<SEC-DOCUMENT>0001144204-11-002606.txt : 20110331
<SEC-HEADER>0001144204-11-002606.hdr.sgml : 20110331
<ACCEPTANCE-DATETIME>20110118134511
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-11-002606
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20110118

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			XTL BIOPHARMACEUTICALS LTD
		CENTRAL INDEX KEY:			0001023549
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		XTL BIOPHARMACEUTICALS LTD
		STREET 2:		C/O ALSTON & BIRD LLP, 90 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10016
		BUSINESS PHONE:		972 9 955 7080

	MAIL ADDRESS:	
		STREET 1:		85 MEDINAT HAYEHUDIM ST.
		STREET 2:		PITUACH, PO BOX 4033
		CITY:			HERZLIYA
		STATE:			L3
		ZIP:			46140
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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      F. McElreath</font></div>
            </td>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Direct
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Date">January 18, 2011</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">VIA:</font></div>
            </td>
            <td align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">UPS
      and EDGAR</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Address">Mr. Jeffrey P. Riedler</a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assistant
Director</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">United
States Securities and Exchange Commission</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100 F
Street, N.E.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Division
of Corporation Finance</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mail Stop
4720</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: times new roman">RE:</font></div>
              </td>
              <td align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: times new roman">XTL
      Biopharmaceuticals Ltd.</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div><a name="Re" />
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form 20-F
filed June 30, 2010</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">File No.
000-51310</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Salutation">Dear Mr. Riedler:</a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Body">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;At
the request and on behalf of our client, XTL Biopharmaceuticals Ltd. (the
&#8220;Company&#8221;), we hereby submit the following responses to the comments of the
Staff of the Securities and Exchange Commission (the &#8220;Commission&#8221;) dated
December 6, 2010 and received by letter on January 4, 2011, relating to the
Company&#8217;s Annual Report on Form 20-F for the year ended December 31, 2009 (File
No. 000-51310) (the &#8220;Form 20-F&#8221;).&#160;&#160;These responses have been prepared
by the Company with our assistance.</a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Comment:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Form
20-F</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Intellectual Property and
Patent</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">DOS, page
27</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1. Please disclose the jurisdiction(s)
where you have obtained, or your licensor has obtained, patent protection with
respect to DOS.&#160;&#160;Similar information should also be provided with
respect to your pending patent applications.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Response:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company proposes to make the following disclosure regarding the jurisdictions of
patent protection with respect to DOS in its future filings under the Securities
Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;), with the
Commission.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Atlanta &#8226;
Charlotte &#8226; Dallas &#8226; Los Angeles &#8226; New York &#8226; Research Triangle &#8226; Silicon Valley
&#8226; Ventura County &#8226; Washington, D.C.</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt">Page 2<br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Issued
Patents</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has obtained patents that have been issued in Nigeria and the United
States.&#160;&#160;The specific identities and issue dates of these patents are
the subject of a confidential treatment request that has been
granted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pending
Patents</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has patent protection pending in the jurisdictions of Australia, Canada,
China, Egypt, Eurasia, Europe, India, Japan, South Africa and the United
States.&#160;&#160;The specific identities of the pending patents are the
subject of a confidential treatment request that has been granted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company believes that additional information on patent protection with respect
to DOS should not be disclosed in the Form 20-F or Exchange Act filings to be
filed in the future as long as the confidential treatment request covering that
information remains in effect.&#160;&#160;Specific information on intellectual
property in the biopharmaceutical industry is one of the most highly guarded
secrets to development stage companies and the Company believes it would be at a
substantial competitive disadvantage if it were required to disclose any
additional information about such patent information. Furthermore, the Company
does not want to disclose any further information on issued patents because such
disclosure about one jurisdiction may cause inadvertent disclosure regarding
similar patents that are pending in other jurisdictions.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Comment:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Form
20-F</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Material Contracts, page
74</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2. We note your discussion of the
VivoQuest and Presidio agreements omits a discussion of the duration of the
agreements, termination provisions, or a range of royalty payments that may be
due or payable, as may be applicable.&#160;&#160;Please disclose all of the
material terms of these agreements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Response:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company proposes to make the following disclosures regarding the duration,
termination provisions and ranges of royalty payments that may be due or payable
under each of the following material agreements:&#160;&#160;the License
Agreement dated as of August 11, 2005, between VivoQuest, Inc. and XTL
Biopharmaceuticals Ltd. (the &#8220;VivoQuest License Agreement&#8221;) and the Amended and
Restated License Agreement dated August 4, 2008, by and between Presidio
Pharmaceuticals, Inc. and XTL Biopharmaceuticals Ltd. (the &#8220;Presidio License
Agreement&#8221;) (collectively, the &#8220;Agreements&#8221;).&#160;&#160;The Company will follow
this disclosure format in its future filings under the Exchange Act with the
Commission.&#160;&#160;For your convenience, we have marked with underline and
strike through portions of the disclosure which differ from what the Company
included in the Form 20-F.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">Page 3</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Material
Contracts</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">VivoQuest
Inc.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In August
2005, we entered into an asset purchase agreement with VivoQuest, a privately
held biotechnology company based in the US, pursuant to which we agreed to
purchase from VivoQuest certain assets, including VivoQuest&#8217;s laboratory
equipment, and to assume VivoQuest&#8217;s lease of its laboratory space. In
consideration, we paid $450,000 to VivoQuest, which payment was satisfied by the
issuance of ordinary shares having a fair market value in the same amount as of
the closing date.&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><font>The</font>
asset purchase was completed in September 2005.</font>&#160;&#160;In addition,
we entered into a license agreement with VivoQuest pursuant to which we acquired
exclusive worldwide<font style="DISPLAY: inline; TEXT-DECORATION: underline">,
perpetual, irrevocable and non-terminable</font> rights to VivoQuest&#8217;s <font style="DISPLAY: inline; TEXT-DECORATION: underline">patents,</font> intellectual
property and technology.&#160; The license covers a proprietary compound
library, including VivoQuest&#8217;s lead HCV compounds, that was developed through
the use of Diversity Oriented Synthesis, or DOS, technology. The terms of the
license agreement include an initial upfront license fee of approximately
$941,000 that was paid in our ordinary shares.&#160; The license agreement also
provides for additional milestone payments triggered by certain regulatory and
sales targets.&#160; The milestone payments amount <font style="DISPLAY: inline; TEXT-DECORATION: underline">to an aggregate</font> of
$34 million, $25 million of which will be due upon or following regulatory
approval or actual product sales, and are payable in cash or ordinary shares at
our election.&#160; In addition, the license agreement requires that we make
royalty payments on product sales.&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: line-through">The asset purchase
agreement and the license agreement with VivoQuest were was completed in
September 2005.</font>&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">The license remains in force
on a country-by-country basis until ten years from the first commercial sale in
such country or until the expiration date of the last to expire of the licensed
patents, whichever is later.&#160;&#160;Upon the expiration of a license in any
country, the license shall be fully paid-up, royalty free and perpetual in such
country.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Presidio
Pharmaceuticals, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2008, and as revised August 2008, we signed an agreement to out-license the DOS
program to Presidio Pharmaceuticals, Inc., or Presidio, a specialty
pharmaceutical company focused on the discovery, in-licensing, development and
commercialization of novel therapeutics for viral infections, including HIV and
HCV. Under the terms of the license agreement, as revised, Presidio <font style="DISPLAY: inline; TEXT-DECORATION: underline">was granted a license for
patent rights and technology relating to the DOS program, and</font> became
responsible for all further development and commercialization activities and
costs relating to our DOS program.&#160; In accordance with the terms of the
license agreement, we received a $5.94 million, non-refundable, upfront payment
in cash from Presidio and <font style="DISPLAY: inline; TEXT-DECORATION: line-through">will</font> are <font style="DISPLAY: inline; TEXT-DECORATION: underline">eligible to</font> receive
up to an additional <font style="DISPLAY: inline; TEXT-DECORATION: underline">aggregate amount of</font>
$59 million upon reaching certain development and commercialization
milestones.&#160;&#160;In addition, we will receive a royalty <font style="DISPLAY: inline; TEXT-DECORATION: underline">range of 1% to 10%</font> on
direct product sales by Presidio, and a percentage of Presidio&#8217;s income if the
DOS program is sublicensed by Presidio to a third party.&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">The license remains in
effect until the expiration of all of Presidio&#8217;s payment obligations, including
milestone and royalty payments.&#160;&#160;Upon expiration of the agreement, on
a licensed product-by-product and country-by-country basis, the license granted
to Presidio shall convert to a non-exclusive, perpetual, fully paid-up,
non-royalty-bearing license.&#160;&#160;Presidio may terminate the license
agreement at any time upon ninety days written notice to us, after which
Presidio must return the licensed intellectual property to us and cease
development and commercialization for a period of ten years.</font></font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">Page 4</div><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company believes that additional information on the milestone payments and
royalty rates contained in the VivoQuest License Agreement and the Presidio
License Agreement should not be disclosed in the Form 20-F or Exchange Act
filings to be filed in the near-future.&#160;&#160;Milestone payments and
royalty rates in biopharmaceutical licensing agreements are one of the most
highly negotiated terms and the Company believes it would be at a substantial
competitive disadvantage if it were required to disclose any additional
information about such payments and rates at this time.&#160;&#160;The Company&#8217;s
ability to negotiate future license agreements could be negatively impacted
because future potential licensors would have knowledge of the range of such
milestone payments and royalty rates contained in the Agreements.&#160;&#160;In
addition, disclosure of such payments and rates could cause current licensors to
attempt to renegotiate their agreement with the Company.&#160;&#160;The Company
has previously been granted confidential treatment on specific milestone
payments and royalty rates in the Agreements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition to the competitive issues involved in disclosing more information on
the milestone payments and royalty rates under the Agreements, the Company
believes that more information is not appropriate at this time because the
milestone payments and royalty rates do not constitute material
information.&#160;&#160;Presidio is responsible for all further development and
commercialization activities relating to the DOS program.&#160;&#160;The Company
only receives news of major developments and breakthroughs as they are
discovered by Presidio and, therefore, we are not made aware of applicable
milestone and royalty events until they occur.&#160;&#160;Accordingly, the
Company believes that the uncertainty of the time period before any payments
would be received or paid, and the risks inherent in any drug development
process, make the amount of any milestone payment or royalty rate presently
immaterial.&#160;&#160;The Company will continue to monitor the development of
the drugs under the Agreements, and the resulting status of milestone or royalty
payments, and when more information about the such payments become material, the
Company hereby confirms that it will include additional information disclosures
in its filings under the Exchange Act.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has authorized us to acknowledge on its behalf that (i) the Company is
responsible for the adequacy and accuracy of the disclosure in the Form 20-F;
(ii) staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect to the Form
20-F; and (iii) the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If you
have any further questions, comments or informational requests relating to this
matter, please do not hesitate to contact me at the telephone number
above.</font></div>
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              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Sincerely,</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <tr>
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              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="top" width="3%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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              <td align="left" nowrap valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/&#160;<a name="fullname">Mark F. McElreath</a></font></td>
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              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" nowrap valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="fullname">Mark F. McElreath</a></font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Partner</font></td>
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              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
Executive Officer</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">XTL
Biopharmaceuticals Ltd.</font></div>
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