
pricing and demand for our products, if approved.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Increasing healthcare expenditures
have been the subject of considerable public attention in the United States. Both private and government entities are seeking ways
to reduce or contain healthcare costs. Numerous proposals that would affect changes in the U.S. healthcare system have been introduced
or proposed in the U.S. Congress and in some state legislatures within the United States, including reductions in the pricing of
prescription products and changes in the levels at which consumers and healthcare providers are reimbursed for purchases of pharmaceutical
products. Legislation passed in recent years has imposed certain changes to the way in which drugs, including our product candidates,
are covered and reimbursed in the United States. For example, federal legislation and regulations have implemented new reimbursement
methodologies for certain drugs, created a voluntary prescription drug benefit, Medicare Part D, and have imposed significant revisions
to the Medicaid Drug Rebate Program. The recently enacted Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Affordability Reconciliation Act (collectively, the &ldquo;PPACA&rdquo;), imposes yet additional changes to
these programs. We believe that legislation that reduces reimbursement for our product candidates could adversely impact how much
or under what circumstances healthcare providers will prescribe or administer our products, if approved. This could materially
and adversely impact our business by reducing our ability to generate revenue, raise capital, obtain additional collaborators and
market our products, if approved. In addition, we believe the increasing emphasis on managed care in the United States has and
will continue to put pressure on the price and usage of pharmaceutical products, which may adversely impact product sales, upon
approval, if at all.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We are subject to healthcare
reform measures, including legislation, regulatory proposals and healthcare payor initiatives that may increase our costs and adversely
affect our profitability and/or ability to obtain adequate reimbursement for our product candidates.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">The United States and some foreign
jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system
in ways that could affect our ability to sell our products profitably. Among policymakers and payors in the United States and elsewhere,
there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs,
improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these
efforts and has been significantly affected by major legislative initiatives. For example, the PPACA which was enacted in the United
States in March 2010 substantially changes the way healthcare is financed in the United States by both governmental and private
insurers and significantly affects the pharmaceutical industry. The PPACA, among other things, subjects biologic products to potential
competition by lower-cost biosimilars, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate
Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees
and taxes on manufacturers of certain branded prescription drugs, requires manufacturers to participate in a discount program for
certain outpatient drugs under Medicare Part D, and promotes programs that increase the federal government&rsquo;s comparative
effectiveness research. Since its passage, a number of state governors have strenuously opposed certain of the PPACA&rsquo;s provisions,
and initiated lawsuits challenging its constitutionality. These challenges are pending final adjudication in several jurisdictions,
including the United States Supreme Court. Congress has also proposed a number of legislative initiatives, including possible repeal
of the PPACA. Although we cannot predict their full impact, we anticipate that PPACA, as well as other healthcare reform measures
that may be adopted in the future, may result in more rigorous coverage and reimbursement criteria and in additional downward pressure
on the price that we receive for any approved product, and could adversely affect our profits and our business generally.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We may be subject, directly or
indirectly, to federal and state healthcare fraud and abuse and false claims laws and regulations. If we are unable to comply,
or have not fully complied, with such laws, we could face substantial penalties.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">If we obtain FDA approval for any
of our product candidates and begin commercializing those products in the United States, our operations may be directly, or indirectly
through our customers, subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback
Statute, the federal False Claims Act and HIPAA. These laws may impact, among other things, our proposed sales, marketing and education
programs.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">The federal Anti-Kickback Statute
prohibits persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly,
to induce either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which
payment may be made under a federal healthcare program, such as the Medicare and Medicaid programs. The term &ldquo;remuneration&rdquo;
has been broadly interpreted to include anything of value, including for example, gifts, discounts, the furnishing of supplies
or equipment, credit arrangements, payments of cash, waivers of co-payments and deductibles, ownership interests and providing
anything at less than its fair market value. The reach of the Anti-Kickback Statute</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">was also broadened by PPACA, which,
among other things, amends the intent requirement of the federal Anti-Kickback Statute and the applicable criminal healthcare
fraud statutes contained within 42 U.S.C. &sect; 1320a-7b, effective March 23, 2010. Pursuant to the statutory amendment, a person
or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed
a violation. In addition, PPACA provides that the government may assert that a claim including items or services resulting from
a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims
Act (discussed below) or the civil monetary penalties statute, which imposes penalties against any person who is determined to
have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item
or service that was not provided as claimed or is false or fraudulent. The federal Anti-Kickback Statute is broad, and despite
a series of narrow safe harbors, prohibits many arrangements and practices that are lawful in businesses outside of the healthcare
industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil sanctions such as
fines, imprisonment and possible exclusion from Medicare, Medicaid and other healthcare programs. Many states have also adopted
laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services
reimbursed by any source, not only the Medicare and Medicaid programs, and do not contain identical safe harbors.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">The federal False Claims Act imposes
liability on any person who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for
payment by a federal healthcare program. The &ldquo;qui tam&rdquo; provisions of the False Claims Act allow a private individual
to bring civil actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal
government, and to share in any monetary recovery. In addition, various states have enacted false claims laws analogous to the
False Claims Act. Many of these state laws apply where a claim is submitted to any third-party payer and not merely a federal healthcare
program. When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual
damages sustained by the government, plus civil penalties of $5,500 to $11,000 for each separate false claim.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Also, the Health Insurance Portability
and Accountability Act of 1996, or HIPAA, created several new federal crimes, including health care fraud, and false statements
relating to health care matters. The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud
any health care benefit program, including private third-party payers. The false statements statute prohibits knowingly and willfully
falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection
with the delivery of or payment for health care benefits, items or services.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We are unable to predict whether
we could be subject to actions under any of these or other fraud and abuse laws, or the impact of such actions. Moreover, to the
extent that our products will be sold in a foreign country, we may be subject to similar foreign laws and regulations. If we are
found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may
be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement
programs and the curtailment or restructuring or our operations, all of which could have a material adverse effect on our business,
results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Governments outside the United
States tend to impose strict price controls and reimbursement approval policies, which may adversely affect our prospects for generating
revenue.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><FONT STYLE="color: black">In some
countries, particularly European Union member states, the pricing of prescription pharmaceuticals is subject to governmental control.
In these countries, pricing negotiations with governmental authorities can take considerable time (six to 12&nbsp;months or longer)
after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries with respect
to any product candidate that achieves regulatory approval, we may be required to conduct a clinical trial that compares the cost-effectiveness
of our product candidate to other available therapies. If reimbursement of our products upon approval, if at all, is unavailable
or limited in scope or amount, or if pricing is set at unsatisfactory levels, our prospects for generating revenue, if any, could
be adversely affected which would have a material adverse effect on our business, results of operations and financial condition.
Further, if we achieve regulatory approval of any product, we must successfully negotiate product pricing for such product in individual
countries. As a result, the pricing of our products, if approved, in different countries may vary widely, thus creating the potential
for third-party trade in our products in an attempt to exploit price differences between countries. This third-party trade of our
products could undermine our sales in markets with higher prices </FONT>which could have a material adverse effect on our business,
results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>All liabilities of our company
have survived the merger and there may be undisclosed liabilities that could harm our revenues, business, prospects, financial
condition and results of operations.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Protalix Ltd. and its counsel
conducted due diligence on us that was customary and appropriate for the reverse merger transaction consummated on December 31,
2006. However, the due diligence process may not have revealed all our material liabilities then existing or that could be asserted
in the future against us relating to our activities before the consummation of the merger. Any such potential liabilities survive
the merger and could harm our revenues, business, prospects, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We are a holding company with
no operations of our own. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">We are a holding company with no
operations of our own. Accordingly, our ability to conduct our operations, service any debt that we may incur in the future and
pay dividends, if any, is dependent upon the earnings from the business conducted by Protalix Ltd. The distribution of those earnings
or advances or other distributions of funds by our subsidiary to us, as well as our receipt of such funds, are contingent upon
the earnings of our subsidiary and are subject to various business considerations and U.S. and Israeli law. If Protalix Ltd. is
unable to make sufficient distributions or advances to us, or if there are limitations on our ability to receive such distributions
or advances, we may not have the cash resources necessary to conduct our corporate operations which would have a material adverse
effect on our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left"><B>Risks Related to Regulatory
Matters</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>We
are subject to extensive governmental regulation including the requirement of FDA approval before our drug candidates may be marketed.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">Both
before and after approval of our drug candidates, we, our drug candidates, our suppliers, our contract manufacturers and our contract
testing laboratories are subject to extensive regulation by the FDA or comparable foreign regulatory authorities. Failure to comply
with applicable requirements of the FDA or comparable foreign regulatory authorities could result in, among other things, any of
the following actions:</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">warning letters;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">fines and other monetary
penalties;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">unanticipated expenditures;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">delays in the FDA&rsquo;s
or other foreign regulatory authorities&rsquo; approving, or the refusal of any regulatory authority to approve, any drug candidate;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">product recall or
seizure;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">interruption of manufacturing
or clinical trials;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">operating restrictions;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">injunctions; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">criminal prosecutions.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">In
addition to the approval requirements, other numerous and pervasive regulatory requirements apply, both before and after approval,
to us, our drug candidates, and our suppliers, contract manufacturers, and contract laboratories. These include requirements related
to:</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">testing;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">manufacturing;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">quality control;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">labeling;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">advertising;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">promotion;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">distribution;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">export;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">reporting to the FDA
certain adverse experiences associated with use of the drug candidate; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">obtaining additional
approvals for certain modifications to the drug candidate or its labeling or claims.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">We
also are subject to inspection by the FDA and comparable foreign regulatory authorities, to determine our compliance with regulatory
requirements, as are our suppliers, contract manufacturers, and contract testing laboratories, and there can be no assurance that
the FDA or any other comparable foreign regulatory authority, will not identify compliance issues that may disrupt production or
distribution, or require substantial resources to correct. We may be required to make modifications to our manufacturing operations
in response to these inspections which may require significant resources and may have a material adverse effect upon our business,
results of operations and financial condition.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left; background-color: white"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">The
approval process for any drug candidate may also be delayed by changes in government regulation, future legislation or administrative
action or changes in policy of the FDA and comparable foreign authorities that occur prior to or during their respective regulatory
reviews of such drug candidate. Delays in obtaining regulatory approva</FONT>ls with respect to any drug candidate may:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">delay commercialization
of, and our ability to derive product revenues from, such drug candidate;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">delay the regulatory-related
milestone payments we anticipate receiving from Pfizer;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">require us to perform
costly procedures with respect to such drug candidate; or</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">otherwise diminish
any competitive advantages that we may have with respect to such drug candidate.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 12pt 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">Delays
in the approval process for any drug candidate may have a material adverse effect upon our business, financial condition and results
of operations.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>We
may not obtain the necessary U.S. or worldwide regulatory approvals to commercialize our drug candidates in a timely manner, if
at all, which would have a material adverse effect on our business, financial condition and results of operations.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">We
need FDA approval to commercialize our drug candidates in the United States and approvals from foreign regulators to commercialize
our drug candidates elsewhere. In order to obtain FDA approval of any of our drug candidates, we must submit to the FDA an NDA
or a Biologic License Application (BLA) demonstrating that the drug candidate is safe for humans and effective for its intended
use. This demonstration requires significant research and animal tests, which are referred to as preclinical studies, as well as
human tests, which are referred to as clinical trials.&nbsp;&nbsp;In the European Union, we must submit an MAA to the EMA. Satisfaction
of the FDA&rsquo;s and foreign regulatory authorities&rsquo; regulatory requirements typically takes many years, depends upon the
type, complexity and novelty of the drug candidate and requires substantial resources for research, development and testing. In
December 2009, we completed the filing of an NDA for taliglucerase alfa for the treatment of Gaucher disease and received a PDUFA
date of February&nbsp;25, 2011. In addition, we have submitted a marketing application for taliglucerase alfa to the Israeli MOH,
and MAAs have been submitted to each of the EMA, ANVISA and the Australian TGA.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="color: black; background-color: white">In
February 2011, we received a CRL from the FDA regarding our NDA for taliglucerase alfa for the treatment of Gaucher disease. The
main questions raised by the FDA regarding the NDA related to clinical and CMC.&nbsp;&nbsp;In the clinical section of the CRL,
the FDA requested additional data from the ongoing switchover trial and the long-term extension trial relating to taliglucerase
alfa.&nbsp;&nbsp;At the time the NDA was submitted, full data from these trials was not available.&nbsp;&nbsp;In the CMC section
of the CRL, the FDA requested information regarding testing specifications and assay validation.&nbsp;&nbsp;The FDA did not request
additional clinical studies in the CRL. In May 2011, we had a meeting with the FDA to clarify the FDA&rsquo;s requests and in July
2011, we submitted a reply to the CRL.&nbsp;&nbsp;In August 2011, the FDA notified us that it had accepted for review the resubmission
of the taliglucerase alfa NDA, had deemed the resubmission a class 2, or 6-month, response and established February 1, 2012 as
the new PDUFA date. </FONT> In December 2011, the FDA notified us that it had decided to extend the PDUFA date to May 1, 2012.
In its notification, the FDA stated that its decision related to certain clinical information regarding taliglucerase alfa we had
submitted in November 2011 in response to an FDA request. The requested information related mainly to the presentation of select
data provided in the NDA.&nbsp;&nbsp;As this information was requested and provided within 90 days of the February 1, 2012 PDUFA
goal date, the FDA had the option to extend the PDUFA goal date to provide adequate time for the FDA to complete its review. A
three-month extension cycle is the standard period granted. No additional data was requested by the FDA in the notification, nor
were we notified of any specific deficiency in the taliglucerase alfa NDA. <FONT STYLE="color: black; background-color: white">There
can be no assurance that the FDA will not make any additional request regarding our NDA.&nbsp;&nbsp;In the past, the FDA has made
additional requests to other applicants after the delivery of a CRL.&nbsp;&nbsp;Any additional requests from the FDA relating to
the NDA may delay or preclude the FDA&rsquo;s review of our reply to the CRL.&nbsp;&nbsp;Even if we comply with all of the FDA&rsquo;s
requests in the CRL or otherwise, if any, the FDA may ultimately reject the NDA, or fail to approve the NDA in a timely manner,
which would have a material adverse effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">Even
if we comply with all the requests of the FDA and comparable foreign authorities, the authorities may ultimately reject the NDA
or other filing or submission we filed for taliglucerase alfa or one or more of the NDAs or other filings or submissions we file
in the future, if any, or we might not obtain regulatory clearance in a timely manner for taliglucerase alfa or any of our other
drug candidates.&nbsp;&nbsp;Companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in
advanced or late-stage clinical trials, even after obtaining promising earlier trial results or in preliminary findings or other
comparable authorities for such clinical trials.&nbsp;&nbsp;Further, even if favorable testing data is generated by any clinical
trial of a drug candidate, the FDA, EMA or other regulatory authority may not accept or approve an NDA, MAA or other comparable
submission, as applicable, filed by a pharmaceutical or biotechnology company for the drug candidate.&nbsp;&nbsp;Failure to obtain
approval of the FDA or comparable foreign authorities of any of our drug candidates in a timely manner, if at all, will severely
undermine our business, financial condition and results of operation by reducing our potential marketable products and our ability
to generate corresponding product revenues.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">Our
research and clinical efforts may not result in drugs that the FDA or foreign regulatory authorities consider safe for humans and
effective for indicated uses, which would have a material adverse effect on our business, financial condition and results of operations.&nbsp;&nbsp;After
clinical trials are completed for any drug candidate, if at all, the FDA and foreign regulatory authorities have substantial discretion
in the drug approval process of the drug candidate in their respective jurisdictions and may require us to conduct additional clinical
testing or perform post-marketing studies which would cause us to incur additional costs.&nbsp;&nbsp;Incurring such costs may have
a material adverse effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>We
have only limited experience in regulatory affairs, and some of our drug candidates may be based on new technologies. These factors
may affect our ability or the time we require to obtain necessary regulatory approvals.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><FONT STYLE="background-color: white">We
have only limited experience in filing and prosecuting the applications necessary to gain regulatory approvals for medical devices
and drug candidates. Moreover, some of the drug candidates that are likely to result from our development programs may be based
on new technologies that have not been extensively tested in humans. The regulatory requirements governing these types of drug
candidates may be less well defined or more rigorous than for conventional products.&nbsp;&nbsp;As a result, we may experience
a longer regulatory process in connection with obtaining regulatory approvals of any products that we develop</FONT>.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white"><B>If
any of our competitors are able to obtain orphan drug exclusivity for any products that are competitive with our products, we may
be precluded from selling or obtaining approval of our competing products by the applicable regulatory authorities for a significant
period of time.</B></FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">In
the United States, orphan drug status may be designated for a drug that has the potential to treat a &ldquo;rare disease or condition,&rdquo;
which generally is a disease or condition that affects fewer than 200,000 individuals within the United States. Orphan drug designation
does not convey an advantage in, or shorten the duration of, the review and approval process.&nbsp;&nbsp;If a drug candidate which
has orphan drug designation subsequently receives the first approval for the indication in a jurisdiction for which it has such
designation, the drug candidate is entitled to orphan exclusivity in that jurisdiction, meaning that the applicable regulatory
authority may not approve any other application to market the same drug for the same indication, except in very limited circumstances,
for seven years.&nbsp;&nbsp;There can be no assurance that a drug candidate that receives orphan drug designation will receive
orphan drug marketing exclusivity. More than one drug can have orphan designation for the same indication.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="color: black; background-color: white">Foreign
regulations regarding orphan drugs are similar to those in the United States but there are several conceptual differences.&nbsp;&nbsp;For
example, the exclusivity period in the European Union is generally 10 years.</FONT> The EMA/European Commission has granted orphan
drug designation and exclusivity to VPRIV in the European Union. This designation could prevent the marketing authorization of
taliglucerase alfa in the European Union for a 10-year period commencing upon the August 2010 marketing authorization of VPRIV
in the European Union. Any marketing protection granted to VPRIV by the EMA/European Commission in connection with the orphan drug
designation may have a <FONT STYLE="color: black; background-color: white">material adverse effect on our business, financial condition
and results of operations</FONT>.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white"><FONT STYLE="background-color: white">From
time to time, we may apply to the FDA or any comparable foreign regulatory authority for orphan drug designation for any one or
more of our drug candidates. For example, in September 2009, the FDA&rsquo;s Office of Orphan Product Development granted taliglucerase
alfa orphan drug status.&nbsp;&nbsp;In January 2010, the COMP, after reviewing all relevant clinical data, recommended that the
European Commission grant orphan drug designation to taliglucerase alfa for the treatment of Gaucher disease, and such designation
was granted by the European Commission in March 2010.&nbsp;&nbsp;However, none of our other drug candidates have been designated
as an orphan drug and there is no guarantee that the FDA will grant such designation in the future. In addition, neither orphan
drug designation nor orphan drug exclusivity prevents competitors from developing or marketing different drugs for that indication.
Even if we obtain orphan drug exclusivity for one or more indications for one of our drug candidates, we may not be able to maintain
the exclusivity. For example, if a competitive product that is the same drug or biologic as one of our drug candidates is shown
to be clinically superior to the drug candidate, any orphan drug exclusivity granted to the drug candidate will not block the approval
of the competitive product. Failure to obtain or maintain orphan drug exclusivity for taliglucerase alfa or any of our other drug
candidates may have a material adverse effect on our business, results of operation and financial condition. If VPRIV or any other
drug receives orphan drug exclusivity in any jurisdiction for Gaucher disease or any other indication for a product that competes
with one of the indications for one of our drug candidates, we could be prevented from marketing the applicable drug candidate
in the jurisdiction during the applicable exclusivity period which will have a material adverse effect on our business, results
of operations and financial condition</FONT>.</P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><B>Risks Related to Intellectual
Property Matters</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If we fail to adequately protect
or enforce our intellectual property rights or secure rights to third party patents, the value of our intellectual property rights
would diminish and our business, competitive position and results of operations would suffer. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left; background-color: white">As of December
31, 2011, we had 82 pending patent applications and held licensed rights to seven pending patent applications. However, the filing
of a patent application does not mean that we will be issued a patent, or that any patent eventually issued will be as broad as
requested in the patent application or sufficient to protect our technology. Any modification required to a current patent application
may delay the approval of such patent application which would have a material adverse effect on our business, results of operations
and financial condition. In addition, there are a number of factors that could cause our patents, if granted, to become invalid
or unenforceable or that could cause our patent applications to not be granted, including known or unknown prior art, deficiencies
in the patent application or the lack of originality of the technology. Our competitive position and future revenues will depend
in part on our ability and the ability of our licensors and collaborators to obtain and maintain patent protection for our products,
methods, processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary
rights and to operate without infringing the proprietary rights of third parties. We have filed U.S. and international patent applications
for process patents, as well as composition of matter patents, for taliglucerase alfa. However, we cannot predict:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the degree and range
of protection any patents will afford us against competitors and those who infringe upon our patents, including whether third parties
will find ways to invalidate or otherwise circumvent our licensed patents;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">if and when patents
will issue;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">whether or not others
will obtain patents claiming aspects similar to those covered by our licensed patents and patent applications; or</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">whether we will need
to initiate litigation or administrative proceedings, which may be costly, and whether we win or lose. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">As
of December 31, 2011, we hold, or have license rights to, 38 patents. If patent rights covering our products or technologies are
not sufficiently broad, they may not provide us with sufficient proprietary protection or competitive advantages against competitors
with similar products and technologies. Furthermore, if the </FONT>U.S.<FONT STYLE="color: black"> Patent and Trademark Office
or foreign patent offices issue patents to us or our licensors, others may challenge the patents or circumvent the patents, or
the patent office or the courts may invalidate the patents. Thus, any patents we own or license from or to third parties may not
provide any protection against our competitors and those who infringe upon our patents.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Furthermore, the life of
our patents is limited. The patents we hold relating to our ProCellEx protein expression system will expire in 2017. If patents
issue from other currently pending patent applications, those patents will expire between 2024 and 2028.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>We rely on confidentiality agreements
that could be breached and may be difficult to enforce which could have a material adverse effect on our business and competitive
position.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Our policy is to enter agreements
relating to the non-disclosure of confidential information with third parties, including our contractors, consultants, advisors
and research collaborators, as well as agreements that purport to require the disclosure and assignment to us of the rights to
the ideas, developments, discoveries and inventions of our employees and consultants while we employ them. However, these agreements
can be difficult and costly to enforce. Moreover, to the extent that our contractors, consultants, advisors and research collaborators
apply or independently develop intellectual property in connection with any of our projects, disputes may arise as to the proprietary
rights to the intellectual property. If a dispute arises, a court may determine that the right belongs to a third party, and enforcement
of our rights can be costly and unpredictable. In addition, we rely on trade secrets and proprietary know-how that we seek to protect
in part by confidentiality agreements with our employees, contractors, consultants, advisors and others. Despite the protective
measures we employ, we still face the risk that:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">these agreements may
be breached;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">these agreements may
not provide adequate remedies for the applicable type of breach; or</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">our trade secrets
or proprietary know-how will otherwise become known.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Any breach of our confidentiality
agreements or our failure to effectively enforce such agreements may have a material adverse effect on our business and competitive
position.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If we infringe the rights of
third parties we could be prevented from selling products, forced to pay damages and required to defend against litigation which
could result in substantial costs and may have a material adverse effect on our business, results of operations and financial condition.
</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We have not received to date
any claims of infringement by any third parties. However, as our drug candidates progress into clinical trials and commercialization,
if at all, our public profile and that of our drug candidates may be raised and generate such claims. Defending against such claims,
and occurrence of a judgment adverse to us, could result in unanticipated costs and may have a material adverse effect on our business
and competitive position. If our products, methods, processes and other technologies infringe the proprietary rights of other parties,
we may incur substantial costs and we may have to:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">obtain licenses, which
may not be available on commercially reasonable terms, if at all;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">redesign our products
or processes to avoid infringement;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">stop using the subject
matter claimed in the patents held by others, which could cause us to lose the use of one or more of our drug candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">defend litigation
or administrative proceedings that may be costly whether we win or lose, and which could result in a substantial diversion of management
resources; or</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">pay damages.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Any costs incurred in connection
with such events or the inability to sell our products may have a material adverse effect on our business, results of operations
and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>If we cannot meet requirements
under our license agreements, we could lose the rights to our products, which could have a material adverse effect on our business.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">We
depend on licensing agreements with third parties to maintain the intellectual property rights to ce</FONT>rtain of our product
candidates. Presently, we have licensed rights from the Yeda Research and Development Company Limited, the technology transfer
arm of the Weizman Institute of Science, which allow us to use their technology and discoveries for the development, production
and sale of enzymatically active mutations of GCD and derivatives thereof for the treatment of Gaucher disease. In addition, pursuant
to our agreement with the Yissum Research and Development Company, or Yissum, the technology transfer arm of the Hebrew University
of Jerusalem, Israel, and the Boyce Thompson Institute for Plant Research, at Cornell University, we have received an exclusive
worldwide right and license to certain technology, including patents and additional patent applications relating to acetylcholinesterase
(AChE), for all therapeutic and prophylactic indications as well as an exclusive license not limited to such indications with respect
to certain of these patents and patent applications. Under the agreement with Yissum, we intend to develop a proprietary plant
cell-based acetylcholinesterase (AChE) and its molecular variants for the use in several therapeutic and prophylactic indications,
including a biodefense program. In addition, we have licensed certain rights relating to our production of taliglucerase alfa from
Virginia Tech. Our license agreements require us to make payments and satisfy performance obligations in order t<FONT STYLE="color: black">o
maintain our rights under these agreements. All of these agreements last either throughout the life of the patents that are the
subject of the agreements, or with respect to other licensed technology, for a number of years after the first commercial sale
of the relevant product. </FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">In addition, we are responsible
for the cost of filing and prosecuting certain patent applications and maintaining certain issued patents licensed to us. If we
do not meet our obligations under our license agreements in a timely manner, we could lose the rights to our proprietary technology
which could have a material adverse effect on our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Risks Relating to Our Operations
in Israel </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Potential political, economic
and military instability in the State of Israel, where the majority of our senior management and our research and development facilities
are located, may adversely affect our results of operations.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">Our
executive office and operations are located in the State of Israel. Accordingly, political, economic and military conditions in
Israel directly affect our business. Since the State of Israel was established in 1948, a number of armed conflicts have occurred
between Israel and its Arab neighbors. Any hostilities involving Israel or the interruption or curtailment of trade between Israel
and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could affect adversely
our operations. </FONT>Since October 2000 there have been increasing occurrences of terrorist violence. Ongoing and revived h<FONT STYLE="color: black">ostilities
or other Israeli political or economic factors could harm our operations and product development and cause our revenues to decrease.
Furthermore, several countries, principally those in the Middle East, still restrict business with Israel and Israeli companies.
These restrictive laws and policies may limit seriously our ability to sell our products in these countries. </FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Although Israel has entered
into various agreements with Egypt, Jordan and the Palestinian Authority, there have been times since October 2000 when Israel
has experienced an increase in unrest and terrorist activity. The establishment in 2006 of a government in the Palestinian Authority
by representatives of the Hamas militant group has created additional unrest and uncertainty in the region. In mid-2006, there
was a war between Israel and the Hezbollah in Lebanon, resulting in thousands of rockets being fired from Lebanon up to 50 miles
into Israel. Our current facilities are located in northern Israel, are in range of rockets that were fired from Lebanon into Israel
during the war and suffered minimal damages during one of the rocket attacks. Our insurance policies do not cover us for <FONT STYLE="color: black">these
types of damages or for any resulting disruption in our operations. The Israeli government, as a matter of law, provides coverage
for the reinstatement value of direct damages that are caused by terrorist attacks or acts of war; however, the government may
cease providing such coverage or the coverage might not be enough to cover potential damages. </FONT>If our facilities are damaged
as a result of hostile action, our operations may be materially adversely affected.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">In addition to the foregoing, since
the end of 2010, numerous acts of protest and civil unrest have taken place in several countries in the Middle East and North Africa,
many of which involved significant violence. The civil unrest in Egypt, which borders Israel, resulted in the resignation of its
president Hosni Mubarak, and to significant changes to the country's government. In Syria, also bordering Israel, large civilian
protests are continuing to take place. The ultimate effect of these developments on the political and security situation in the
Middle East and on Israel's position within the region is not clear at this time.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Our operations may be disrupted
by the obligations of our personnel to perform military service which could have a material adverse effect on our business. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Many of our male employees
in Israel, including members of senior management, are obligated to perform up to one month (in some cases more) of annual military
reserve duty until they reach the age of 45 and, if there is a military conflict, could be called to active duty. Our operations
may be disrupted by the absence of a significant number of our employees related to military service or the absence for extended
periods of military service of one or more of our key employees. Any disruption could have a material adverse effect on our business.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Because a certain portion of
our expenses is incurred in New Israeli Shekels, or NIS, our results of operations may be seriously harmed by currency fluctuations
and inflation. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">We report our financial statements
in U.S. dollars, our functional currency, but we pay a meaningful portion of our expenses in New Israeli Shekels, or NIS. As a
result, we are exposed to risk to the extent that the inflation rate in Israel exceeds the rate of devaluation of the NIS in relation
to the U.S. dollar or if the timing of these devaluations lags behind inflation in Israel. In that event, the U.S. dollar cost
of our operations in Israel will increase and our U.S. dollar-measured results of operations will be adversely affected. To the
extent that the value of the NIS increases against the dollar, our expenses on a dollar cost basis increase. Our operations also
could be adversely affected if we are unable to guard against currency fluctuations in the future. To date, we have not engaged
in hedging transactions. In the future, we may enter into currency hedging transactions to decrease the risk of financial exposure
from fluctuations in the exchange rate of the U.S. dollar against the NIS. These measures, however, may not adequately protect
us from material adverse effects.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>The tax benefits available to
us require that we meet several conditions and may be terminated or reduced in the future, which would increase our taxes.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">We
are</FONT> abl<FONT STYLE="color: black">e to take advantage of tax exemptions and reductions resulting from the &ldquo;Approved
Enterprise&rdquo; status of our faci</FONT>lities in Israel. To remain eligible for these tax benefits, we must continue to meet
certain conditions, including making specified investments in property and equipment, and financing at least 30% of such investments
with share capital. If we fail to meet these conditions in the future, the tax benefits would be canceled and we may be required
to refund any tax benefits we already have enjoyed. These tax benefits are subject to investment policy by the Investment Center
and may not be continued in the future at their current levels or at any level. In recent years the Israeli government has reduced
the benefits available and has indicated that it may further reduce or eliminate some of these benefits in the future. The termination
or reduction of these tax benefits or our inability to qualify for additional &ldquo;Approved Enterprise&rdquo; approvals may increase
our tax expenses in the future, which would reduce our expected profits and adversely affect our business and results of operations.
Additionally, if we increase our activities outside of Israel, for example, by future acquisitions, such increased activities generally
may not be eligible for inclusion in Israeli tax benefit programs.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>The Israeli government grants
we have received for certain research and development expenditures restrict our ability to manufacture products and transfer technologies
outside of Israel and require us to satisfy specified conditions. If we fail to satisfy these conditions, we may be required to
refund grants previously received together with interest and penalties which could have a material adverse effect on our business
and results of operations. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Our research and development
efforts have been financed, in part, through grants that we have received from the OCS. We, therefore, must comply with the requirements
of the Israeli Law for the Encouragement of Industrial Research and Development, 1984, and related regulations, or the Research
Law.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Under the Research Law we are prohibited
from manufacturing products developed using these grants outside of the State of Israel without special approvals, although the
Research Law does enable companies to seek prior approval for conducting manufacturing activities outside of Israel without being
subject to increased royalties. <FONT STYLE="color: black">We may not receive the required approvals for any proposed transfer
of manufacturing activities. </FONT>Even if we do receive approval to manufacture products developed with government grants outside
of Israel, we may be required to pay an increased total amount of royalties (possibly up to 300% of the grant amounts plus interest),
depending on the manufacturing volume that is performed outside of Israel, as well as at a possibly increased royalty rate. This
restriction may impair our ability to outsource manufacturing or engage in similar arrangements for those products or technologies.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Additionally, under the Research
Law, we are prohibited from transferring the OCS-financed technologies and related intellectual property rights outside of the
State of Israel, except under limited circumstances and only with the approval of the OCS' Research Committee. We may not receive
the required approvals for any proposed transfer and, if received, we may be required to pay the OCS a portion of the consideration
that we receive upon any sale of such technology by a non-Israeli entity. The scope of the support received, the royalties that
we have already paid to the OCS, the amount of time that has elapsed between the date on which the know-how was transferred and
the date on which the OCS grants were received and the sale price and the form of transaction will be taken into account in order
to calculate the amount of the payment to the OCS. Approval of the transfer of technology to residents of the State of Israel is
required, and may be granted in specific circumstances only if the recipient abides by the provisions of applicable laws, including
the restrictions on the transfer of know-how and the obligation to pay royalties. No assurance can be made that approval to any
such transfer, if requested, will be granted.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><FONT STYLE="color: black">These
restrictions may impair our ability to sell our technology assets or to outsource manufacturing outside of Israel. The restrictions
will continue to apply for a certain period of time even after we have repaid the full amount of royalties payable for the grants.
</FONT>For the year ended December 31, 2010 and for the nine months ended September 30, 2011, we recorded grants totaling $3.8
million and $2.6 million from the OCS, respectively. The grants represent 10% and 9%, respectively, of our gross research and development
expenditures for the year ended December 31, 2010 and for the nine months ended on September 30, 2011. <FONT STYLE="color: black">If
we fail to satisfy the conditions of the Research Law, we may be required to refund certain grants previously received together
with interest and penalties, and may become subject to criminal charges, any of which could have a material adverse effect on our
business, results of operations and financial condition.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Investors may have difficulties
enforcing a U.S. judgment, including judgments based upon the civil liability provisions of the U.S. federal securities laws against
us, our executive officers and most of our directors or asserting U.S. securities laws claims in Israel. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Most of our directors and
officers are not residents of the United States and most of their assets and our assets are located outside the United States.
Service of process upon our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States
against us, some of our directors and executive officers may be difficult to obtain within the United States. We have been informed
by our legal counsel in Israel that investors may find it difficult to assert claims under U.S. securities laws in original actions
instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws against us, our
officers and our directors. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or
our officers and directors because Israel is not the most appropriate forum to bring such a claim. In addition, even if an Israeli
court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found
to be applicable, the content of applicable U.S. law must be proved as a fact which can be a time-consuming and costly process.
Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters
described above.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Israeli courts might not
enforce judgments rendered outside Israel which may make it difficult to collect on judgments rendered against us. Subject to certain
time limitations, an Israeli court may declare a foreign civil judgment enforceable only if it finds that:</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the judgment was rendered
by a court which was, according to the laws of the state of the court, competent to render the judgment; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the judgment may no
longer be appealed; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the obligation imposed
by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of
the judgment is not contrary to public policy; and </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the judgment is executory
in the state in which it was given.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Even if these conditions
are satisfied, an Israeli court will not enforce a foreign judgment if it was given in a state whose laws do not provide for the
enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty
or security of the State of Israel. An Israeli court also will not declare a foreign judgment enforceable if:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the judgment was obtained
by fraud; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">there is a finding
of lack of due process; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the judgment was rendered
by a court not competent to render it according to the laws of private international law in Israel; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the judgment is at
variance with another judgment that was given in the same matter between the same parties and that is still valid; or </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">at the time the action
was brought in the foreign court, a suit in the same matter and between the same parties was pending before a court or tribunal
in Israel.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.6pt 0 17.85pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Risks Related to Investing in
Our Common Stock </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>The market price of our common
stock may fluctuate significantly. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">The market price of our common
stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the results of our
ongoing studies regarding our lead product candidate taliglucerase alfa, or communications from the FDA or other regulatory authorities
regarding our NDA or other marketing authorization applications, including the approval of any such filings by the FDA or other
applicable regulatory authorities, or any delay or failure by the FDA or other applicable regulatory authorities to approve any
such filings;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">developments concerning
intellectual property rights and regulatory approvals;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">the announcement of
new products or product enhancements by us or our competitors;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">variations in our
and our competitors&rsquo; results of operations;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">changes in earnings
estimates or recommendations by securities analysts, if our common stock is covered by analysts;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">developments in the
biotechnology industry; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left; padding-right: 11.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">general market conditions
and other factors, including factors unrelated to our operating performance.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 0 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Further, stock markets in
general, and the market for biotechnology companies in particular, often experience price and volume fluctuations. Continued market
fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our
common stock. Price volatility of our common stock may be worse if the trading volume of our common stock is low. We have not paid,
and do not expect to pay, any cash dividends on our common stock as any earnings generated from future operations will be used
to finance our operations. As a result, investors will not realize any income from an investment in our common stock until and
unless their shares are sold at a profit.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Our common stock is listed for
trade on more than one stock exchange, and this may result in price variations.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Our common stock is listed for
trade on both the NYSE Amex and the Tel Aviv Stock Exchange, or the TASE. Dual-listing may result in price variations between the
exchanges due to a number of factors. First, our common stock is traded in U.S. dollars on the NYSE Amex and in NIS on the TASE.
In addition, the exchanges are open for trade at different times of the day and on different days. For example, the TASE opens
generally during Israeli business hours, Sunday through Thursday while the NYSE Amex opens generally during U.S. business hours,
Monday through Thursday. The two exchanges also have differing vacation schedules. Differences in the trading schedules, as well
as volatility in the exchange rate of the two currencies, among other factors, may result different trading prices for our common
stock on the two exchanges. Other external influences may have different effects on the trading price of our common stock on the
two exchanges.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><B>Future sales of our common
stock could reduce our stock price.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">The market price of our common stock
could drop significantly if our existing shareholders sell a large number of shares of our common stock or are perceived by the
market as intending to sell them. All of the shares sold in our public offering in October 2007 were freely tradable without restriction
or further registration under the federal securities laws, unless purchased by our &ldquo;affiliates&rdquo; as that term is defined
in Rule&nbsp;144 under the Securities Act. In addition, all of the outstanding shares of our common stock are freely tradable without
restriction or further registration under the federal securities laws, unless owned by our affiliates. At September 30, 2011, there
were options issued and outstanding to purchase 7,412,339 shares of our common stock with a weighted average exercise price of
$3.86 per share. Also at September 30, 2011, there were 47,351 shares of common stock remaining available for future for issuance
in connection with future grants of incentives under our 2006 Stock Incentive Plan. In addition, four of our executive officers
have entered into trading plans established under Rule 10b5-1 under the Securities Act that allow for sales of approximately 1.3
million shares upon receipt of FDA approval of taliglucerase alfa, if at all.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Directors, executive officers,
principal shareholders and affiliated entities own a significant percentage of our capital stock, and they may make decisions that
an investor may not consider to be in the best interests of our shareholders.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Our directors, executive
officers, principal shareholders and affiliated entities beneficially own, in the aggregate, approximately 28% of our outstanding
common stock. As a result, if some or all of them acted together, they would have the ability to exert substantial influence over
the election of our Board of Directors and the outcome of issues requiring approval by our shareholders. This concentration of
ownership may have the effect of delaying or preventing a change in control of our company that may be favored by other shareholders.
This could prevent the consummation of transactions favorable to other shareholders, such as a transaction in which shareholders
might otherwise receive a premium for their shares over current market prices.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Failure to maintain effective
internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business
and operating results. In addition, current and potential shareholders could lose confidence in our financial reporting, which
could have a material adverse effect on the price of our common stock. </B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Effective internal controls
are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial
reports or prevent fraud, our results of operation could be harmed.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">Section 404 of the Sarbanes-Oxley
Act of 2002 requires annual management assessments of the effectiveness of our internal controls over financial reporting and a
report by our independent registered public accounting firm addressing these assessments. We continuously monitor our existing
internal controls over financial reporting systems to confirm that they are compliant with Section 404, and we may identify deficiencies
that we may not be able to remediate in time to meet the deadlines imposed by the Sarbanes-Oxley Act. This process may divert internal
resources and will take a significant amount of time and effort to complete.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left">If, at any time, it is determined
that we are not in compliance with Section 404, we may be required to implement new internal control procedures and reevaluate
our financial reporting. We may experience higher than anticipated operating expenses as well as increased independent auditor
fees during the implementation of these changes and thereafter. Further, we may need to hire additional qualified personnel. If
we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to
time, we may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance
with Section 404 of the Sarbanes-Oxley Act, which could result in our being unable to obtain an unqualified report on internal
controls from our independent auditors. Failure to maintain an effective internal control environment could also cause investors
to lose confidence in our reported financial information, which could have a material adverse effect on the price of our common
stock.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Compliance with changing regulation
of corporate governance and public disclosure may result in additional expenses, divert management&rsquo;s attention from operating
our business which could have a material adverse effect on our business.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 11.5pt 10pt 0; text-align: left"><FONT STYLE="color: black">There
have been other changing laws, regulations and standards relating to corporate governance and public disclosure in addition to
the Sarbanes-Oxley Act, as well as new regulations promulgated by the Commission and rules promulgated by the national securities
exchanges, including the </FONT>NYSE Amex<FONT STYLE="color: black"> and the NASDAQ. These new or changed laws, regulations and
standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application
in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing
uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
As a result, our efforts to comply with evolving laws, regulations and standards are likely to continue to result in increased
general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance
activities. Our board members, Chief Executive Officer and Chief Financial Officer could face an increased risk of personal liability
in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified board
members and executive officers, which could have a material adverse effect on our business. If our efforts to comply with new or
changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies, we may incur additional
expenses to comply with standards set by regulatory authorities or governing bodies which would have a material adverse effect
on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"></P>

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<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>The issuance of preferred stock
or additional shares of common stock could adversely affect the rights of the holders of shares of our common stock.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Our Board of Directors is authorized
to issue up to 100,000,000 shares of preferred stock without any further action on the part of our shareholders. Our Board of Directors
has the authority to fix and determine the voting rights, rights of redemption and other rights and preferences of preferred stock.
Currently, we have no shares of preferred stock outstanding.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">Our Board of Directors may, at any
time, authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon
liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right
to the redemption of the shares, together with a premium, before the redemption of our common stock, which may have a material
adverse effect on the rights of the holders of our common stock. In addition, our Board of Directors, without further shareholder
approval, may, at any time, issue large blocks of preferred stock. In addition, the ability of our Board of Directors to issue
shares of preferred stock without any further action on the part of our shareholders may impede a takeover of our company and may
prevent a transaction that is favorable to our shareholders.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">According
to the Israeli Securities Law, we are allowed to issue securities with preferential rights with respect to dividends but such securities
may not include voting rights. Any such issuance is subject to TASE approval, which is not typically obtained. The foregoing does
not limit our liability to issue and grant options and warrants for the</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our
ability to utilize net operating loss carryforwards may be limited.</FONT></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left"><B>Our ability to utilize net operating
loss carryforwards may be limited.</B></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: left">The net operating loss carryforwards
(&ldquo;NOLs&rdquo;) of the Company as of September 30, 2010, equal to approximately $9 million, may be restricted under Section
382 of the Internal Revenue Code of 1986, as amended (the &ldquo;Code&rdquo;). Section 382 of the Code imposes limitations on a
corporation&rsquo;s ability to utilize NOLs to offset taxable income if the corporation experiences an &ldquo;ownership change.&rdquo;
In general terms, an &ldquo;ownership change&rdquo; may result from transactions increasing the ownership of certain stockholders
in the stock of a corporation by more than 50% over a three-year period. In the event that an ownership change has occurred, or
were to occur, utilization of our NOLs would be subject to an annual limitation under Section 382, which is generally the fair
market value of the pre-change entity multiplied by the long-term tax exempt rate, which is published monthly by the Internal Revenue
Service.</P>



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