As filed with the Securities and Exchange Commission on May 28, 2013.

Registration No. 333-187870

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Amendment No. 2 to
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

KAMADA LTD.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

 

Israel		2834		Not applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

7 Sapir St.
Kiryat Weizmann Science Park
P.O Box 4081
Ness Ziona 74140
Israel
Attention: David Tsur
Chief Executive Officer
+972 8 9406472

(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)

 

Puglisi & Associates
850 Library Avenue, Suite 204
P.O. Box 885, Newark, Delaware 19715
(302) 738-6680

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

 

Bruce A. Mann, Esq. Andrew D. Thorpe, Esq. Kevin Yung, Esq. Morrison & Foerster LLP 425 Market Street San Francisco, CA 94105 (415) 268-7000		Raz Tepper, Adv. Ronald Lehmann, Adv. Sharon Rosen, Adv. Fischer Behar Chen Well Orion & Co. 3 Daniel Frisch St. Tel-Aviv, 64731, Israel +972 3 6944111		Michael Kaplan, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000		Chaim Friedland, Adv. Ari Fried, Adv. Gornitzky & Co. Zion Building 45 Rothschild Boulevard Tel Aviv, 65784, Israel +972 3 7109191

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act,

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please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)
Issued May 28, 2013

5,582,636 SHARES

ORDINARY SHARES

Kamada Ltd. is offering 5,582,636 ordinary shares. This is our initial public offering in the United States. Our ordinary shares are listed on the Tel Aviv Stock Exchange (the “TASE”) under the symbol “KMDA.” On May 12, 2013, the last reported sale price of our ordinary shares on the TASE was NIS 38.24, or $10.75, per share (based on the exchange rate reported by the Bank of Israel on such date, which was NIS 3.5580 per U.S. $1.00).

We have been approved to list our ordinary shares on the Nasdaq Global Select Market under the symbol “KMDA.”

We are an “emerging growth company” under the federal securities laws. Investing in our ordinary shares involves risks. See “Risk Factors” beginning on page 15 .

PRICE $     A SHARE

Price to Public

Underwriting Discounts and Commissions

Proceeds to Company (1)

Per Share

$

$

$

Total

$

$

$

(1)

Expenses related to the review and qualification of the offering of the ordinary shares by the Financial Regulatory Authority, Inc. (“FINRA”) and financial advisory fees will be paid by us. See “Underwriters.”

Kamada Ltd. has granted the underwriters the right to purchase up to an additional 837,395 ordinary shares to cover over-allotments.

The Securities and Exchange Commission, the Israeli Securities Authority and state regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the ordinary shares to purchasers on            , 2013.

MORGAN STANLEY		JEFFERIES

RBC Capital Markets

Oppenheimer & Co.

H.C. Wainwright & Co., LLC

           , 2013

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Prospectus Summary			1
Risk Factors			15
Special Note Regarding Forward-Looking Statements			45
Price Range of our Ordinary Shares			46
Use of Proceeds			47
Dividend Policy			48
Capitalization			49
Dilution			50
Selected Consolidated Financial Data			51
Management’s Discussion and Analysis of Financial Condition and Results of Operations			55
Business			78
Management			108
Principal Shareholders			128
Certain Relationships and Related Party Transactions			131
Description of Share Capital			134
Shares Eligible for Future Sale			139
Taxation and Government Programs			141
Underwriters			150
Expenses Relating to this Offering			155
Legal Matters			156
Experts			156
Enforceability of Civil Liabilities			157
Where You Can Find Additional Information			159
Index to Consolidated Financial Statements			F-1

 

Neither we nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters take any responsibility for, or can provide any assurance as to the reliability of, any information other than the information in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus prepared by us or on our behalf. We are offering to sell ordinary shares and seeking offers to buy ordinary shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ordinary shares.

We have not taken any action to permit a public offering of the ordinary shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of this prospectus outside of the United States.

The (i) audited consolidated financial statements as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010 and the (ii) unaudited consolidated financial statements as of March 31, 2013 and 2012 and for the three months ended March 31, 2013 and 2012 in this prospectus have been prepared in accordance with the international financial reporting standards (“IFRS”) as issued by the international accounting standards board (“IASB”). None of the financial information in this prospectus has been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

Unless otherwise noted, NIS amounts presented in this prospectus are translated at the rate of $1.00 = NIS 3.73, the exchange rate published by the Bank of Israel as of December 31, 2012.

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We operate in two segments: the Proprietary Products segment, in which we develop and manufacture plasma-derived therapeutics and market them in more than 15 countries, and the Distribution segment, in which we distribute drugs manufactured by third-parties for critical use in Israel, most of which are produced from plasma or its derivative products.

Our Competitive Strengths

We believe our position in the market is attributable to the following strengths:

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Our Strategy

We intend to grow our company by pursuing the following strategies:

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Our Existing Products

Our existing products include plasma-derived protein therapeutics that are administered intravenously, intramuscularly or by inhalation and either produced in our Proprietary Products segment or marketed and sold in our Distribution segment. The following chart sets forth our primary products in our Proprietary Products segment, as well as the countries in which the products are currently approved or marketed as indicated:

Product		Indication		Active Ingredient		Geography
Respiratory
Glassia (or Respira/RespiKam/Ventia in certain countries)		Intravenous AATD		Alpha-1 Antitrypsin (human)		United States, Israel, Russia*, Slovenia, Brazil, Croatia and Argentina*
Immunoglobulins
KamRAB		Prophylaxis of rabies disease		Anti-rabies immunoglobulin (human)		Israel, India, Thailand, El Salvador, Russia*, and Mexico* and Korea
KamRho (D) IM		Prophylaxis of hemolytic disease of newborns		Rho(D) immunoglobulin (human)		Israel, Brazil, India, Argentina, Chile*, El Salvador, Sri Lanka, Russia, Kenya, Nigeria, Sri Lanka* and the Palestinian Authority
KamRho (D) IV		Treatment of immune thermobocytopunic purpura		Rho(D) immunoglobulin (human)		Israel, India and Argentina*
Snake bite antiserum		Treatment of snake bites by the Vipera palaestinae		Anti snake venom		Israel
Other Products
Heparin Lock Flush		To maintain patency of indwelling IV catheter designed for intermittent injection therapy or blood sampling		Heparin sodium		Israel
Kamacaine 0.5%		Local or regional anesthesia or analgesia during surgery, diagnostic and therapeutic procedures and obstetrical procedures. Spinal anesthesia for surgery		Bupivacaine HCl		Israel

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Product		Indication		Active Ingredient		Geography
Human transferrin (diagnostical grade)		Not for human use		Transferrin		United States, Israel, Germany, Slovakia and France

The following chart sets forth our primary products in our Distribution segment:

Product		Indication		Active Ingredient
Respiratory
Bramitob		Management of chronic pulmonary infection due to pseudomonas aeruginosa in patients six years and older with cystic fibrosis		Tobramycin
Immunoglobulins
IVIG 5%		Treatment of various immunodeficiency-related conditions		Gamma globulins (IgG) (human)
Varitect		Preventive treatment after exposure to the virus which causes chicken pox and zoster herpes		Varicella zoster immunoglobulin (human)
Hepatect CP		Prevent contraction of Hepatitis B by adults and children older than two years		Hepatitis B immunoglobulin (human)
Megalotect		Contains antibodies which neutralize cytomegalovirus viruses and prevent their spread in immunologically impaired patients		CMV immunoglobulin (human)
Critical Care
Heparin sodium injection		Treatment of thrombo-embolic disorders such as deep vein thrombosis, acute arterial embolism or thrombosis, thrombophlebitis, pulmonary embolism, fat embolism. Prophylaxis of deep vein thrombosis and thromboembolic events		Heparin sodium
Albumin		Maintains a proper level in the patient’s blood plasma		Human serum Albumin
Coagulation Factors
Factor VIII		Treatment of Hemophilia Type A diseases		Coagulation Factor VIII (human)
Factor IX		Treatment of Hemophilia Type B disease		Coagulation Factor IX (human)

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Our Product Pipeline

We are in various stages of clinical development of new products for our Proprietary Products segment that constitute the next generation of products. The following table sets forth our primary product pipeline in our Proprietary Products segment, each such product’s stage of clinical trials, markets in which the product has been approved and our strategic marketing partners, where applicable, for such product or product candidate:

Risks Associated with Our Business

Our business is subject to a number of risks you should be aware of before making an investment decision, as our failure to adequately manage these risks may significantly harm our business. These risks are discussed more fully under the caption “Risk Factors,” and include, but are not limited to, the following:

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Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Thus, we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies generally. For example, we may elect not to have our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting, as would otherwise be required by Section 404(b) of the Sarbanes-Oxley Act (“S-OX”).

We will cease to be an “emerging growth company” upon the earliest of:

The JOBS Act also provides that an “emerging growth company” can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. However, we are choosing to “opt out” of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Corporate Information

We were founded in Israel in 1990. In August 2005, we successfully completed an initial public offering on the TASE. The address of our principal executive office is 7 Sapir St., Kiryat Weizmann Science Park, P.O. Box 4081, Ness Ziona 74140, Israel, and our telephone number is +972 8 9406472. Our website address is www.kamada.com. The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this prospectus.

Our trademarks indicated in this prospectus include Glassia, Kamada, KamRAB, Kamada-Respira, RespiKam, Respira, Rebinolin and Ventia. All other trademarks or service marks appearing in this prospectus are the property of their respective holders.

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The number of ordinary shares to be outstanding after our initial public offering is based on 28,723,998 ordinary shares outstanding as of March 31, 2013, and excludes:

Unless expressly indicated or the context requires otherwise, all information in this prospectus assumes:

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		Three months ended March 31,								Year Ended December 31,
		2013				2012				2012				2011				2010
		(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues from Proprietary Products		$	8,060			$	12,478			$	46,445			$	35,308			$	22,980
Revenues from Distribution			4,536				7,124				26,230				24,175				11,497
Total revenues			12,596				19,602				72,675				59,483				34,477
Cost of revenues from Proprietary Products			4,562				7,595				26,911				22,188				18,878
Cost of revenues from Distribution			3,839				6,384				23,071				20,574				9,827
Total cost of revenues			8,401				13,979				49,982				42,762				28,705
Gross profit			4,195				5,623				22,693				16,721				5,772
Research and development expenses			3,730				3,466				11,821				11,729				9,279
Selling and marketing expenses			513				472				1,853				2,331				2,152
General and administrative expenses			1,256				1,348				4,781				5,126				4,543
Operating income (loss)			(1,304	)			337				4,238				(2,465	)			(10,202	)
Financial income			86				183				578				870				560
Income (expense) in respect of currency exchange and translation differences and derivatives instruments, net			62				(64	)			(100	)			937				(1,052	)
Income (expense) in respect of revaluation of warrants to fair value			—				(55	)			(576	)			540				(640	)
Financial expense			(855	)			(873	)			(3,357	)			(3,597	)			(3,088	)
Income (loss) before taxes on income			(2,011	)			(472	)			783				(3,715	)			(14,421	)
Taxes on income			24				—				523				—				—
Net income (loss)		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)
Income (loss) attributable to equity holders		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)
Income (loss) per share attributable to equity holders:
Basic		$	(0.07	)		$	(0.02	)		$	0.01			$	(0.13	)		$	(0.54	)
Diluted		$	(0.07	)		$	(0.02	)		$	0.01			$	(0.15	)		$	(0.54	)
Weighted-average number of ordinary shares used to compute income (loss) per share attributable to equity holders:
Basic			28,677,370				27,607,342				28,078,996				27,550,643				26,674,717
Diluted			28,677,370				27,607,342				28,686,636				27,703,331				26,674,717
Pro forma earnings per share attributable to equity holders (1) :
Basic		$	(0.06	)						$	0.01
Diluted		$	(0.06	)						$	0.01
Consolidated Statements of Cash Flows:
Cash flows from operating activities			500			$	(7,133	)		$	(8,262	)		$	994			$	10,037
Cash flows from investing activities			5,295				(3,383	)			(2,432	)			(1,136	)			(22,183	)
Cash flows from financing activities			(348	)			103				2,966				(403	)			7,430
Other Data:
Adjusted net income (loss) (2) (3)		$	(1,822	)		$	(69	)		$	2,103			$	(3,377	)		$	(12,161	)
Adjusted EBITDA (2) (4)			(268	)			1,437				8,549				1,453				(5,941	)

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										As of December 31,
		As of March 31, 2013								2012				2011				2010
		As Adjusted (5)				Actual
		(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents, restricted cash and short-term investments		$	86,887			$	33,036			$	33,795			$	42,686			$	46,071
Trade receivables			9,177				9,177				13,861				7,131				12,827
Working capital (6)			90,505				37,725				40,651				44,185				51,545
Total assets			141,781				88,551				89,114				85,114				91,496
Total liabilities			61,725				61,825				60,721				62,716				65,172
Total shareholders’ equity			80,056				26,726				28,393				22,398				26,324

Non-IFRS financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, our IFRS results. We expect to continue reporting non-IFRS financial measures, adjusting for the items described below, and we expect to continue to incur expenses similar to the non-cash, non-IFRS adjustments described below. Accordingly, unless otherwise stated, the exclusion of these and other similar items in the presentation of non-IFRS financial measures should not be construed as an inference that these items are unusual, infrequent or non-recurring. Adjusted net income (loss) and adjusted EBITDA are not recognized terms under IFRS and do not purport to be an alternative to IFRS net income (loss) as an indicator of operating performance or any other IFRS measure. Moreover, because not all companies use identical measures and calculations, the presentation of adjusted net income (loss) or adjusted EBITDA may not be comparable to other similarly titled measures of other companies. A reconciliation of our net income (loss) under IFRS to adjusted net income (loss) and to adjusted EBITDA is set forth below in “Selected Consolidated Financial Data.”

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approval processes of the FDA, the EMA, the regulatory authorities in Israel or any other applicable regulatory authority or agency for any of our product candidates will take or whether any such approvals ultimately will be granted. The FDA, the EMA, the regulatory authorities in Israel and other regulatory agencies have substantial discretion in the drug approval process, and positive results in preclinical testing or early phases of clinical studies offer no assurance of success in later phases of the approval process. The approval process varies from country to country and the requirements governing the conduct of clinical trials, product manufacturing, product licensing, pricing and reimbursement vary greatly from country to country.

Preclinical and clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, preclinical testing and the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including:

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we contemplate, if we are unable to successfully complete our clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive or if safety concerns arise, we may:

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Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, if at all. Significant preclinical or clinical trial delays also could shorten the patent protection period during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market before we do, impairing our ability to commercialize our products or product candidates. For example, in the past, we have experienced delays in the commencement of clinical trials, such as a delay in patient enrollment for our clinical trials in Europe for Inhaled AAT for AATD and a delay in receiving approval for the commencement of Phase II trials in the United States for Inhaled AAT for AATD until further preclinical testing results were submitted.

Even if preclinical trials are successful, we still may be unable to commercialize a product because of difficulties in obtaining regulatory approval for its engineering process or problems in scaling that process to commercial production.

Pre-clinical studies, including studies of our product candidates in animal models of disease, may not accurately predict the result of human clinical trials of those product candidates. In particular, new indications for our AAT products that are entering into Phase I and II clinical trials may be found not to be safe and/or efficacious when studied further in Phase III trials. To satisfy FDA or foreign regulatory approval standards for the commercial sale of our product candidates, we must demonstrate in adequate and controlled clinical trials that our product candidates are safe and effective. Success in early clinical trials, including Phase II trials, does not ensure that later clinical trials will be successful. Initial results from Phase I and II clinical trials also may not be confirmed by later analysis or subsequent larger clinical trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after obtaining promising results in earlier clinical trials.

We cannot provide assurance that any products we may seek to develop or are currently developing, such as Inhaled AAT for AATD, will ever be successfully commercialized, and to the extent they are not successfully commercialized, such products could be a significant expense with no reward.

We may not obtain orphan drug status for our products, or we may lose orphan drug designations, which would have a material adverse effect on our business.

Many of our products and product candidates, including Inhaled AAT for AATD, have been granted the designation of an orphan drug. One of the incentives provided by an orphan drug designation is market exclusivity for seven years in the United States and ten years in the European Union for the first product in a class approved for the treatment of a rare disease. While the marketing exclusivity of an orphan drug would prevent other sponsors from obtaining approval of the same drug compound for the same indication unless the subsequent sponsors could demonstrate clinical superiority or a market shortage occurs, it would not prevent other sponsors from obtaining approval of the same compound for other indications or the use of other types of drugs for the same use as the orphan drug. We may not be the first product licensed for the treatment of a rare disease. In such a situation, we would not be able to take advantage of market exclusivity and instead the other sponsor would receive such exclusivity. In the event we are unable to fill demand for any orphan drug, it is possible that the FDA or the EMA may view such unmet demand as a market shortage which could impact the market exclusivity. The FDA or the EMA may also, in the future, revisit any orphan drug designation it has conferred upon a drug and retains the ability to withdraw the designation at any time. Additionally, the U.S. Congress has considered, and may consider in the future, legislation that would restrict

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the duration or scope of the market exclusivity of an orphan drug and, thus, we cannot be sure that the benefits to us of the existing statute will remain in effect.

The commercial success of any products that we may develop, if any, will depend upon the degree of market acceptance by physicians, patients, healthcare payors, opinion leaders, patients’ organizations and others in the medical community.

Any products that we bring to the market may not gain market acceptance by physicians, patients, healthcare payors, opinion leaders, patients’ organizations and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate material product revenue and we may not sustain profitability. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, some of which are beyond our control, including:

If we are not successful in achieving market acceptance for any new products that we have developed and have been approved for commercial sale, we may be unable to recover the large investment we have made and plan to make in research and development efforts and our growth strategy will be adversely affected.

Our products involve biological intermediates that are susceptible to contamination, which could adversely affect our operating results.

Plasma and its derivatives, such as fraction IV, are raw materials that are susceptible to damage and contamination and may contain microorganisms that cause diseases in humans, commonly known as human pathogens, any of which would render such materials unsuitable as raw material for further manufacturing. Almost immediately after collection from a donor, plasma and plasma derivatives must be stored and transported at temperatures that are at least -20 degrees Celsius (-4 degrees Fahrenheit). Improper storage or transportation of plasma or plasma derivatives by us or third-party suppliers may require us to destroy some of our raw material. In addition, plasma and plasma derivatives are also suitable for use only for certain periods of time once removed from storage. If unsuitable plasma or plasma derivatives are not identified and discarded prior to release to our manufacturing processes, it may be necessary to discard intermediate or finished products made from that plasma or plasma derivatives, or to recall any finished product released to the market, resulting in a charge to cost of goods sold and harm to our brand and reputation. Furthermore, if we distribute plasma-derived protein therapeutics that are produced from unsuitable plasma because we have not detected any contaminants or impurities, we could be subject to product liability claims and our reputation would be adversely affected.

Additionally, despite overlapping safeguards, including the screening of donors and other steps to remove or inactivate viruses and other infectious disease-causing agents, the risk of transmissible disease through plasma-derived protein therapeutics cannot be entirely eliminated. If a new infectious disease was to emerge in the human population, the regulatory and public health authorities could impose precautions to limit the transmission of the disease that would impair our ability to manufacture our products. Such precautionary measures could be taken before there is conclusive medical or scientific evidence that a disease poses a risk for plasma-derived protein therapeutics. In recent years, new testing and viral inactivation methods have been developed that more effectively detect and inactivate infectious viruses in collected plasma. There can be no assurance, however, that such new testing and inactivation methods will adequately screen for, and inactivate,

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infectious agents in the plasma or plasma derivatives used in the production of our plasma-derived protein therapeutics. Additionally, this could trigger the need for changes in our existing inactivation and production methods, including the administration of new detection tests, which could result in delays in production until the new methods are in place, as well as increased costs that may not be readily passed on to our customers.

Plasma and plasma derivatives can also become contaminated through the manufacturing process itself, such as through our failure to identify and purify the contaminant through our manufacturing process or failure to maintain a high level of sterility within our manufacturing facilities.

Once we have manufactured our plasma-derived protein therapeutics, they must be handled carefully and kept at appropriate temperatures. Our failure, or the failure of third parties that supply, ship or distribute our products, to properly care for our plasma-derived products may result in the requirement that such products be destroyed.

While we expect to write off small amounts of work-in-process inventories in the ordinary course of business because of the complex nature of plasma and plasma derivatives, our processes and our plasma-derived protein therapeutics, unanticipated events may lead to write-offs and other costs materially in excess of our expectations. We had in the past situations that have caused us to write off the value of our product. For example, in the past year, we have had to discard an immaterial amount of inventory that did not pass our inspections due to deviations in the production process that had created a higher risk of contamination. Such write-offs and other costs could cause material fluctuations in our operating results. Furthermore, contamination of our plasma-derived protein therapeutics could cause consumers or other third parties with whom we conduct business to lose confidence in the reliability of our manufacturing procedures, which could adversely affect sales and operating results.

Our ability to continue manufacturing and distributing our plasma-derived protein therapeutics depends on our continued adherence to cGMP regulations.

The manufacturing processes for our products are governed by detailed written procedures and regulations that set forth cGMP requirements for blood products, including plasma and plasma derivative products. Failure by our quality operations unit to adhere to established procedures or regulations, or to meet a specification set forth in cGMP requirements, could require that a product or material be rejected and destroyed. There are relatively few opportunities for us to rework, reprocess or salvage nonconforming materials or products. Our manufacturing process and facilities are not currently approved by the EMA, and we will need to obtain such approval prior to beginning manufacture of products (including Inhaled AAT for AATD) to be marketed and sold in Europe.

Our adherence to cGMP regulations and the effectiveness of our quality control systems are periodically assessed through inspections of our manufacturing facility in Beit Kama, Israel by the FDA and regulatory authorities of other countries. Such inspections could result in deficiency citations, which would require us to take action to correct those deficiencies to the satisfaction of the applicable regulatory authorities. If serious deficiencies are noted or if we are unable to prevent recurrences, we may have to recall products or suspend operations until appropriate measures can be implemented. We are required to report certain deviations from procedures to the FDA. Even if we determine that the deviations were not material, the FDA could require us to take certain measures to address the deviations. Since cGMP reflects ever-evolving standards, we regularly need to update our manufacturing processes and procedures to comply with cGMP. These changes may cause us to incur additional costs and may adversely impact our profitability. For example, more sensitive testing assays (if and when they become available) may be required or existing procedures or processes may require revalidation, all of which may be costly and time-consuming and could delay or prevent the manufacturing of a product or launch of a new product.

The biologic properties of plasma and plasma derivatives are variable, which may adversely impact our levels of product yield from our plasma or plasma derivative supply.

Due to the nature of plasma, there will be variations in the biologic properties of the plasma or plasma derivatives we purchase that may result in fluctuations in the obtainable yield of desired fractions, even if cGMP is followed. Lower yields may limit production of our plasma-derived protein therapeutics because of capacity constraints. If these batches of plasma with lower yields impact production for extended periods, we

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may not be able to fulfill orders on a timely basis and the total capacity of product that we are able to market could decline and our cost of goods sold could increase, thus reducing our profitability.

Usage of our products may lead to serious and unexpected side effects, which could materially adversely affect our business and may, among other factors, lead to our products being recalled and our reputation being harmed, resulting in an adverse effect on our operating results.

As with many pharmaceutical products, the use of our plasma-derived protein therapeutics may produce undesirable side effects or adverse reactions or events. For the most part, these side effects are known, are expected to occur at some frequency and are described in the products’ labeling. Known side effects of a number of our plasma-derived protein therapeutics include headache, nausea and additional common protein infusion related events such as flu-like symptoms, dizziness and hypertension. The occurrence of known side effects on a large scale could adversely affect our reputation and public image, and hence also our operating results.

In addition, the use of our plasma-derived protein therapeutics may be associated with serious and unexpected side effects, or with less serious reactions at a greater than expected frequency. This may be especially true when our products are used in critically ill patient populations. When these unexpected events are reported to us, we typically make a thorough investigation to determine causality and implications for product safety. These events must also be specifically reported to the applicable regulatory authorities. If our evaluation concludes, or regulatory authorities perceive, that there is an unreasonable risk associated with one of our products, we would be obligated to withdraw the impacted lot or lots of that product or, in certain cases, to withdraw the product entirely. Furthermore, it is possible that an unexpected side effect caused by a product could be recognized only after extensive use of the product, which could expose us to product liability risks, enforcement action by regulatory authorities and damage to our reputation.

We are subject to a number of existing laws and regulations in multiple jurisdictions, non-compliance with which could adversely affect our business, financial condition and results of operations, and we are susceptible to a changing regulatory environment which could increase our compliance costs or reduce profit margins.

Any new product must undergo lengthy and rigorous testing and other extensive, costly and time-consuming procedures mandated by the FDA and similar authorities in other jurisdictions, including the EMA and the regulatory authorities in Israel. Our facilities must be approved and licensed prior to production and remain subject to inspection from time to time thereafter. Failure to comply with the requirements of the FDA or similar authorities in other jurisdictions, including a failed inspection or a failure in our reporting system for adverse effects of our products experienced by the users of our products, could result in warning letters, product recalls or seizures, monetary sanctions, injunctions to halt the manufacture and distribution of products, civil or criminal sanctions, refusal of a regulatory authority to grant approvals or licenses, restrictions on operations or withdrawal of existing approvals and licenses. In addition, we rely to a large extent on Baxter for purposes of most of our regulatory compliance for Glassia and product development and approvals in the United States relating to Glassia. Any failure by Baxter to properly advise us regarding, or properly perform tasks related to, regulatory compliance requirements could adversely affect us. If our relationship with Baxter terminated for any reason, we may be unable to maintain regulatory compliance on a cost-effective basis, if at all. Any of these actions could cause direct liabilities, a loss in our ability to market Glassia, or a loss of customer confidence in us or Glassia, which could adversely affect our sales, reputation, and results of operations.

Any changes in our production processes for our products must be approved by the FDA and similar authorities in other jurisdictions. Failure to comply with any requirements as to production process changes dictated by the FDA or similar authorities in other jurisdictions could also result in warning letters, product recalls or seizures, monetary sanctions, injunctions to halt the manufacture and distribution of products, civil or criminal sanctions, refusal of a regulatory authority to grant approvals or licenses, restrictions on operations or withdrawal of existing approvals and licenses. Recently, as part of our on-going effort to increase efficiency and profitability, we submitted a supplement with the FDA to make changes to the production processes for Glassia, which are intended to scale-up the output of our manufacturing facility and began to produce Glassia using the improved processes. In March 2013, we received a request from the FDA to submit additional data and explanations prior to its approval of our new production processes. We expect to provide the additional

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information required by the FDA during the second quarter of 2013. While such FDA review is pending, we are continuing to produce Glassia according to FDA-approved production processes. We cannot provide assurances that we will obtain approval for the improved processes on a timely basis or at all. Failure to obtain such approval, or obtaining approval only on a prospective basis, could cause us to write off the value of the inventory produced using the new methods. Delays in obtaining such approval could delay revenues from Baxter or Glassia. In addition, we would not obtain the margin benefits we are anticipating from such new operating processes and could have difficulty meeting increased demand in the future.

In addition, changes in the regulation of our activities, such as increased regulation affecting safety requirements or new regulations such as limitations on the prices charged to customers in the European Union, the United States, Israel or other jurisdictions in which we operate, could materially adversely affect our business. In addition, the requirements of different jurisdictions in which we operate may become less uniform, creating a greater administrative burden and generating additional compliance costs, which would have a material adverse effect on our profit margins.

We would become supply-constrained and our financial performance would suffer if we were unable to obtain adequate quantities of source plasma or plasma derivatives or specialty ancillary products approved by the FDA, the EMA or the regulatory authorities in Israel, or if our suppliers were to fail to modify their operations to meet regulatory requirements.

Our products that generate the majority of our revenues depend on our access to U.S. or European source plasma or its derivative, fraction IV. Our plasma and fraction IV are purchased from third-party licensed suppliers which are also responsible for the fractionation process, pursuant to multiple purchase agreements. We have entered into a number of supply agreements with various third parties in the United States and Europe, some of which are also strategic partners in the distribution of our proprietary products. These agreements contain various termination provisions, including upon a material breach of either party, force majeure and, with respect to supply agreements with strategic partners, the failure or delay on the part of either party to obtain the applicable regulatory approvals or the termination of the principal strategic relationship. If we are unable to obtain adequate quantities of source plasma or fraction IV approved by the FDA, the EMA or the regulatory authorities in Israel from these providers, we may be unable to find an alternative cost-effective source.

In order for plasma and fraction IV to be used in the manufacturing of our plasma-derived protein therapeutics, the individual centers at which the plasma is collected must be licensed and approved by the relevant regulatory authorities, such as the FDA or the EMA. When a new plasma collection center is opened, and on an ongoing basis after its licensure, it must be inspected by the FDA and the EMA and the regulatory authorities in Israel for compliance with cGMP and other regulatory requirements. An unsatisfactory inspection could prevent a new center from being licensed or lead to the suspension or revocation of an existing license. If we or relevant regulatory authorities determine a plasma collection center did not comply with cGMP in collecting plasma, we may be unable to use and may ultimately destroy plasma collected from that center, which may impact on our ability to timely meet our manufacturing and supply obligations. Additionally, if noncompliance in the plasma collection process is identified after the impacted plasma has been pooled with compliant plasma from other sources, entire plasma pools, in-process intermediate materials and final products could be impacted. Consequently, we could experience significant inventory impairment provisions and write-offs which could adversely affect our business and financial results.

In addition, the plasma supplier’s fractionation process must also meet standards of the FDA, the EMA and the regulatory authorities in Israel. If a plasma supplier is unable to meet such standards, we will not be able to use the plasma derivatives provided by such supplier, which may impact on our ability to timely meet our manufacturing and supply obligations.

If we were unable to obtain adequate quantities of source plasma or plasma derivatives approved by the FDA, the EMA or the regulatory authorities in Israel, we would be limited in our ability to maintain or increase current manufacturing levels of our plasma derivative products, as well as our ability to conduct the research required to maintain a robust product pipeline. As a result, we could experience a substantial decrease in total revenues or profit margins, a potential breach of distribution agreements, a loss of customers, a

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negative effect on our reputation as a reliable supplier of plasma derivative products or a substantial delay in our production and strategic growth plans.

The ability to increase plasma collections may be limited, our supply of plasma and plasma derivatives could be disrupted or the cost of plasma and plasma derivatives could increase substantially, as a result of numerous factors, including a reduction in the donor pool, increased regulatory requirements, decreased number of plasma supply sources due to consolidation and new indications for plasma-derived protein therapeutics, which could increase demand for plasma and plasma derivatives and lead to shortages.

We are also dependent on a number of suppliers who supply specialty ancillary products used in the production process, such as specific gels and filters. Each of these specialty ancillary products is provided by a single, exclusive supplier. If these suppliers were unable to provide us with these specialty ancillary products or if our relationships with these suppliers deteriorate, the production of our products would be materially adversely affected, which would adversely affect our sales and results of operations.

In addition, regulatory requirements, including cGMP regulations, continually evolve. Failure of our plasma suppliers to adjust their operations to conform to new standards as established and interpreted by applicable regulatory authorities would create a compliance risk that could impair our ability to sustain normal operations.

We have been required to conduct post-approval clinical trials of Glassia as a condition to marketing the product in the United States, and we may be required to conduct post-approval clinical trials as a condition to licensing or distributing other products.

When a new product is approved, the FDA or other regulatory authorities may require post-approval clinical trials, sometimes called Phase IV clinical trials. For example, the FDA has required that we conduct Phase IV clinical trials of Glassia. The trials are aimed at collecting additional safety data, such as the immune response in the body of a human or animal, commonly referred to as immunogenicity, viral transmission, levels of the protein in the lung, or epithelial lining fluid, and certain efficacy endpoints requested by the FDA. If the results of such trials are unfavorable and demonstrate a previously undetected risk or provide new information that puts the patients at risk, this could result in the loss of the approval to market the product in the United States and other countries, or the imposition of restrictions, such as additional labelling, with a resulting loss of sales. Other products we develop may face similar requirements, which would require additional resources and which may not be successful.

The nature of producing plasma-derived protein therapeutics may prevent us from responding in a timely manner to market forces and effectively managing our production capacity.

The production of plasma-derived protein therapeutics is a lengthy and complex process. Our ability to match our production of plasma-derived protein therapeutics to market demand is imprecise and may result in a failure to meet the market demand for our plasma-derived protein therapeutics or potentially in an oversupply of inventory. Failure to meet market demand for our plasma-derived protein therapeutics may result in customers transitioning to available competitive products, resulting in a loss of segment share or customer confidence. In the event of an oversupply in the market, we may be forced to lower the prices we charge for some of our plasma-derived protein therapeutics, record asset impairment charges or take other action which may adversely affect our business, financial condition and results of operations.

In our Proprietary Products segment, we currently rely on one of our strategic partners that accounts for a significant portion of our total sales and our distribution plan for our principal product candidate relies on another strategic partner, and any disruption to our relationships with these distributors would have an adverse effect on our results of operations and profitability.

We have a partnership arrangement with Baxter, pursuant to which Baxter is the sole distributor of Glassia in the United States, Canada, Australia and New Zealand. Sales to Baxter accounted for approximately 22% and 41% of our total revenues in the three months ended March 31, 2013 and 2012, respectively, and 42%, 41% and 30% of our total revenues in the years ended December 31, 2012, 2011 and 2010, respectively. Additionally, we depend upon Baxter for the supply of fraction IV plasma for our production of Glassia to be sold in the United States. See “Risk Factors — We would become supply-constrained and our financial

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performance would suffer if we were unable to obtain adequate quantities of source plasma or plasma derivatives or specialty ancillary products approved by the FDA, the EMA or the regulatory authorities in Israel, or if our suppliers were to fail to modify their operations to meet regulatory requirements.”

Currently, revenue derived from our relationship with Baxter consists solely of sales of Glassia, which we incur cost of revenues to produce. However, Baxter is expected to begin producing Glassia itself in 2017 and pay us royalties. While we would generate higher margins from royalties, as we would not incur cost of revenues, we will receive lower revenues per unit sold. We plan to replace that revenue by producing other AAT products, including for sales in Europe, and increases in the volume of units sold. If we could not obtain approval and make such sales in Europe or were unable to increase sales of our products, our revenues would be impacted and our operating results would be impacted as we would continue to incur the fixed costs relating to our manufacturing facility.

In addition, for Inhaled AAT for AATD, we intend to rely on our relationship with Chiesi for the distribution of Inhaled AAT for AATD in Europe and to obtain reimbursement for our Inhaled AAT for AATD product in Europe. Chiesi’s failure to adequately distribute or to obtain reimbursement will have a material adverse effect on our expected profitability from sales of Inhaled AAT for AATD in Europe.

If our relationship with Baxter were to deteriorate, our sales through this channel and our supply of fraction IV could be adversely affected. If we fail to maintain our relationship with Baxter or Chiesi, we could face significant costs in finding a replacement distributor for the markets Baxter and Chiesi serve for Glassia and Inhaled AAT for AATD, respectively, and a replacement supplier of fraction IV for Glassia. Delays in establishing a relationship with a new distributor and supplier could lead to a decrease in our sales and a deterioration in our market share compared to one or more of our competitors. Any of the foregoing developments could have an adverse effect upon our sales, margins and profitability.

Each inhaled formulation of AAT, including Inhaled AAT for AATD, is being developed with a specific nebulizer produced by PARI, and the occurrence of an adverse market event or PARI’s non-compliance with its obligations would have a material adverse effect on the commercialization of any inhaled formulation of AAT.

We are dependent upon PARI for the commercialization of any inhaled formulation of AAT, including our second generation AATD product, Inhaled AAT for AATD. We have an agreement with PARI, pursuant to which it is required to obtain the appropriate clearance to market PARI’s eFlow device, which is a device required for the administration of inhaled formulation of AAT, from the EMA and FDA for use with Inhaled AAT for AATD. See “Business — Strategic Partnerships — PARI.” Failure of PARI to achieve these authorizations will have a material adverse effect on the commercialization of any inhaled formulation of AAT, including Inhaled AAT for AATD, which would harm our growth strategy.

Additionally, pursuant to the agreement, PARI is obligated to manufacture and supply all of the market demand for the eFlow device for use in conjunction with any inhaled formulation of AAT and, we are required to purchase all of our volume requirements from PARI. Any event which permanently, or for an extended period, prevents PARI from supplying the required quantity of devices would have an adverse effect on the commercialization of any inhaled formulation of AAT, including Inhaled AAT for AATD.

Our Distribution segment is dependent on a few suppliers, and any disruption to our relationship with these suppliers, or their inability to supply us with the products we sell, in a timely manner, in adequate quantities and/or at a reasonable cost, would have a material adverse effect on our business, financial condition and results of operations.

Sales of products supplied by Bioproducts Laboratories Ltd. and Biotest A.G., which are sold in our Distribution segment, together represented 35% and 34% of our total revenues for the three months ended March 31, 2013 and 2012, respectively, and 35% and 39% of our total revenues for the years ended December 31, 2012 and 2011, respectively. While we have distribution agreements with each of these suppliers, these agreements do not obligate these suppliers to provide us with minimum amounts of our Distribution segment products. Purchases of our Distribution segment products from our suppliers are typically on a purchase order basis. We work closely with our suppliers to develop annual forecasts, but these forecasts are not obligations or commitments. However, if we fail to submit purchase orders that meet our annual

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forecasts, we could lose exclusivity or the agreement could be terminated. These suppliers may experience capacity constraints that result in their being unable to supply us with products in a timely manner, in adequate quantities and/or at a reasonable cost. Contributing factors to supplier capacity constraints include, among other things, industry or customer demands in excess of machine capacity, labor shortages and changes in raw material flows. These suppliers may also choose not to supply us with products at their discretion or raise prices to a level that would render our products non competitive. Any significant interruption in the supply of these products could result in us being unable to meet the demands of our customers, which would have a material adverse effect on our business, financial condition and results of operations.

Additionally, if our relationship with either were to deteriorate, our distribution sales could be adversely affected. If we fail to maintain our existing relationships with these suppliers, we could face significant costs in finding a replacement supplier, and delays in establishing a relationship with a new supplier could lead to a decrease in our sales and a deterioration in our market share compared to one or more of our competitors.

Our business requires substantial capital, including potential investments in large capital projects, to operate and grow and to achieve our strategy of realizing increased operating leverage.

In order to obtain FDA, EMA and other regulatory approval for product candidates and new indications for existing products, we are required to enhance the facilities in which and processes by which we manufacture existing products, to develop new product delivery mechanisms for existing products and to develop innovative product additions and conduct clinical trials. We face a number of obstacles that we will need to overcome in order to achieve these goals, including but not limited to the successful development of an experimental product for use in clinical trials, the design of clinical study protocols acceptable to the FDA, the EMA and other regulatory authorities, the successful outcome of clinical trials, scaling our manufacturing processes to produce commercial quantities or successfully transition technology, obtaining FDA, EMA and other regulatory approvals of our products or processes and successfully marketing an approved product or new product with our new process. To finance these various activities, we may need to incur future debt or issue additional equity, and we may not be able to structure our debt obligations on favorable economic terms. A failure to fund these activities may harm our growth strategy, competitive position, quality compliance and financial condition.

In addition, any enhancements to our manufacturing facilities necessary to obtain FDA or EMA approval for product candidates or new indications for existing products could require large capital projects. We may also undertake such capital projects in order to maintain compliance with cGMP or expand capacity. Capital projects of this magnitude involve technology and project management risks. Technologies that have worked well in a laboratory or in a pilot plant may cost more or not perform as well, or at all, in full scale operations. Projects may run over budget or be delayed. We cannot be certain that these projects will be completed in a timely manner or that we will maintain our compliance with cGMP, and we may need to spend additional amounts to achieve compliance. Additionally, by the time these multi-year projects are completed, market conditions may differ significantly from our assumptions regarding competitors, customer demand, alternative therapies, reimbursement and public policy, and as a result capital returns may not be realized. A failure to invest in large capital projects may harm our competitive position and financial condition. In addition, to fund large capital projects, we may need to incur future debt or issue additional equity, and we may not be able to structure our debt obligations on favorable economic terms. A failure to fund these activities may harm our growth strategy, competitive position, quality compliance and financial condition.

Our Proprietary Products segment operates in a highly competitive market.

We compete with well-established drug companies, including two to four large competitors for each of our products in the Proprietary Products segment. These large competitors include CSL Behring Ltd., Baxter, Cangene Corporation and Grifols S.A., which recently acquired a previous competitor, Talecris Biotherapeutics, Inc. We compete against these companies for, among other things, licenses, expertise, clinical trial patients and investigators, consultants and third-party strategic partners. We also compete with these companies for market share for certain products in the Proprietary Products segment. Our large competitors have advantages in the market because of their size, financial resources, markets and the duration of their activities and experience in the relevant market, especially in the United States and countries of the European Union. As a result, they may be able to devote more funds to research and development and new production

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technologies, as well as to the promotion of their products and business. These competitors may also be able to sustain for longer periods a deliberate substantial reduction in the price of their products or services. Some of them also have an additional advantage regarding the availability of raw materials, as they manufacture plasma and its products, and own companies that collect or produce raw materials such as plasma. Other than our AAT products, our products generally do not benefit from patent protection and compete against similar products produced by other providers.

Additionally, the development by a competitor of a similar or superior product or increased pricing competition may result in a reduction in our net sales or a decrease in our profit margins.

For example, we believe that there are two main competitors in the AAT market: Grifols and CSL. We estimate that Grifols’s AAT by infusion product for the treatment of AATD, Prolastin A1PI, accounts for more than 70% of sales in the worldwide market for the treatment of AATD, and is the only product that is allowed to be sold in both Europe and the United States. Due to its limited availability, CSL’s product is mainly sold in the United States. Apart from its sales through Talecris, Grifols is also a local producer of the product in the Spanish market and operates in Brazil. There is another, smaller local producer in the French market, LFB S.A.

Similarly, if a new AAT formulation with a significantly improved rate of administration is adopted (including, for example, aerosol inhalation or one that can demonstrate statistically significant efficacy), the market share of our current AAT product, Glassia, could be negatively impacted. While we are in the process of developing Inhaled AAT for AATD, our competitors may also be attempting to develop similar products or products which could be substitutions for AAT products, such as gene therapy. For example, in October 2012, Grifols announced that it commenced a limited clinical trial for the development of an inhaled formulation of AAT for the indication of cystic fibrosis. While we believe that these products are in the early stages of development, they may eventually be successfully developed and launched. Furthermore, even if we are able to commercialize Inhaled AAT for AATD prior to the development of comparable products by our competitors, sales of Inhaled AAT for AATD could adversely impact our revenue and growth of sales of Glassia, our current AATD product.

In addition, our plasma-derived protein therapeutics face competition from existing non-plasma products and other courses of treatments. For example, we believe our main competitor for KamRho(D) (IM and IV) is Kedrion, which recently acquired the Anti-Rh product line of Ortho-Clinical Diagnostics, Inc., formerly our main competitor for KamRho(D) (IM or IV). Kedrion sells a product that we estimate accounts for approximately 50% of sales in the U.S. anti-Rh market. We believe there are three additional competitors in this market: Cangene, Grifols and CSL. Additionally, in 2008, GlaxoSmithKline plc and Amgen Inc. launched thrombopoietin inhibitors targeting immune thermobocytopunic purpura patients, which may reduce the demand for intravenous immunoglobulins (“IVIG”) to treat immune thermobocytopunic purpura. New treatments, such as small molecules, monoclonal or recombinant products, may also be developed for indications for which our products are now used. We do not currently sell any recombinant products. We have begun developing recombinant versions of AAT, but we cannot be certain that such products will ever be approved or commercialized. The main advantage of recombinant AAT is its potentially higher availability at lower price per raw material. As a result, our product offerings may remain plasma-derived, even if our competitors offer competing recombinant or other non-plasma products or treatments.

Sales in our Distribution segment rely primarily on our ability to win tender bids based on the price and availability of our products in annual public tender processes.

We primarily sell our Distribution segment products through offers to participate in public tenders, which occur on an annual basis. The public tender process involves health maintenance organizations and hospitals soliciting bids from several potential suppliers, including us, and selecting the winning bid based on several attributes, primarily price and availability. The annual public tender process is also used by our existing customers to determine their suppliers. As a result, our existing relationships with customers in our Distribution segment do not guarantee additional orders from such customers year to year.

In 2010 through 2012, we benefitted from the temporary suspension of two of our competitors from selling their IVIG products in Israel. This suspension has been lifted and both competitors are now able to distribute plasma-derived protein therapeutics in the Israeli market. As these competing IVIG products

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returned to the market by the end of 2012, we expect to see increased competition for our Distribution segment products, which could lead to decreased revenues from our Distribution segment. For example, we recently participated in a public tender in Israel with these competitors. During this public tender process, some of our customers in prior years chose to purchase their supply requirements from our competitors. As a result, we expect that revenues from our Distribution segment will decrease in 2013.

Our existing and new competitors may also have significantly greater financial resources than us, which they could use to promote their products and business. Greater financial resources would also enable our competitors to substantially reduce the price of their products or services. If our competitors are able to offer prices lower than us, our ability to win tender bids during the annual tender process will be materially affected, and could reduce our total revenues or decrease our profit margins.

Certain of our products have historically been, and may in the future be, subject to supply-driven price fluctuations.

Certain of our products in both segments have historically been subject to price fluctuations as a result of changes in the production capacity available in the industry, the availability and pricing of plasma, development of competing products and the availability of alternative therapies. Higher prices for plasma-derived protein therapeutics have traditionally spurred increases in plasma production and collection capacity, resulting over time in increased product supply and lower prices. As demand continues to grow, if plasma supply and manufacturing capacity do not commensurately expand, prices tend to increase. Additionally, consolidation in plasma companies has led to a decrease in the number of plasma suppliers in the world, as either manufacturers of plasma-based pharmaceuticals purchase plasma suppliers or plasma suppliers are shut down in response to the number of manufacturers of plasma-based pharmaceuticals decreasing, which may lead to increased prices. We may not be able to pass along these increased plasma and plasma-derivative prices to our customers, which would reduce our profit margins.

Sales of our Distribution segment products are made through public tenders of Israeli hospitals and health maintenance organizations on an annual basis. The prices we can offer, as well as the availability of products, are key factors in the tender process. If our suppliers in the Distribution segment cannot sell us products at a competitive price or cannot guarantee sufficient quantities of products, we may lose the tenders.

Product liability claims or product recalls involving our products or products we distribute could have a material adverse effect on our business.

Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, distribution and sale of plasma-derived therapeutic protein products and other drug products. We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and an even greater risk when we commercially sell any products including those manufactured by others that we distribute in Israel. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, or any indemnities we have negotiated do not cover any losses, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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Plasma is biological matter that is capable of transmitting viruses and pathogens, whether known or unknown. Therefore, plasma derivative products, if not properly tested, inactivated, processed, manufactured, stored and transported, could cause serious disease and possibly death to the patient. Further, even when such steps are properly effected, viral and other infections may escape detection using current testing methods and may not be susceptible to inactivation methods. Any transmission of disease through the use of one of our products or third-party products sold by us could result in claims against us by persons allegedly infected by such products.

In addition, we sell and distribute third-party products in Israel, and the laws of Israel could also expose us to product liability claims for those products. Furthermore, the presence of a defect in a product could require us to carry out a recall of such product. A product liability claim or a product recall could result in substantial financial losses, negative reputational repercussions and an inability to retain customers. Although we maintain insurance for certain types of losses, claims made against our insurance policies could exceed our limits of coverage or be outside our scope of coverage. Additionally, as product liability insurance is expensive and can be difficult to obtain, a product liability claim could increase our required premiums or otherwise decrease our access to product liability insurance on acceptable terms. In turn, we may not be able to maintain insurance coverage at a reasonable cost and may not be able to obtain insurance coverage that will be adequate to satisfy liabilities that may arise.

Regulatory approval for our products is limited by the FDA and similar authorities in other jurisdictions to those specific indications and conditions for which clinical safety and efficacy have been demonstrated, and the prescription or promotion of off-label uses could adversely affect our business.

Any regulatory approval of our products is limited to those specific diseases and indications for which our products have been deemed safe and effective by the FDA or similar authorities in other jurisdictions. In addition to the regulatory approval required for new formulations, any new indication for an approved product also requires regulatory approval. Once we produce a plasma-derived protein therapeutic, we rely on physicians to prescribe and administer it as we have directed and for the indications described on the labeling. It is not, however, unusual for physicians to prescribe medication for unapproved, or “off-label,” uses or in a manner that is inconsistent with the manufacturer’s directions. To the extent such off-label uses and departures from our administration directions become pervasive and produce results such as reduced efficacy or other adverse effects, the reputation of our products in the marketplace may suffer. In addition, off-label uses may cause a decline in our revenues or potential revenues, to the extent that there is a difference between the prices of our product for different indications.

Furthermore, while physicians may choose to prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those approved by regulatory authorities, our ability to promote the products is limited to those indications that are specifically approved by the FDA or other regulators. Although regulatory authorities generally do not regulate the behavior of physicians, they do restrict communications by companies on the subject of off-label use. If our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, failure to follow FDA rules and guidelines relating to promotion and advertising can result in the FDA’s refusal to approve a product, the suspension or withdrawal of an approved product from the market, product recalls, fines, disgorgement of money, operating restrictions, injunctions or criminal prosecution.

The loss of one or more of our key employees could harm our business.

We depend on the continued service and performance of our key employees, including David Tsur, our Chief Executive Officer, and our other senior management. We have entered into employment agreements with all of our senior management, including Mr. Tsur, and other key employees. Either party, however, can terminate these agreements for any reason. The loss of key members of our executive management team could disrupt our operations or product development and have an adverse effect on our ability to grow our business.

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Our ability to attract, recruit, retain and develop qualified employees is critical to our success and growth.

We compete in a market that involves rapidly changing technological and regulatory developments that require a wide ranging set of expertise and intellectual capital. In order for us to successfully compete and grow, we must attract, recruit, retain and develop the necessary personnel who can provide the needed expertise across the entire spectrum of our intellectual capital needs. While we have a number of our key personnel who have substantial experience with our operations, we must also develop our personnel to provide succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital. However, the market for qualified personnel is competitive, and we may not succeed in recruiting additional personnel, retaining current personnel or effectively replacing current personnel who depart with qualified or effective successors. Many of the companies with which we compete for experienced personnel have greater resources than us.

Our effort to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. We cannot assure that qualified employees will continue to be employed or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations.

We are subject to risks associated with doing business globally.

Our operations are subject to risks inherent in conducting business globally and under the laws, regulations and customs of various jurisdictions and geographies. These risks include fluctuations in currency exchange rates, changes in exchange controls, loss of business in government and public tenders that are held annually in many cases, nationalization, expropriation and other governmental actions, availability of raw materials, changes in taxation, importation limitations, export control restrictions, changes in or violations of applicable laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act of 2010, pricing restrictions, economic and political instability, disputes between countries, diminished or insufficient protection of intellectual property, and disruption or destruction of operations in a significant geographic region regardless of cause, including war, terrorism, riot, civil insurrection or social unrest. Failure to comply with, or material changes to, the laws and regulations that affect our global operations could have an adverse effect on our business, financial condition or results of operations.

We are subject to foreign currency exchange risk.

We receive payment for our sales and make payments for resources in a number of different currencies. While our sales and expenses are primarily denominated in U.S. dollars, our financial results may be adversely affected by fluctuations in currency exchange rates as a portion of our sales and expenses are denominated in other currencies, including the NIS and the Euro. Market volatility and currency fluctuations may limit our ability to cost-effectively hedge against our foreign currency exposure and, in addition, our ability to hedge our exposure to currency fluctuations in certain emerging markets may be limited. Hedging strategies may not eliminate our exposure to foreign exchange rate fluctuations and may involve costs and risks of their own, such as devotion of management time, external costs to implement the strategies and potential accounting implications. Foreign currency fluctuations, independent of the performance of our underlying business, could lead to materially adverse results or could lead to positive results that are not repeated in future periods.

Events in global credit markets may impact our ability to obtain financing or increase the cost of future financing or refinancing of our existing debt, including interest rate fluctuations based on macroeconomic conditions that are beyond our control.

As of March 31, 2013, we had total debt of approximately $25.0 million, which primarily consists of convertible debentures with a total aggregate principal amount of approximately $26.8 million. During periods of volatility and disruption in the U.S., European, or global credit markets, obtaining additional or replacement financing may be more difficult and the cost of issuing new debt or replacing our existing convertible debentures could be higher than the costs we incur under our current debentures. The higher cost of new debt may limit our ability to have cash on hand for working capital, capital expenditures and acquisitions on terms that are acceptable to us. Additionally, our convertible debentures have a variable interest rate. By its nature, a

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variable interest rate will move up or down based on changes in the economy and other factors, all of which are beyond our control. If interest rates increase, our interest expense could increase, affecting earnings and reducing cash flows available for working capital, capital expenditures and acquisitions.

Developments in the economy may adversely impact our business.

Our operating and financial performance may be adversely affected by a variety of factors that influence the general economy in the United States, Europe and worldwide, including the current global economic slowdown and the ongoing challenges faced by European banks and the markets for the sovereign debt of certain European countries. Throughout many of our largest markets, including the United States and Europe, there have been dramatic declines in the housing market, high levels of unemployment and underemployment, and reduced earnings, or, in some cases, losses, for businesses across many industries, with reduced investments in growth.

A recessionary economic environment may adversely affect demand for our plasma-derived protein therapeutics. As a result of their job losses, patients in the U.S. may lose medical insurance and be unable to purchase needed medical products or may be unable to pay their share of deductibles or co-payments. Hospitals adversely affected by the economy may steer patients to less costly therapies, resulting in a reduction in demand, or demand may shift to public health hospitals, which purchase our products at a lower government price. A recessionary economic environment may also lead to price pressure for reimbursement of new drugs, which may adversely affect the demand for our future plasma-derived protein therapeutics.

If our manufacturing facility in Beit Kama, Israel were to suffer a serious accident, or if a force majeure event materially affected our ability to operate and produce saleable plasma-derived protein therapeutics, all of our manufacturing capacity could be shut down for an extended period.

We rely on a single manufacturing facility in Beit Kama, which is located in southern Israel approximately 20 miles from the Gaza Strip. All of our revenues in our Proprietary Products segment are derived from products manufactured at this facility. If this facility were to suffer an accident or a force majeure event such as war, terrorist attack, earthquake, major fire or explosion, major equipment failure or power failure lasting beyond the capabilities of our backup generators or similar event, our revenues would be materially adversely affected. In this situation, our manufacturing capacity could be shut down for an extended period, we could experience a loss of raw materials, work in process or finished goods inventory and our ability to operate our business would be harmed. In addition, in any such event, the reconstruction of our manufacturing facility and storage facilities, and the regulatory approval of the new facilities could be time-consuming. During this period, we would be unable to manufacture our plasma-derived protein therapeutics.

Our insurance against property damage and business interruption insurance may be insufficient to mitigate the losses from any such accident or force majeure event. We may also be unable to recover the value of the lost plasma or work-in-process inventories, as well as the sales opportunities from the products we would be unable to produce, or the loss of customers during such period.

If we experience equipment difficulties or if the suppliers of our equipment or disposable goods fail to deliver key product components or supplies in a timely manner, our manufacturing ability would be impaired and our product sales could suffer.

For certain equipment and supplies, we depend on a limited number of companies that supply and maintain our equipment and provide supplies such as chromatography resins, filter media, glass bottles and stoppers used in the manufacture of our plasma-derived protein therapeutics. If our equipment were to malfunction, or if our suppliers stop manufacturing or supplying such machinery, equipment or any key component parts, the repair or replacement of the machinery may require substantial time and cost, and could disrupt our production and other operations. Alternative sources for key component parts or disposable goods may not be immediately available. In addition, any new equipment or change in supplied materials may require revalidation by us or review and approval by the FDA, the EMA, the regulatory authorities in Israel or other regulatory authorities, which may be time-consuming and require additional capital and other resources. We may not be able to find an adequate alternative supplier in a reasonable time period, or on commercially

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acceptable terms, if at all. As a result, shipments of affected products may be limited or delayed. Our inability to obtain our key source supplies for the manufacture of products may require us to delay shipments of products, harm customer relationships and force us to curtail operations.

If our shipping or distribution channels were to become inaccessible due to an accident, an act of terrorism, a strike or any other force majeure event, our supply, production and distribution processes could be disrupted.

Our raw materials must be transported at a temperature of -20 degrees Celsius (-4 degrees Fahrenheit) to ensure the preservation of their proteins. Not all shipping or distribution channels are equipped to transport plasma at these temperatures. If any of our shipping or distribution channels become inaccessible because of a serious accident, an act of terrorism, a strike or any other force majeure event, we may experience disruptions in our continued supply of plasma and other raw materials, delays in our production process or a reduction in our ability to distribute our plasma-derived protein therapeutics to our customers.

Our success depends in part on our ability to obtain and maintain protection in the United States and other countries for the intellectual property relating to or incorporated into our technology and products, including the patents protecting our manufacturing process.

Our success depends in large part on our ability to obtain and maintain protection in the United States and other countries for the intellectual property covering or incorporated into our technology and products, especially intellectual property related to our manufacturing processes. At present, we consider our two patents relating to our manufacturing process to be material to the operation of our business as a whole.

However, the patent landscape in the biotechnology and pharmaceutical fields is highly uncertain and involves complex legal, factual and scientific questions, and changes in either patent laws or in the interpretation of patent laws in the United States and other countries may diminish the value and strength of our intellectual property or narrow the scope of our patent protection. In addition, we may fail to apply for or be unable to obtain patents necessary to protect our technology or products or enforce our patents due to lack of information about the exact use of our process by third parties. Even if patents are issued to us or to our licensors, they may be challenged, narrowed, invalidated, held to be unenforceable or circumvented, which could limit our ability to prevent competitors from using similar technology or marketing similar products, or limit the length of time our technologies and products have patent protection. Additionally, many of our patents relate to the processes we use to produce our products, not to the products themselves. In many cases, the plasma-derived products we produce or develop in the future will not, in and of themselves, be patentable. Since many of our patents relate to processes, if a competitor is able to utilize a process that does not rely on our protected intellectual property, that competitor could sell a plasma-derived product similar to one we developed or sell it without infringing these patents. In addition, we are a party to certain license agreements which may impose various obligations upon us as a licensee, including the obligation to make milestone and royalty payments. If we fail to comply with these obligations, the licensor may terminate the license, in which event we might not be able to market any product that is covered by the licensed intellectual property.

Our patents also may not afford us protection against competitors with similar technology. Because patent applications in the United States and many other jurisdictions are typically not published until 18 months after their filing, if at all, and because publications of discoveries in scientific literature often lag behind actual discoveries, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in our or their issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in such patent applications. As a result, the patents we own and license may be invalidated in the future, and the patent applications we own and license may not be granted. For example, if a third party has also filed a patent application covering an invention similar to one covered in one of our patent applications, we may be required to participate in an adversarial proceeding, known as an “interference proceeding,” declared by the U.S. Patent and Trademark Office or its foreign counterparts to determine priority of invention. The costs of these proceedings could be substantial and our efforts in them could be unsuccessful, resulting in a loss of our anticipated patent position. In addition, if a third party prevails in such a proceeding and obtains an issued patent, we may be prevented from practicing technology or marketing products covered by that patent. Additionally, patents and patent applications owned by third parties may prevent us from pursuing certain opportunities such as entering into specific markets or

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developing certain products. Finally, we may choose to enter into markets where certain competitors have patents or patent protection over technology that may impede our ability to compete effectively.

Our patents expire at various dates between 2018 and 2027. However, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any of our products can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantages of the patent. Our pending and future patent applications may not lead to the issuance of patents or, if issued, the patents may not be issued in a form that will provide us with any competitive advantage. We also cannot guarantee that: any of our present or future patents or patent claims or other intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; our intellectual property rights will provide competitive advantages or prevent competitors from making or selling competing products; our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; any of our pending or future patent applications will be issued or have the coverage originally sought; our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments. In addition, our competitors or others may design around our patents or protected technologies. Effective protection of our intellectual property rights may also be unavailable, limited or not applied in some countries, and even if available, we may fail to pursue or obtain necessary intellectual property protection in such countries. In addition, the legal systems of certain countries do not favor the aggressive enforcement of patents and other intellectual property rights, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. In order to preserve and enforce our patent and other intellectual property rights, we may need to make claims or file lawsuits against third parties. Such lawsuits could entail significant costs to us and divert our management’s attention from developing and commercializing our products. Lawsuits may ultimately be unsuccessful, and may also subject us to counterclaims and cause our intellectual property rights to be challenged, narrowed, invalidated or held to be unenforceable.

Additionally, unauthorized use of our intellectual property may have occurred or may occur in the future, including, for example, in the production of counterfeit versions of our products. Counterfeit products may use different and possibly contaminated sources of plasma and other raw materials, and the purification process involved in the manufacture of counterfeit products may raise additional safety concerns, over which we have no control. Although we have taken steps to minimize the risk of unauthorized uses of our intellectual property, including for the production of counterfeit products, any failure to identify unauthorized use of, and otherwise adequately protect, our intellectual property could adversely affect our business, including reducing the demand for our products. Additionally, any reported adverse events involving counterfeit products that purport to be our products could harm our reputation and the sale of our products in particular and consumer willingness to use plasma-derived therapeutics in general. Moreover, if we are required to commence litigation related to unauthorized use, whether as a plaintiff or defendant, such litigation would be time-consuming, force us to incur significant costs and divert our attention and the efforts of our management and other employees, which could, in turn, result in lower revenue and higher expenses.

In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how.

We rely on proprietary information (such as trade secrets, know-how and confidential information) to protect intellectual property that may not be patentable, or that we believe is best protected by means that do not require public disclosure. We generally seek to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with our employees, consultants, contractors, scientific advisors and third parties. However, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or otherwise fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. We have limited control over the protection of

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trade secrets used by our third-party manufacturers and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, our proprietary information may otherwise become known or be independently developed by our competitors or other third parties. To the extent that our employees, consultants, contractors, scientific advisors and other third parties use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business position. Furthermore, laws regarding trade secret rights in certain markets where we operate may afford little or no protection to our trade secrets.

We also rely on physical and electronic security measures to protect our proprietary information, but we cannot provide assurance that these security measures will not be breached or provide adequate protection for our property. There is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce our intellectual property rights.

If we are unable to protect our trademarks from infringement, our business prospects may be harmed.

We own trademarks that identify certain of our products and have registered these trademarks in certain key markets. Although we take steps to monitor the possible infringement or misuse of our trademarks, it is possible that third parties may infringe, dilute or otherwise violate our trademark rights. Any unauthorized use of our trademarks could harm our reputation or commercial interests. In addition, our enforcement against third-party infringers or violators may be unduly expensive and time-consuming, and the outcome may be an inadequate remedy.

We may be subject to claims that we infringe, misappropriate or otherwise violate the intellectual property rights of third parties.

The conduct of our business, our products or product candidates may infringe or be accused of infringing one or more claims of an issued patent or may fall within the scope of one or more claims in a published patent application that may be subsequently issued and to which we do not hold a license or other rights. For example, certain of our competitors own patents and patent applications in areas relating to critical aspects of our business and technology, including the separation and purification of proteins, and these competitors may in the future allege that we are infringing on their patent rights. We may also be subject to claims that we are infringing, misappropriating or otherwise violating other intellectual property rights, such as trademarks, copyrights or trade secrets. Third parties could therefore bring claims against us or our strategic partners that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if such a claim were brought against us or our strategic partners, we or they could be forced to permanently or temporarily stop or delay manufacturing or sales of the product or product candidate that is the subject of the suit.

If we are found to be infringing, misappropriating or otherwise violating the patent or other intellectual property rights of a third party, or in order to avoid or settle claims, we or our strategic partners may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both, which could be substantial. These licenses may not be available on acceptable terms, or at all. Even if we or our strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened claims, we or our strategic partners are unable to enter into licenses on acceptable terms.

There have been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition, to the extent that we gain greater visibility and market exposure as a public company in the United States, we face a greater risk of being involved in such litigation. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference, opposition, re-examination and similar proceedings before the U.S. Patent and Trademark Office and its foreign counterparts, regarding intellectual property rights with respect to our products. The cost to us of any patent litigation or other proceeding, even

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if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace, and patent litigation and other proceedings may also absorb significant management time.

Some of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. While we take steps to prevent our employees from using the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have inadvertently or otherwise used or disclosed intellectual property, trade secrets or other proprietary information of any such employee’s former employer. Litigation may be necessary to defend against these claims and, even if we are successful in defending ourselves, could result in substantial costs to us or be distracting to our management. If we fail to defend any such claims successfully, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.

A breakdown in our information technology systems could result in a significant disruption to our business.

Our operations are highly dependent on our information technology systems. If we were to suffer a breakdown in our systems, storage, distribution or tracing, we could experience significant disruptions affecting all our areas of activity, including our manufacturing, research, accounting and billing processes and potentially cause disruptions to our manufacturing process for products currently in production. We may also suffer from partial loss of information and data due to such disruption.

The implementation of the 2010 healthcare reform law in the United States may adversely affect our business.

Our industry is highly regulated and changes in law may adversely impact our business, operations or financial results. The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “healthcare reform law”), is a sweeping measure intended to expand healthcare coverage within the United States, primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program. Several provisions of the new law, which have varying effective dates, may affect us and will likely increase certain of our costs. For example, an increase in the Medicaid rebate rate from 15.1% to 23.1% became effective as of January 1, 2010, and the volume of rebated drugs was expanded to include beneficiaries in Medicaid managed care organizations, effective as of March 23, 2010. In addition, the new law establishes an abbreviated licensure pathway for products that are drugs made by a living organism or derived from a living organism, commonly referred to as biosimilars, to become FDA-approved biological products, with provisions covering exclusivity periods and a specific reimbursement methodology for biosimilars. President Obama’s 2014 budget proposal includes a proposed reduction of the exclusivity period for biosimilars from twelve years to seven years.

The reforms imposed by the new law will significantly impact the pharmaceutical industry; however, the full effects of the healthcare reform law cannot be known until these provisions are implemented and the Centers for Medicare and Medicaid Services and other federal and state agencies issue applicable regulations or guidance. Moreover, in the coming years, additional changes could be made to governmental healthcare programs that could significantly impact the success of our products. We will continue to evaluate the healthcare reform law, as amended, the implementation of regulations or guidance related to various provisions of the healthcare reform law by federal agencies, as well as trends and changes that may be encouraged by the legislation and that may potentially impact on our business over time.

In addition, Federal, state and foreign governmental authorities are likely to continue efforts to control the price of drugs and reduce overall healthcare costs. These efforts could have an adverse impact on our ability to market products and generate revenues in the United States and foreign countries.

Certain of our business practices could become subject to scrutiny by regulatory authorities, as well as to lawsuits brought by private citizens under federal and state laws. Failure to comply with applicable law or an adverse decision in lawsuits may result in adverse consequences to us.

The laws governing our conduct in the United States are enforceable by criminal, civil and administrative penalties. Violations of laws such as the Federal Food, Drug and Cosmetic Act (the “FDCA”), the Federal

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False Claims Act (the “FCA”), the Public Health Service (the “PHS Act”) or a provision of the U.S. Social Security Act known as the “Anti-Kickback Law,” or any regulations promulgated under their authority, may result in jail sentences, fines or exclusion from federal and state programs, as may be determined by Medicare, Medicaid, the Department of Defense, other regulatory authorities and the courts. There can be no assurance that our activities will not come under the scrutiny of regulators and other government authorities or that our practices will not be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen “relators” under federal or state false claims laws.

For example, under the Anti-Kickback Law, and similar state laws and regulations, even common business arrangements, such as discounted terms and volume incentives for customers in a position to recommend or choose drugs and devices for patients, such as physicians and hospitals, can result in substantial legal penalties, including, among others, exclusion from Medicare and Medicaid programs, and arrangements with referral sources must be structured with care to comply with applicable requirements. Also, certain business practices, such as payment of consulting fees to healthcare providers, sponsorship of educational or research grants, charitable donations, interactions with healthcare providers that prescribe products for uses not approved by the FDA and financial support for continuing medical education programs, must be conducted within narrowly prescribed and controlled limits to avoid any possibility of wrongfully influencing healthcare providers to prescribe or purchase particular products or as a reward for past prescribing. Significant enforcement activity has been the result of actions brought by relators, who file complaints in the name of the United States (and if applicable, particular states) under federal and state False Claims Act statutes and can be entitled to receive up to 30% of total recoveries. Also, violations of the False Claims Act can result in treble damages, and each false claim submitted can be subject to a penalty of up to $11,000 per claim. The healthcare reform law imposes new reporting and disclosure requirements for pharmaceutical and medical device manufacturers with regard to payments or other transfers of value made to certain U.S. healthcare practitioners, such as physicians and academic medical centers. Data collection obligations under this rule are to commence on August 1, 2013, and reporting requirements are to be implemented in 2014. On February 5, 2013, the Centers for Medicare and Medicaid Services (“CMS”) issued final regulations to implement these provisions. A number of states have similar laws in place. Additional and stricter prohibitions could be implemented by federal and state authorities. Where practices have been found to involve improper incentives to use products, government investigations and assessments of penalties against manufacturers have resulted in substantial damages and fines. Many manufacturers have been required to enter into consent decrees or orders that prescribe allowable corporate conduct. Failure to satisfy requirements under the FDCA can also result in penalties, as well as requirements to enter into consent decrees or orders that prescribe allowable corporate conduct.

To market and sell our products outside the United States and Israel, we must obtain and maintain regulatory approvals and comply with regulatory requirements in such jurisdictions. The approval procedures vary among countries in complexity and timing. We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all, and in such case, we would be precluded from commercializing products in those markets. In addition, some countries, particularly the countries of the European Union, regulate the pricing of prescription pharmaceuticals. In these countries, pricing discussions with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. Such trials may be time-consuming and expensive and may not show an advantage in cost-efficacy for our products. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, in either the United States or the European Union, we could be adversely affected. Also, under the FCPA, the United States has increasingly focused on regulating the conduct by U.S. businesses occurring outside of the United States, generally prohibiting remuneration to foreign officials for the purpose of obtaining or retaining business.

To enhance compliance with applicable health care laws, and mitigate potential liability in the event of noncompliance, regulatory authorities, such as HHS’s Office of Inspector General (“OIG”), have recommended the adoption and implementation of a comprehensive health care compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of

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the U.S. Sentencing Commission Guidelines Manual. Increasing numbers of U.S.-based pharmaceutical companies have such programs. We have not adopted U.S. healthcare compliance and ethics programs that generally incorporate the HHS OIG’s recommendations, but even if we do, having such a program can be no assurance that we will avoid any compliance issues.

We could be adversely affected if other government or private third-party payors decrease or otherwise limit the amount, price, scope or other eligibility requirements for reimbursement for the purchasers of our products.

Prices in many of our principal markets are subject to local regulation and certain pharmaceutical products, such as plasma-derived protein therapeutics, are subject to price controls. In the United States, where pricing levels for our products are substantially established by third-party payors, a reduction in the payors’ amount of reimbursement for a product may cause groups or individuals dispensing the product to discontinue administration of the product, to administer lower doses, to substitute lower cost products or to seek additional price-related concessions. These actions could have a negative effect on our financial results, particularly in cases where our products command a premium price in the marketplace or where changes in reimbursement rates induce a shift in the site of treatment. The existence of direct and indirect price controls and pressures over our products has affected, and may continue to materially adversely affect, our ability to maintain or increase gross margins.

Also, the intended use of a drug product by a physician can affect pricing. Physicians frequently prescribe legally available therapies for uses that are not described in the product’s labeling and that differ from those tested in clinical studies and approved by the FDA or similar regulatory authorities in other countries. These off-label uses are common across medical specialties, and physicians may believe such off-label uses constitute the preferred treatment or treatment of last resort for many patients in varied circumstances. If reimbursement for off-label uses of products is reduced or eliminated by Medicare or other third-party payors, including those in the United States or the European Union, we could be adversely affected. For example, the CMS could initiate an administrative procedure known as a National Coverage Determination (“NCD”), by which the agency determines which uses of a therapeutic product would be reimbursable under Medicare and which uses would not. This determination process can be lengthy, thereby creating a long period during which the future reimbursement for a particular product may be uncertain.

We are subject to extensive environmental, health and safety, and other laws and regulations.

Our business involves the controlled use of hazardous materials, various biological compounds and chemicals. The risk of accidental contamination or injury from these materials cannot be eliminated. If an accident, spill or release of any regulated chemicals or substances occurs, we could be held liable for resulting damages, including for investigation, remediation and monitoring of the contamination, including natural resource damages, the costs of which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials and chemicals. Although we maintain workers’ compensation insurance to cover the costs and expenses that may be incurred because of injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. Additional or more stringent federal, state, local or foreign laws and regulations affecting our operations may be adopted in the future. We may incur substantial capital costs and operating expenses and may be required to obtain consents to comply with any of these or certain other laws or regulations and the terms and conditions of any permits required pursuant to such laws and regulations, including costs to install new or updated pollution control equipment, modify our operations or perform other corrective actions at our respective facilities. In addition, fines and penalties may be imposed for noncompliance with environmental, health and safety and other laws and regulations or for the failure to have, or comply with the terms and conditions of, required environmental or other permits or consents. In 2009 and 2010, we were subjected to audits by the Environmental Health Department of the Regional Health Bureau of the Ministry of Health of Israel and the Ministry of Environmental Protection of Israel regarding wastewater and brine treatment at our production plant. As a result of these audits, the production plant must comply with specific guidelines during 2013. We do not expect the costs of complying with these guidelines to be material to our business. See “Business — Environmental.”

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Under the Israeli Restrictive Trade Practices Law, 5758-1988 (the “Restrictive Trade Practices Law”), a company that supplies or acquires more than 50% of any product or service in Israel is deemed to be a monopoly. The monopolist is prohibited from participating in certain business practices, including unreasonably refusing to sell products or provide services over which a monopoly exists, charging unfair prices for such products or services, and abusing its position in the market in a manner which might reduce business competition or harm the public. In addition, the General Director of the Israeli Antitrust Authority may determine that a company is a monopoly and has the right to order such company to change its conduct in matters that may adversely affect business competition or the public, including by imposing restrictions on its conduct. Depending on the analysis and the definition of the relevant product markets in which we operate, we may be deemed to be a “monopoly” under the Israeli Antitrust Law with respect to certain of our products.

A significant portion of our workforce has recently joined the Histadrut (General Federation of Labor in Israel) and established an employees' committee, and we could incur additional labor costs or experience work stoppages as a result of our negotiations with the Histadrut and employees' committee.

In February 2013, we were notified by the Histadrut (General Federation of Labor in Israel) that more than one-third of our employees at our Beit Kama facility had decided to join the Histadrut and that they have established an employees' committee. We have begun negotiations with the committee and the Histadrut. In the course of negotiations, the employees’ committee has the right to issue a dispute notice to us, which under Israeli law would permit the employees to lawfully initiate a work stoppage commencing 15 days following the date of the notice. We may receive such notice as soon as shortly before or after pricing of this offering. Depending on the course of our negotiations with the committee and the Histadrut, we could incur additional labor costs and/or experience work stoppages, which could adversely affect our business operations, including through a loss of revenue and strained relationships with customers.

The requirements of being a public company in the United States, as well as in Israel, may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”

Following the completion of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and regulatory requirements will be time consuming, result in increased costs to us and could have a negative effect on our business, results of operations and financial condition.

As a public company in the United States, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the requirements of S-OX. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual and current reports with respect to our business and financial condition. S-OX requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we may need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies in the United States. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

As an “emerging growth company,” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of S-OX (and the rules and regulations of the SEC thereunder). When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

Risks Related to Our Ordinary Shares and the Offering

Our share price may be volatile, and you may lose all or part of your investment or be unable to sell your shares at or above the offering price.

The initial public offering price will be based, in part, on the price of our ordinary shares on the TASE and determined by negotiation between us and the representatives of the underwriters, and the price may not

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be indicative of prices that will prevail in the trading market. The market price of our ordinary shares following this offering is therefore likely to be highly volatile and could be subject to wide fluctuations in price as a result of various factors, some of which are beyond our control. These factors include:

Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market price of equity securities of many companies. Broad market and industry fluctuations, as well as general economic, political and market conditions, may negatively impact the market price of our ordinary shares. If the market price of our ordinary shares after this offering does not exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In the past, companies that have experienced volatility in the market price of their shares have been subject to securities class action litigation. We may also be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

There has been no prior public market in the United States for our ordinary shares, and an active trading market in the United States may not develop.

Prior to this offering, there has been no public market in the United States for our ordinary shares. An active trading market in the United States may not develop following completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies by using our shares as consideration.

If equity research analysts do not publish research reports about our business or if they issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary shares could decline.

The trading market for our ordinary shares will rely in part on the research and reports that equity research analysts publish about us and our business. The price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

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Future sales of our ordinary shares in the public market could cause our share price to fall.

Sales by us or our shareholders of a substantial number of our ordinary shares in the public market, either on the TASE or Nasdaq, after this offering, or the perception that these sales might occur, could depress the market price of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. Upon completion of this offering, we will have 34,306,634 ordinary shares outstanding, assuming no exercise of our outstanding options, warrants or conversion of our convertible debt as of March 31, 2013.

Except for the 9,069,676 ordinary shares that are the subject of lock-up agreements described below and shares held by our affiliates as contemplated by Rule 144 and the Securities Act, all of the ordinary shares sold in this offering and the 28,723,998 ordinary shares that are outstanding as of March 31, 2013, as well as the 4,187,623 ordinary shares issuable upon exercise of outstanding options, or our convertible debentures, will be freely tradable in the United States without restrictions or further registration under the Securities Act. Following the completion of this offering, approximately 26.44% of our outstanding ordinary shares (or 25.81% if the underwriters fully exercise their over-allotment option) will be beneficially owned by affiliates. These entities could resell the shares into the public markets in the United States in the future in accordance with the requirements of Rule 144, which include certain limitations on volume, and subject to the lockups described below. See “Shares Eligible for Future Sale.”

In addition to limits set by Rule 144, we and our executive officers, directors and certain shareholders, who collectively hold 31.54% of our outstanding ordinary shares prior to this offering, or approximately 26.44% of our outstanding shares following the completion of this offering, have agreed with the underwriters that, subject to limited exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase or otherwise dispose of any ordinary shares or any securities convertible into or exercisable or exchangeable for ordinary shares, or in any manner transfer all or a portion of the economic consequences associated with the ownership of ordinary shares, or cause a registration statement covering any ordinary shares to be filed, without the prior written consent of Morgan Stanley & Co. LLC and Jefferies LLC, which may, in their sole discretion and at any time without notice, release all or any portion of the shares subject to these lock-up agreements. After these lock-up agreements have expired and holding periods have elapsed, additional shares will be eligible for sale in the public market.

In addition, at any time following the expiration or earlier waiver of the lock-up period, Damar Chemicals Inc., a company registered in Panama (“Damar”), Leon Recanati, Gov Financial Holdings Ltd., a company organized under the laws of the State of Israel (“Gov”) and wholly-owned by Mr. Recanati, and David Tsur and their respective affiliates are entitled to require that we register their 4,540,986 shares under the Securities Act for resale into the public markets in the United States. All shares sold pursuant to an offering covered by such registration statement will be freely tradable in the United States, except for shares purchased by affiliates. See “Certain Relationships and Related Party Transactions — Registration Rights Agreement.”

We may file a registration statement on Form S-8 under the Securities Act to register approximately 1.5 million shares for issuance under the Option Plans and an additional 1.0 million shares reserved for future grants under our Option Plans. Once we register these shares, they can be freely sold in the public market upon issuance and vesting.

The significant share ownership positions of the estate of Ralf Hahn, the former Chairman of our board of directors, and Leon Recanati, the Chairman of our board of directors, may limit your ability to influence corporate matters.

After giving effect to this offering, the estate of Ralf Hahn, the former Chairman of our board of directors, and Leon Recanati, the Chairman of our board of directors, will own or control, directly and indirectly, approximately 14.00% (or 13.67% if the underwriters fully exercise their over-allotment option) and 9.98% (or 9.74% if the underwriters fully exercise their over-allotment option) of our outstanding ordinary shares, respectively. Accordingly, if the estate of Ralf Hahn and Leon Recanati vote the shares that they own or control together, they will be able to significantly influence the outcome of matters required to be submitted to our shareholders for approval, including decisions relating to the election of our board of directors and the

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outcome of any proposed merger or consolidation of our company. Their interests may not be consistent with those of our other shareholders. In addition, these parties’ significant interest in us may discourage third parties from seeking to acquire control of us, which may adversely affect the market price of our shares. On March 6, 2013, a shareholders agreement was entered into, effective March 4, 2013, pursuant to which Mr. Recanati and any company controlled by him (collectively, the “Recanati Group”), who collectively own 11.92% of our outstanding ordinary shares on the one hand, and Damar, TUTEUR S.A.C.I.F.I.A (“Tuteur”) (companies formerly controlled by Mr. Ralf Hahn) and their affiliates (collectively, the “Damar Group”), who collectively own 16.71% of our outstanding ordinary shares, on the other hand, have each agreed to vote the ordinary shares beneficially owned by them in favor of the election of director nominees designated by the other group as follows: (i) three director nominees, so long as the other group beneficially owns at least 7.5% of our outstanding share capital, (ii) two director nominees, so long as the other group beneficially owns at least 5.0% (but less than 7.5%) of our outstanding share capital, and (iii) one director nominee, so long as the other group beneficially owns at least 2.5% (but less than 5.0%) of our outstanding share capital. In addition, to the extent that after the designation of the foregoing director nominees there are additional director vacancies, each of the Recanati Group and Damar Group have agreed to vote the ordinary shares beneficially owned by them in favor of such additional director nominees designated by the party who beneficially owns the larger voting rights in our company. We are not party to such agreement or bound by its terms.

Our ordinary shares will be traded on more than one market and this may result in price variations.

Our ordinary shares have been traded on the TASE since August 2005, and we have been approved to list our ordinary shares on Nasdaq. Trading in our ordinary shares on these markets will take place in different currencies (U.S. dollars on Nasdaq and NIS on the TASE), and at different times (resulting from different time zones, trading days and public holidays in the United States and Israel). The trading prices of our ordinary shares on these two markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on the TASE could cause a decrease in the trading price of our ordinary shares on Nasdaq.

Our U.S. shareholders may suffer adverse tax consequences if we are characterized as a passive foreign investment company.

Generally, if, for any taxable year, at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets that produce passive income or are held for the production of passive income, we would be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Our status as a PFIC may also depend, in part, on how quickly we utilize the cash proceeds from this offering in our business. We do not expect to be a PFIC for our current taxable year. However, since PFIC status depends on the composition of our income and assets and the value of our assets (which may be determined in large part by reference to the market value of our ordinary shares, which may be volatile) from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year. If we are characterized as a PFIC, our U.S. shareholders may suffer adverse tax consequences, including having gains realized on the sale of our ordinary shares treated as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on our ordinary shares by individuals who are U.S. Holders (as defined in “Taxation and Government Programs — United States Federal Income Taxation”), and having interest charges apply to distributions by us and the proceeds of share sales. See “Taxation and Government Programs — United States Federal Income Taxation.”

We are a “foreign private issuer” and have disclosure obligations that are different from those of U.S. domestic reporting companies.

We are a foreign private issuer and are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers,

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directors and principal shareholders will be exempt from the requirements to report short-swing profit recovery contained in Section 16 of the Exchange Act.

As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

As a foreign private issuer, we have the option to follow certain Israeli corporate governance practices rather than those of Nasdaq, except to the extent that such laws would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the home country practices we follow instead. We intend to rely on this “foreign private issuer exemption” with respect to the Nasdaq requirements to have a majority of independent directors on our board of directors, shareholder approval requirements in respect of equity issuances and equity-based compensation plans, the requirement to have independent oversight on our director nominations process and the quorum requirement for meetings of our shareholders. In addition, we intend to rely on the “foreign private issuer exemption” in the future with respect to the Nasdaq requirement, once effective, to have a formal charter for the compensation committee. We may in the future elect to follow home country practices in Israel with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements. See “Management — Corporate Governance Practices.”

We do not intend to pay dividends.

We have not recently declared or paid any cash dividends on our ordinary shares and do not intend to pay any cash dividends. Any future agreements may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our ordinary shares. In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their ordinary shares after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

You will experience immediate and substantial dilution in the net tangible book value of ordinary shares purchased.

The initial public offering price per ordinary share will be substantially higher than the net tangible book value per ordinary share prior to the offering. Consequently, when you purchase ordinary shares in the offering, you will incur an immediate dilution of $8.42 per ordinary share (assuming the underwriters do not exercise their over-allotment option), representing the difference between our net tangible book value per ordinary share as of March 31, 2013, after giving effect to this offering, and the initial public offering price of $10.75 per ordinary share (which was the last reported sale price of our ordinary shares on the TASE on May 12, 2013, based on the exchange rate reported by the Bank of Israel on that date).

Our management will have broad discretion over how to use the proceeds from this offering.

We intend to use the net proceeds from this offering for general corporate purposes, which may include the funding of future clinical trials for our existing product pipeline, expanding our distribution capabilities to additional territories, expanding manufacturing capacity and infrastructure, research and development for additional AAT indications, and acquisitions or in-licensing of new products. However, depending on future developments and circumstances, we may use some of the proceeds for other purposes. Our management will have significant flexibility and discretion in applying the net proceeds we receive from this offering. The net proceeds could be applied in ways that do not improve our operating results or in ways with which you may not agree. The actual amounts and timing of these expenditures will vary significantly depending on a number of factors, including the amount of cash used in or generated by our operations and the market response to the introduction of any new product offerings.

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We have not yet determined whether our existing internal controls over financial reporting are compliant with Section 404 of S-OX, and we cannot assure you that there are no material weaknesses or significant deficiencies in our existing internal controls.

Section 404(a) of S-OX and the related rules adopted by the SEC and the Public Company Accounting Oversight Board will require our management to report on the effectiveness of our internal control over financial reporting beginning with the second annual report that we file with the SEC after the completion of this offering. Beginning with that same report, Section 404(b) of S-OX will require our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting, although as an “emerging growth company” under the JOBS Act, we will have the option to defer compliance with the requirements of Section 404(b) until we no longer qualify as an “emerging growth company,” as described below.

We have not yet begun the process of determining whether our existing internal controls over financial reporting are compliant with Section 404 and whether there are any material weaknesses or significant deficiencies in our existing internal controls. This process will require the investment of substantial time and resources, including by our Chief Financial Officer and other members of our senior management. It could, therefore, divert internal resources and take a significant amount of time, effort and expense to complete.

In addition, we cannot predict whether we will determine that we have effective controls over financial reporting or whether we will need to implement remedial actions in order to implement effective controls. This determination and any required remedial actions could result in our incurring additional, unexpected costs. As a result, we may experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes. Further, any failure of our internal controls could result in an adverse opinion from our auditors or have a material adverse effect on our stated results of operations, either of which could harm our reputation and cause investors to lose confidence in the reliability of our financial reporting, thereby adversely affecting the value of our ordinary shares.

We are an “emerging growth company” with reduced reporting requirements that may make our ordinary shares less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies generally. As discussed above, for so long as we remain an emerging growth company, we may elect not to have our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting, as would otherwise be required by Section 404(b) of S-OX. This may increase the risk that we fail to detect and remedy any weaknesses or deficiencies in our internal control over financial reporting.

In general, these reduced reporting requirements may allow us to refrain from disclosing information that you may find important. It is also possible that investors may generally find our ordinary shares less attractive because of our status as an emerging growth company and our more limited disclosure. Any of the foregoing could adversely affect the price and liquidity of our ordinary shares.

We may take advantage of these disclosure exemptions until we are no longer an “emerging growth company.” We will cease to be an “emerging growth company” upon the earliest of:

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Risks Relating to Our Incorporation and Location in Israel

Conditions in Israel could adversely affect our business.

We are incorporated under Israeli law and our principal offices and manufacturing facilities are located in 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. Although Israel has entered into various agreements with Egypt, Jordan and the Palestinian Authority, there has been an increase in unrest and terrorist activity, which began in September 2000 and has continued with varying levels of severity through 2012. Starting in December 2008, for approximately three weeks, Israel engaged in an armed conflict with Hamas in the Gaza Strip, which involved missile strikes against civilian targets in various parts of Israel and negatively affected business conditions in Israel. In November 2012, for approximately one week, Israel experienced a similar armed conflict, resulting in hundreds of rockets being fired from the Gaza Strip and disrupting most day-to-day civilian activity in southern Israel, the location of our manufacturing facility. In the event that our facilities are damaged as a result of hostile action or hostilities otherwise disrupt the ongoing operation of our facilities or the airports and seaports on which we depend to import and export our supplies and products, our ability to manufacture and deliver products to customers could be materially adversely affected.

Several countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continues or increases. These restrictions may limit materially our ability to obtain raw materials from these countries or sell our products to companies in these countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or significant downturn in the economic or financial condition of Israel, could adversely affect our operations and product development, cause our sales to decrease and adversely affect the share price of publicly traded companies having operations in Israel, such as us.

Our operations may be disrupted by the obligations of personnel to perform military service.

As of March 31, 2013, we had 292 employees, all of whom were based in Israel. Our employees may be called upon to perform up to 36 days (and in some cases more) of annual military reserve duty until they reach the age of 40 (and in some cases, up to 45 or older) and, in emergency circumstances, could be called to active duty. In response to increased tension and hostilities, there have been since September 2000 occasional call-ups of military reservists, including in connection with the mid-2006 war in Lebanon, and the December 2008 and November 2012 conflicts with Hamas, and it is possible that there will be additional call-ups in the future. Our operations could be disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods of one or more of our key employees for military service. Such disruption could materially adversely affect our business and results of operations. Additionally, the absence of a significant number of the employees of our Israeli suppliers and contractors related to military service or the absence for extended periods of one or more of their key employees for military service may disrupt their operations, in which event our ability to deliver products to customers may be materially adversely affected.

The tax benefits that are available to us require us to continue to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes.

One of our Israeli facilities has “Approved Enterprise” status granted by the Investment Center of the Ministry of Economy (formerly named the Ministry of Industry, Trade and Labor) of the State of Israel (the “Investment Center”), under the Israeli Law for the Encouragement of Capital Investments, 1959 (the “Investment Law”), which made us eligible for a grant and certain tax benefits under that law for a certain investment program. The investment program provided us with a grant in the amount of 24% of our approved investments, in addition to certain tax benefits, which will apply to the turnover resulting from the operation of such investment program, for a period of up to ten consecutive years from the first year in which we generated taxable income. The tax benefits under the Approved Enterprise status will expire at the end of 2017.

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Additionally, we have obtained a tax ruling from the Israeli Tax Authority according to which, among other things, our activity has been qualified as an “industrial activity,” as defined in the Investment Law, and is also eligible for tax benefits as a “Privileged Enterprise,” which will apply to the turnover attributed to such enterprise, for a period of up to ten years from the first year in which we generated taxable income. The tax benefits under the Privileged Enterprise status are scheduled to expire at the end of 2021.

In order to remain eligible for the tax benefits of an Approved/Privileged Enterprise, we must continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. In addition, in order to remain eligible for the tax benefits available to the Approved Enterprise, we must also comply with the criteria set forth in the applicable certificate of approval, and in the case of the Privileged Enterprise, we must also comply with the conditions set forth in the tax ruling. These conditions include, among other things, that the production, directly or through subcontractors, of all our products should be performed within certain regions of Israel. If we do not meet these requirements, the tax benefits would be reduced or canceled and we could be required to refund any tax benefits that we received in the past, in whole or in part, linked to the Israeli consumer price index, together with interest. Further, these tax benefits may be reduced or discontinued in the future. For example, while we do not expect that the transfer of manufacturing of Glassia to Baxter would result in the reduction or loss of these tax benefits, the Israeli Tax Authority may determine otherwise. If these tax benefits are canceled, our Israeli taxable income would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies is currently 25% and, if the 2013 – 2014 Economic Plan recently proposed by the Israeli government (the “2013 – 2014 Economic Plan”) is enacted, it would increase to 26.5% in 2014 and thereafter. For more information about applicable Israeli tax regulations, see “Taxation and Government Programs — Israeli Tax Considerations and Government Programs.”

In the future, we may not be eligible to receive additional tax benefits under the Investment Law if we increase certain of our activities outside of Israel. Additionally, in the event of a distribution of a dividend from the abovementioned tax exempt income, in addition to withholding tax at a rate of 15% (or a reduced rate under an applicable double tax treaty), we will be subject to tax on the otherwise exempt income (grossed-up to reflect the pre-tax income that we would have had to earn in order to distribute the dividend) at the corporate tax rate applicable to our Approved/Privileged Enterprise’s income which would have been applied had we not enjoyed the exemption. Similarly, in the event of our liquidation or a share buyback, we will be subject to tax on the grossed up amount distributed or paid at the corporate tax rate which would have been applied to our Privileged Enterprise’s income had we not enjoyed the exemption. For more information about applicable Israeli tax regulations, see “Taxation and Government Programs — Israeli Tax Considerations and Government Programs.”

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the Israeli experts named in this prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.

We are incorporated in Israel. None of our directors and executive officers are residents of the United States and the Israeli experts named in this prospectus are located in Israel. The majority of our assets and the assets of these persons are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or Israeli court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws on the grounds that Israel is not the most appropriate forum in which to bring such a claim. 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. See “Enforceability of Civil Liabilities.”

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Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

Since we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our articles of association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders of U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters, such as an amendment to the company’s articles of association, an increase of the company’s authorized share capital, a merger of the company and approval of related party transactions that require shareholder approval. A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholders vote or to appoint or prevent the appointment of an office holder in the company has a duty to act in fairness towards the company. However, Israeli law does not define the substance of this duty of fairness. See “Management — Fiduciary Duties and Approval of Specified Related Party Transactions under Israeli Law — Duties of Shareholders.” Since Israeli corporate law underwent extensive revisions approximately 12 years ago, the parameters and implications of the provisions that govern shareholder behavior have not been clearly determined. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations.

Provisions of Israeli law and our articles of association may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.

Certain provisions of Israeli law and our articles of association could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or for our shareholders to elect different individuals to our board of directors, even if doing so would be beneficial to our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. For example, Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased. Under our articles of association, a merger shall require the approval of 66% of the voting rights represented at a meeting of our shareholders and voting on the matter, in person or by proxy, and any amendment to such provision shall require the approval of 60% of the voting rights represented at a meeting of our shareholders and voting on the matter, in person or by proxy. Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. With respect to certain mergers, Israeli tax law may impose certain restrictions on future transactions, including with respect to dispositions of shares received as consideration, for a period of two years from the date of the merger. See “Description of Share Capital — Acquisitions Under Israeli Law.”

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PRICE RANGE OF OUR ORDINARY SHARES

Our ordinary shares have been trading on the TASE under the symbol “KMDA” since August 2005. No trading market currently exists for our ordinary shares in the United States. We have been approved to list our ordinary shares on Nasdaq under the symbol “KMDA.”

The following table sets forth, for the periods indicated, the reported high and low closing sale prices of our ordinary shares on the TASE in NIS and U.S. dollars at a rate of $1.00 = NIS 3.73, the exchange rate published by the Bank of Israel as of December 31, 2012.

		NIS								$
		Price Per Ordinary Share								Price Per Ordinary Share
		High				Low				High				Low
Annual:
2012			35.95				19.02				9.64				5.10
2011			33.00				17.65				8.85				4.73
2010			28.13				18.18				7.54				4.87
2009			34.48				4.83				9.24				1.29
2008			40.00				4.55				10.72				1.22
Quarterly:
First Quarter 2013			39.70				33.80				10.64				9.06
Fourth Quarter 2012			37.16				30.50				9.96				8.18
Third Quarter 2012			29.90				25.50				8.02				6.84
Second Quarter 2012			30.51				22.35				8.18				5.99
First Quarter 2012			22.47				19.02				6.02				5.10
Fourth Quarter 2011			24.45				19.66				6.55				5.27
Third Quarter 2011			28.19				17.65				7.56				4.73
Second Quarter 2011			31.85				24.31				8.54				6.52
First Quarter 2011			33.00				25.84				8.85				6.93
Most Recent Six Months:
April 2013			44.45				37.10				11.92				9.95
March 2013			39.70				35.44				10.64				9.50
February 2013			37.01				35.11				9.92				9.41
January 2013			36.90				33.93				9.89				9.10
December 2012			37.16				31.95				9.96				8.57
November 2012			32.64				32.15				8.75				8.62

On May 12, 2013, the last reported sale price of our ordinary shares on the TASE was NIS 38.24 per share, or $10.75 per share (based on the exchange rate reported by the Bank of Israel on such date, which was NIS 3.5580 = $1.00).

As of April 30, 2013, there were three shareholders of record of our ordinary shares. The number of record holders is not representative of the number of beneficial holders of our ordinary shares, as 98% of our issued and outstanding shares as of such date were recorded in the name of our nominee company to the TASE, Mizrahi Tefahot Registration Company Ltd.

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CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2013:

•

on an actual basis; and

•

on an as adjusted basis to reflect our sale of 5,582,636 ordinary shares in this offering at an initial public offering price of $10.75 per share, which was the last reported sale price of our ordinary shares on the TASE on May 12, 2013 (based on the exchange rate reported by the Bank of Israel on that date).

You should read this table together with our consolidated financial statements and the related notes, which we include elsewhere in this prospectus, and with the information under “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

		As of March 31, 2013
		Actual				As Adjusted
Cash, cash equivalents and short-term investments		$	33,036			$	86,887
Debt:
Convertible Debentures (1)		$	24,986			$	24,986
Shareholder’s Equity:
Ordinary shares, NIS 1.00 par value; 70,000,000 shares authorized, 28,723,998 shares issued and outstanding, actual; 70,000,000 shares authorized, 34,306,634 shares issued and outstanding, as adjusted			7,220				8,750
Additional paid in capital			97,185				148,985
Conversion option in convertible debentures			3,794				3,794
Other capital reserves			4,555				4,555
Capital reserve due to translation to presentation currency			(3,490	)			(3,490	)
Cash flow hedge reserve			188				188
Accumulated deficit			(82,726	)			(82,726	)
Total shareholder’s equity			26,726				80,056
Total capitalization		$	51,712			$	105,042

(1)

Convertible debentures represents NIS 100 million ($28.1 million based on the exchange rate reported by the Bank of Israel on May 12, 2013) aggregate principal amount of our convertible debentures, which are convertible into our ordinary shares at a price of NIS 37.12 (or approximately $10.43 per share based on the exchange rate reported by the Bank of Israel on May 12, 2013).

The number of our ordinary shares outstanding as of March 31, 2013 excludes:

•

1,493,658 ordinary shares (not including 150,000 options granted to David Tsur, our Chief Executive Officer, which were approved in December 2012 and amended in April 2013 by our compensation committee and board of directors, and approved by our shareholders in May 2013 at our general shareholders meeting) issuable upon the exercise of options issued as incentive compensation outstanding as of March 31, 2013, at a weighted average exercise price of NIS 22.64 (or approximately $6.07), per share; and

•

2,693,965 ordinary shares issuable upon the conversion of NIS 100 million ($28.1 million based on the exchange rate reported by the Bank of Israel on May 12, 2013) aggregate principal amount of convertible debentures outstanding as of March 31, 2013, at a conversion price of NIS 37.12 (or approximately $10.43 based on the exchange rate reported by the Bank of Israel on May 12, 2013) per share.

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DILUTION

If you invest in our ordinary shares in this offering, your interest will be diluted to the extent of the difference between the public offering price per ordinary share and the net tangible book value per ordinary share after this offering. We determine our net tangible book value per ordinary share as of any date by taking the amount of our total tangible assets, subtracting the amount of our total liabilities, and dividing the difference by the total number of our ordinary shares outstanding as of the given date.

As of March 31, 2013, our net tangible book value was $26.5 million, or $0.92 per ordinary share. After giving effect to our sale in this offering of 5,582,636 ordinary shares at an assumed initial public offering price of $10.75 per share, which was the last reported sale price of our ordinary shares on the TASE on May 12, 2013 (based on the exchange rate reported by the Bank of Israel on that date), and after deducting the underwriting discount and the estimated offering expenses payable by us, our net tangible book value as of March 31, 2013 would have been $79.9 million, or $2.33 per ordinary share. This represents an immediate increase of net tangible book value of $53.3 million to our existing shareholders and an immediate dilution of $8.42 per ordinary share to investors purchasing shares in this offering. The following table illustrates this dilution.

Initial public offering price per ordinary share						$	10.75
Net tangible book value per ordinary share as of March 31, 2013, before giving effect to this offering		$	0.92
Increase in net tangible book value per ordinary share attributable to investors purchasing shares in this offering			1.41
Net tangible book value per ordinary share after giving effect to this offering							2.33
Dilution per ordinary share to investors purchasing shares in this offering						$	8.42

A $1.00 increase (decrease) in the assumed initial public offering price of $10.75 per share would increase (decrease) our pro forma net tangible book value after the offering by approximately $5.2 million and our net tangible book value per share after this offering by approximately $0.15 and (decrease) increase dilution per share to new investors by approximately $0.85, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

If the underwriters fully exercise their overallotment option, the net tangible book value per ordinary share after giving effect to this offering would be $2.51 per ordinary share, and the dilution in pro forma net tangible book value per ordinary share to investors in this offering would be $8.24 per ordinary share.

The following table presents the differences between the total consideration paid to us and the average price per ordinary share paid by our existing shareholders (based on the exchange rate reported by the Bank of Israel on May 12, 2013) and by new investors purchasing ordinary shares in this offering, before deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

		Ordinary Shares Purchased								Total Consideration								Average Price Per Ordinary Share
		Number				Percent				Amount				Percent
Existing shareholders			28,723,998				83.73			$	95,102,958.70				61.32			$	3.31
New investors			5,582,636				16.27				60,000,000.00				38.68				10.75
Total			34,306,634				100.0			$	155,102,958.70				100.0

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		Three months ended March 31,								Year Ended December 31,
		2013				2012				2012				2011				2010
		(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues from Proprietary Products		$	8,060			$	12,478			$	46,445			$	35,308			$	22,980
Revenues from Distribution			4,536				7,127				26,230				24,175				11,497
Total revenues			12,596				19,602				72,675				59,483				34,477
Cost of revenues from Proprietary Products			4,562				7,595				26,911				22,188				18,878
Cost of revenues from Distribution			3,839				6,384				23,071				20,574				9,827
Total cost of revenues			8,401				13,979				49,982				42,762				28,705
Gross profit			4,195				5,623				22,693				16,721				5,772
Research and development expenses			3,730				3,466				11,821				11,729				9,279
Selling and marketing expenses			513				472				1,853				2,331				2,152
General and administrative expenses			1,256				1,348				4,781				5,126				4,543
Operating income (loss)			(1,304	)			337				4,238				(2,465	)			(10,202	)
Financial income			86				183				578				870				560
Income (expense) in respect of currency exchange and translation differences and derivatives instruments, net			62				(64	)			(100	)			937				(1,052	)
Income (expense) in respect of revaluation of warrants to fair value			—				(55	)			(576	)			540				(640	)
Financial expense			(855	)			(873	)			(3,357	)			(3,597	)			(3,088	)
Income (loss) before taxes on income			(2,011	)			(472	)			783				(3,715	)			(14,421	)
Taxes on income			24				—				523				—				—
Net income (loss)		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)
Income (loss) attributable to equity holders		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)
Income (loss) per share attributable to equity holders:
Basic		$	(0.07	)		$	(0.02	)		$	0.01			$	(0.13	)		$	(0.54	)
Diluted		$	(0.07	)		$	(0.02	)		$	0.01			$	(0.15	)		$	(0.54	)
Weighted-average number of ordinary shares used to compute income (loss) per share attributable to equity holders:
Basic			28,677,370				27,607,342				28,078,996				27,550,643				26,674,717
Diluted			28,677,370				27,607,342				28,686,636				27,703,331				26,674,717
Pro forma earnings per share attributable to equity holders (1) :
Basic		$	(0.06	)						$	(0.01	)
Diluted		$	(0.06	)						$	(0.01	)
Consolidated Statements of Cash Flows:
Cash flows from operating activities			500			$	(7,133	)		$	(8,262	)		$	994			$	10,037
Cash flows from investing activities			5,295				(3,383	)			(2,432	)			(1,136	)			(22,183	)
Cash flows from financing activities			(348	)			103				2,966				(403	)			7,430
Other Data:
Adjusted net income (loss) (2) (3)		$	(1,822	)		$	(69	)		$	2,103			$	(3,377	)		$	(12,161	)
Adjusted EBITDA (2) (4)			(268	)			1,437				8,549				1,453				(5,941	)

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										As of December 31,
		As of March 31.								2012				2011				2010
		As Adjusted (5)				Actual
		(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents, restricted cash and short-term investments		$	86,887			$	33,036			$	33,795			$	42,686			$	46,071
Trade receivables			9,177				9,177				13,861				7,131				12,827
Working capital (6)			90,505				37,725				40,651				44,185				51,545
Total assets			141,781				88,551				89,114				85,114				91,496
Total liabilities			61,725				61,825				60,721				62,716				65,172
Total shareholders’ equity			80,056				26,726				28,393				22,398				26,324

Non-IFRS financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, our IFRS results. We expect to continue reporting non-IFRS financial measures, adjusting for the items described below, and we expect to continue to incur expenses similar to the non-cash, non-IFRS adjustments described below. Accordingly, unless otherwise stated, the exclusion of these and other similar items in the presentation of non-IFRS financial measures should not be construed as an inference that these items are unusual, infrequent or non-recurring. Adjusted net income (loss) and adjusted EBITDA are not recognized terms under IFRS and do not purport to be an alternative to IFRS net income (loss) as an indicator of operating performance or any other IFRS measure. Moreover, because not all companies use identical measures and calculations, the presentation of adjusted net income (loss) or adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

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The table below shows adjusted net income (loss) and also reconciles these figures to the IFRS measure net income (loss):

		Three Months Ended March 31,								Year Ended December 31,
		2013				2012				2012				2011				2010
		(in thousands of dollars)
Net income (loss)		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)
Share-based compensation charges			213				348				1,267				878				1,620
Expense (income) in respect of revaluation of warrants to fair value			—				55				576				(540	)			640
Adjusted net income (loss)		$	(1,822	)		$	(69	)		$	2,103			$	(3,377	)		$	(12,161	)

The table below shows adjusted EBITDA and also reconciles these figures to the IFRS measure net income (loss):

		Three Months Ended March 31,								Year Ended December 31,
		2013				2012				2012				2011				2010
		(in thousands of dollars)
Net income (loss)		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)
Income tax expense			24				—				523				—				—
Financial expense, net			769				690				2,779				2,727				2,528
Depreciation and amortization expense			823				752				3,044				3,040				2,640
Share-based compensation charges			213				348				1,267				878				1,620
Income (expense) in respect of translation differences and derivatives instruments, net			(62	)			64				100				(937	)			1,052
Expense (income) in respect of revaluation of warrants fair value			—				55				576				(540	)			640
Adjusted EBITDA		$	(268	)		$	1,437			$	8,549			$	1,453			$	(5,941	)

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$35.3 million of revenues from our Proprietary Products segment, or 59% of total revenues, and $24.2 million of revenues from our Distribution segment, or 41% of total revenues.

Factors Affecting Our Results of Operations

Strategic Partnerships

In July 2010, we received FDA approval for the marketing of Glassia in the United States. Following this approval, we entered into a strategic arrangement with Baxter for the marketing and distribution of Glassia in the United States, Canada, Australia and New Zealand and for the licensing of our technology, granting Baxter rights to manufacture Glassia for sales in these territories. We began recognizing revenues from sales of Glassia in the United States under this strategic arrangement with Baxter in September 2010. From the inception of the strategic arrangement through December 31, 2012, we have received $30.0 million from Baxter for distribution rights, a portion of which has been accrued as deferred revenue, and for achieving milestones set forth in the distribution and licensing agreements. We have recognized cumulative revenues until December 31, 2012 from Baxter in the amount of $65.6 million. We currently generate revenues from sales of Glassia to Baxter, and incur cost of revenues to produce it. Baxter has the right to begin producing Glassia itself, which is expected to occur in 2017, and pay us royalties. As Baxter transitions to producing Glassia in its own facilities, our capacity will become available to produce inhaled formulations of AAT, AAT products for sale in other geographies and indications, or other plasma-derived products. We would generate higher margins from royalties from Baxter under this arrangement, as we would not incur cost of revenues, but we may receive lower revenues. We expect to replace those lower revenues by producing and selling other products, including inhaled formulations of AAT and Glassia (if approved) in Europe.

In August 2012, we also entered into a strategic agreement with Chiesi, pursuant to which Chiesi will be an exclusive distributor of Inhaled AAT for AATD in Europe. Chiesi will be responsible for, among other things, product marketing, patient screening and obtaining reimbursement approvals for the Inhaled AAT for AATD product. As part of the agreement, we are entitled to receive payments of up to $60.0 million, contingent on meeting regulatory and sales milestones. In addition, Chiesi has committed to purchase Inhaled AAT for AATD in minimum quantities following the second anniversary of obtaining certain regulatory and reimbursement approvals.

In addition, in July 2011, we signed a strategic agreement with Kedrion to cooperate in the clinical development and exclusive marketing and sales in the United States of KamRAB, our vaccine against rabies in humans. Kedrion markets its products in Europe, the United States and in approximately 40 other countries worldwide. We have not yet started to generate revenues under this agreement as Kedrion is in the process of commencing the Phase III clinical trials in the United States.

Product Development Costs

Since the founding of our company, we have focused on developing a broad portfolio of plasma-derived protein therapeutics for a variety of indications. The development of plasma-derived protein therapeutics is characterized by significant up-front product development costs, including, for example, costs for conducting clinical trials to obtain regulatory approvals, costs for materials for development, external consulting fees and opportunity costs for reallocating our production facility to produce clinical trial materials. In order to reduce costs related to the development and regulatory approval of new protein therapeutics, we seek to share development costs with strategic partners, such as Baxter for the clinical trials for Glassia in the United States and Kedrion for the clinical trials for KamRAB in the United States. See “Business — Strategic Partnerships — Baxter (Glassia)” and “Business — Strategic Partnerships — Kedrion (KamRAB).”

Product development costs may fluctuate from period to period, as our product candidates pass through various stages of development. For example, for the years ended December 31, 2012 and 2011, we incurred significant research and development expenses related to two ongoing clinical trials related to Inhaled AAT for AATD in Europe and the use of AAT for the treatment of newly diagnosed Type-1 diabetes. We expect to continue to incur research and development expenses related to clinical trials, as well as other ongoing, planned or future clinical trials with regards to our product pipeline. See “Business — Our Product Pipeline and Development Program.

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Product Competition

The worldwide market for pharmaceuticals in general and biopharmaceutical and plasma products in particular has in recent years undergone a process of mergers and acquisitions among companies active in such markets. This trend has led to a reduction in the number of competitors in the market, and the strengthening of the remaining competitors, mainly for specific immunoglobulin products.

While there are additional producers of AAT products in Europe and the United States, including Baxter, we have not seen significant changes in these producers’ activities in the market. Additionally, our strategic alliance with Baxter has strengthened our competitive positioning in the market and we believe this will contribute to increased revenues in the future.

In our Distribution segment, in recent periods, we have benefitted from the temporary suspension in sales in Israel of two of our competitors’ IVIG products. These competing IVIG products have returned to the market in 2013. As such, we expect to see increased competition for our Distribution segment products. Based on the results of the recent tenders for 2013, we expect that revenues from our Distribution segment will decrease in 2013 due to such renewed competition.

Costs of Raw Materials

In our Proprietary Products segment, a significant portion of our manufacturing costs are for raw materials consisting of plasma or fraction IV. The consolidation among plasma companies has led to a decrease in the number of plasma suppliers in the world, as either manufacturers of plasma-based pharmaceuticals purchase plasma suppliers or plasma suppliers are shut down in response to the number of manufacturers of plasma-based pharmaceuticals decreasing. In addition, in recent years, we have seen an increase in the development efforts for new plasma-derived products.

Historically, we have not been subject to significant pricing fluctuations for plasma or fraction IV due to the consolidation of plasma suppliers or increased development efforts. Additionally, in order to attempt to prevent future price fluctuations and ensure the availability of plasma and fraction IV, we have secured supply of plasma and fraction IV from multiple suppliers at fixed prices (subject to adjustments for inflation) for predetermined quantities.

In our Distribution segment, our costs are for the purchase of products for sale from our distributors. Our annual purchases are forecasted each year with each distributor, but individual product purchases during the year are made on a purchase order basis. We do not have minimum purchase obligations, and as such, are able to respond accordingly to pricing fluctuations that occur year to year. Historically, we have not seen significant price fluctuations from our two largest suppliers. Absent material changes in the market, such as a significant increase in the price of plasma or plasma-derivatives, we do not expect a significant increase in the cost of purchasing products.

Growing Demand

Over the past few years, we have seen an increase in demand for products in our Proprietary Products segment. Technological improvements and increased awareness permit innovations in the diagnosis of the illnesses and symptoms that our products are designed to treat. For example, demand in certain emerging markets such as Russia, Brazil and India for plasma-derived products have grown and are expected to continue to grow. This demand is driven by enhanced socioeconomic conditions and more informed patients who are demanding better quality medical care, as well as increasing government healthcare spending on plasma derivative products in some of these markets. More informed patients are demanding the use of drugs based on human antibodies obtained from human plasma rather than antibodies obtained from animal blood, which generally have a lower standard of quality and safety.

Additionally, in the United States and Europe, we believe that AATD is currently significantly under-identified and under-treated, as we estimate that only approximately 5% and 2% of all potential cases of AATD are treated in the United States and Europe, respectively, with an aggregate of up to an estimated 200,000 patients suffering from AATD, of which lesss than 10% have been disgnosed. We expect that our market opportunity for our AAT products, including Glassia and Inhaled AAT for AATD (if approved), will continue to grow as awareness of AATD expands due to factors such as marketing activities, inexpensive and

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effective diagnosis tools, and improved training. In addition, various awareness and patient identification programs initiated by companies producing AATD treatments are expected to increase demand for Glassia and, once approved, Inhaled AAT for AATD. In addition, our product pipeline is focused on products for indications that will address markets in which we believe have a significant market opportunity, such as indications for the treatment of cystic fibrosis and newly diagnosed Type-1 diabetes.

Key Components of Our Results of Operations

Revenues

In our Proprietary Products segment, we generate revenues from the sale of products and the licensing of our technology to strategic partners. Historically, we have derived most of our revenues from the sale of products and to a lesser extent from payments by the Israeli government related to our snake bite antiserum product. In the three months ended March 31, 2013 and 2012, and the years ended December 31, 2012, 2011 and 2010, we derived a significant portion of our total revenues from sales of Glassia to Baxter. Sales to Baxter accounted for approximately 22% and 41% of our total revenues in the three months ended March 31, 2013 and 2012, respectively, and 42%, 41% and 30% of our total revenues in the years ended December 31, 2012, 2011 and 2010, respectively. We expect sales of Glassia to Baxter will be stable in the next year or two and grow after that, until Baxter begins production of Glassia, at which time our sales to Baxter will be reduced as they are replaced by royalties from Baxter. As a result of the timing of Baxter’s orders for Glassia and our expected timetable for receiving FDA approval for our production processes changes, which is expected during the second half of 2013 (see “Business — Manufacturing and Supply”), based upon Baxter’s actual orders, revenue in 2013 from sales to Baxter will mainly be recognized during the second half of the year. In the second quarter of 2013, we successfully completed a milestone under our license agreement with Baxter related to the transfer of technology to Baxter, for which we are entitled to payment of $4.5 million in 2013.

In our Distribution segment, we generate revenues from the sale in Israel of products produced by third parties, which, in the years ended December 31, 2012 and 2011, has increased significantly due to a temporary reduction in sales of our competitors’ IVIG products in the Israeli market. One of our competitors resumed marketing and selling its IVIG products in Israel in 2013, as expected. Sales of IVIG accounted for approximately 23%, 26%, 29% and 18% of our total revenues for the three months ended March 31, 2013 and the years ended December 31, 2012, 2011 and 2010, respectively.

In the future, as we further commercialize our products, we expect to derive a greater percentage of our revenues from our Proprietary Products segment, mainly as a result of continued growth in sales of our existing products, the launch of new AAT products currently in different development phases and reduced revenues from our Distribution segment due to the factors described above.

Cost of Revenues and Gross Profit

Cost of revenues in our Proprietary Products segment includes expenses for the manufacturing of products such as raw materials, payroll, utilities, laboratory costs and depreciation. Cost of revenues also includes provisions for write-downs of inventories and inventory write offs. Costs of revenues in our Distribution segment consists of costs of products acquired, packaging and labeling for sales by us in Israel.

In addition to the successful strategic partnership with Baxter and successful penetration of the U.S. market, we have focused during the three months ended March 31, 2013 and the years ended December 31, 2012 and 2011 on increasing our production outputs and improving profitability. In addition, implementing significant technology improvements and streamlining our manufacturing process resulted in significantly increased manufacturing capacity at our facility. The increase in production capacity led to a further increase in profitability and, following the strategic partnership with Baxter, enabled us to achieve economies of scale and lower our per unit costs. We have been implementing production improvements for Glassia that we expect will lead to improved margins and higher productivity in anticipation of additional applications for AAT. Any changes in our Glassia production processes must be approved by the FDA, and we recently submitted a supplement to the FDA with respect to the Glassia production improvements. In March 2013, we received a request from the FDA to submit additional data and explanations prior to its approval of our new production processes. We expect to provide the additional information required by the FDA during the second quarter of

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2013. We had produced some Glassia using the new processes before we received this request. Until we receive FDA approval for the new processes, we are continuing to produce Glassia according to FDA approved production processes. We cannot provide assurance that we will obtain such approval on a timely basis or at all. Failure to obtain such approval could cause us to write off all or part of the value of the inventory produced using the new methods, which was $9.8 million as of March 31, 2013. In addition, if we do not obtain such approval, we would not obtain the margin benefits we are anticipating from such improved processes.

Gross profit is the difference between total revenues and the cost of revenues. Gross profit is mainly affected by volume of sales and launching new products, cost of raw materials and plant maintenance and overhead. We have seen an increase in gross profitability in recent years as a result of the increase in our sales and the corresponding reduction in per unit costs attributable to greater production output.

Our gross margins are generally higher in our Proprietary Products segment (43.4% for the three months ended March 31, 2013 and 42.1% for the year ended December 31, 2012), reflecting higher margins on our proprietary products than in our Distribution segment (15.1% for the three months ended March 31, 2013 and 12.0% for the year ended December 31, 2012). We expect that our overall gross margins will increase to the extent that our sales from Proprietary Products segment increase as a percentage of our total sales (which we expect to occur in 2013), and we expect our gross margins in the Proprietary Products segment to increase further to the extent that our sales of Glassia (or other AAT products) increase as these products have higher gross margins than our immunoglobulin proprietary products.

Research and Development Expenses

Research and development expenses are incurred for the development of new products and processes and include conducting clinical trials, development materials, payroll, including scientists and professionals for product registration and approval, external advisors and the allotted cost of our manufacturing facility for research and development purposes. While research and development expenses are unallocated on a segment basis, the activities generally relate to our Proprietary Products segment.

We expect our research and development expenses to increase annually over the next couple of years to reflect our plan to fund certain additional clinical trials for AAT for certain indications. However, actual spending could differ as our plans change and we invest in other drugs or potentially reduce our anticipated funding on research for existing products.

Selling and Marketing Expenses

Selling and marketing expenses principally consist of expenditures incurred for advertising, marketing or promotional activities, shipping and handling costs, product liability insurance and business development activities, as well as marketing authorization fees to regulatory agencies. Due to our strategic partnerships in our Proprietary Products segment, we expect these costs to remain at a similar level. However, we may incur higher expenses in the future, as we have not entered into strategic partnerships for all of our pipeline products, which we may decide to sell using our own direct sales force. We market our products in our Distribution segment to health maintenance organizations and hospitals in Israel.

General and Administrative Expenses

General and administrative expenses consist of compensation for employees in executive and administrative functions (including payroll, bonus, equity compensation and other benefits), office expenses, professional consulting services, legal and audit fees as well as team development. We expect general and administrative expenses to remain stable; however, they may increase due to expenses related to being a public company in the United States. In addition, we expect to incur certain non-recurring incentive-based employee compensation expenses in connection with this offering. See “Management — Employment Agreements with Executive Officers.”

Financial Income

Financial income is comprised of interest income on amounts invested, in bank deposits and short-term investments and changes in fair value of financial instruments at fair value through profit or loss.

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Income (expense) in respect of currency exchange and translation differences and derivatives instruments

Income (expense) in respect of currency exchange and translation differences and derivatives instruments are comprised of changes on balances in currencies other than our functional currency. As a result of changing our functional currency in 2012 from NIS to U.S dollar, the income (expense) in respect of translation differences are generated (incurred) due to differences on balances in other currencies versus the U.S dollar, while before 2012, it was generated due to other currencies versus the NIS. Changes in the fair value of derivatives instruments not designated as hedging instruments are reported to profit or loss.

Income (expense) in respect of revaluation of warrants to fair value

Income (expense) in respect of revaluation of warrants to fair value comprised of a change in the fair value of warrants as a result of change in shares prices and expected life of warrants, which impact the fair value of the liability at the end of each reporting period. We do not expect to record any further income (expense) in respect of the revaluation of warrants to fair value starting in the second quarter of 2013 because the remaining outstanding warrants as of December 31, 2012 were exercised during the first quarter of 2013.

Financial Expenses

Financial expenses are comprised of changes in the time value of provisions, changes in the fair value of financial assets at fair value through profit and interest and amortization of discount on convertible debentures.

Taxes on Income

We have not been required to pay income taxes since 1997 other than tax withheld in a foreign jurisdiction in 2012.

One of our Israeli facilities has Approved Enterprise status granted by the Investment Center under the Investment Law, which made us eligible for a grant and certain tax benefits under that law for a certain investment program. The investment program provided us with a grant in the amount of 24% of our approved investments, in addition to certain tax benefits, which will apply to the turnover resulting from the operation of such investment program, for a period of up to ten consecutive years from the first year in which we generated taxable income. The tax benefits under the Approved Enterprise status will expire at the end of 2017. Additionally, we have obtained a tax ruling from the Israeli Tax Authority according to which, among other things, our activity has been qualified as an “industrial activity,” as defined in the Investment Law, and is also eligible for tax benefits as a Privileged Enterprise, which will apply to the turnover attributed to such enterprise, for a period of up to ten years from the first year in which we generated taxable income. The tax benefits under the Privileged Enterprise status are scheduled to expire at the end of 2021. As of the date of this prospectus, we have not utilized any tax benefits under the Investment Law, other than the receipt of grants attributable to our Approved Enterprise status.

We may be subject to withholding taxes for payments we receive from foreign countries. If certain conditions are met, these taxes may be credited against future tax liabilities under tax treaties and Israeli tax laws. However, due to our net operating loss carryforwards, it is uncertain whether we will be able to receive such credit and therefore, we may incur tax expenses.

We anticipate that as we further expand our sales into other countries, we could become subject to taxation based on such country’s statutory rates and our effective tax rate could fluctuate accordingly.

As of December 31, 2012, we have net operating loss carryfowards of approximately $73.0 million. The net operating loss carryforwards have no expiration date. Following the full utilization of our net operating loss carryforwards, we expect that our effective income tax rate in Israel will reflect the benefits discussed above.

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Results of Operations

The following table sets forth certain statement of operations data:

		Three months ended March 31,								Year Ended December 31,
		2013				2012				2012				2011				2010
		(in thousands, except per share data)
Revenues from Proprietary Products		$	8,060			$	12,478			$	46,445			$	35,308			$	22,980
Revenues from Distribution			4,536				7,124				26,230				24,175				11,497
Total revenues			12,596				19,602				72,675				59,483				34,477
Cost of revenues from Proprietary Products			4,562				7,595				26,911				22,188				18,878
Cost of revenues from Distribution			3,839				6,384				23,071				20,574				9,827
Total cost of revenues			8,401				13,979				49,982				42,762				28,705
Gross profit			4,195				5,623				22,693				16,721				5,772
Research and development expenses			3,730				3,466				11,821				11,729				9,279
Selling and marketing expenses			513				472				1,853				2,331				2,152
General and administrative expenses			1,256				1,348				4,781				5,126				4,543
Operating income (loss)			(1,304	)			337				4,238				(2,465	)			(10,202	)
Financial income			86				183				578				870				560
Income (expense) in respect of currency exchange and translation differences and derivatives instruments			62				(64	)			(100	)			937				(1,052	)
Income (expense) in respect of revaluation of warrants to fair value			—				(55	)			(576	)			540				(640	)
Financial expense			(855	)			(873	)			(3,357	)			(3,597	)			(3,087	)
Income (loss) before taxes on income			(2,011	)			(472	)			783				(3,715	)			(14,421	)
Taxes on income			24				—				523				—				—
Net income (loss)		$	(2,035	)		$	(472	)		$	260			$	(3,715	)		$	(14,421	)

Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012

Segment Results

		Three months ended March 31,								Change Q1 2013 vs. Q1 2012
		2013				2012				Amount				Percent
		(in thousands)
Revenues:
Proprietary Products		$	8,060			$	12,478			$	(4,418	)			(35	%)
Distribution			4,536				7,124				(2,588	)			(36	%)
Total		$	12,596			$	19,602			$	(7,006	)			(36	%)
Cost of Revenues:
Proprietary Products		$	4,562			$	7,595			$	(3,033	)			(40	%)
Distribution			3,839				6,384				(2,545	)			(40	%)
Total		$	8,401			$	13,979			$	(5,578	)			(40	%)
Gross Profit:
Proprietary Products		$	3,498			$	4,883			$	(1,385	)			(28	%)
Distribution			697				740				(43	)			(6	%)
Total		$	4,195			$	5,623			$	(1,428	)			(25	%)

Revenues

In the three months ended March 31, 2013, we generated $12.6 million of total revenues, compared to $19.6 million in the three months ended March 31, 2012, a decrease of $7.0 million, or approximately 36%. This decrease was primarily due to a $4.4 million decrease in our Proprietary Products segment revenues,

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mainly attributable to a decrease in sales volume of Glassia to Baxter due to the reason discussed below, as well as a $2.6 million decrease in our Distribution segment revenues, mainly attributable to a decrease in IVIG product sales volume, as one of our competitors resumed marketing and selling its IVIG product in 2013, as expected. The relative decrease in sales of Glassia to Baxter in the three months ended March 31, 2013 was due to the fact that Baxter ordered a greater amount of Glassia to be delivered after the first quarter of 2013 compared to its product orders for delivery in the first quarter of 2012. Baxter’s schedule for the delivery of Glassia contemplated that deliveries would occur mainly during the second half of 2013 and, based upon Baxter’s actual orders, we expect revenue in 2013 from sales to Baxter will mainly be recognized during the second half of the year. We currently expect to receive FDA approval of the improved production processes during the second half of 2013 (see “Business — Manufacturing and Supply”). While the FDA review is pending, we are continuing to produce Glassia according to the FDA-approved production processes to fulfill Baxter’s orders in 2013, which will enable us to meet Baxter delivery requirements regardless of the timing of obtaining FDA approval for the improved processes.

Cost of Revenues

In the three months ended March 31, 2013, we incurred $8.4 million of cost of revenues, compared to $14.0 million in the three months ended March 31, 2012, a decrease of $5.6 million, or approximately 40%. The costs of revenues in our Proprietary Products segment decreased by $3.0 million, which was primarily due to the decrease in sales volume of Glassia. The costs of revenues in our Distribution segment decreased by $2.5 million, which was primarily due to a decrease in the volume of IVIG products sold.

Gross profit in our Proprietary Products segment decreased by $1.4 million, primarily due to the decrease in revenues discussed above. Gross profit in our Distribution segment decreased by $43 thousand. As a percentage of total revenues, gross margin was 33.3% and 28.7% for the periods ended March 31, 2013 and 2012, respectively. Gross margin for our Proprietary Products segment, as a percentage of revenues from that segment, was 43.4% and 39.1% for the periods ended March 31, 2013 and 2012, respectively. The increase in gross margin for our Proprietary Products segment is mainly attributable to revenues recognized from our agreement with Chiesi in the period ended March 31, 2013, which were not recognized in the period ended March 31, 2012 as we entered into the agreement in August 2012. Gross margin for our Distribution segment, as a percentage of revenues from that segment, was 15.4% and 10.4% for the periods ended March 31, 2013 and 2012, respectively. The increase in gross margin for our Distribution segment is mainly attributable to a shift in product mix as sales in the first quarter of 2013 of IVIG products that had lower margins as a percentage of Distribution segment revenues decreased from the first quarter of 2012 and sales in the first quarter of 2013 of higher margin products as a percentage of Distribution segment revenues increased from the first quarter of 2012. The overall increase in gross profit as a percentage of total revenues was primarily driven by the increase in gross margin for both our Proprietary Products segment and our Distribution segment, attributable to the reasons discussed above.

Research and Development Expenses

In the three months ended March 31, 2013, we incurred $3.7 million of research and development expenses, compared to $3.5 million in the three months ended March 31, 2012, an increase of $0.2 million. This increase was primarily due to a $0.7 million increase in facility costs allocated to research and development use offset by a $0.4 million decrease of clinical trial expenses for Type-1 Diabetes and Inhaled AAT in Europe trials. Other research and development expenses are not managed by projects as they are allocated between various tasks that are not always related to a major project.

		Three months ended March 31,								Total Expenses to Date through March 31,
		2013				2012				2013
Inhaled AAT		$	1,479			$	1,438			$	29,267
AAT for newly diagnosed Type-1 Diabetes			37				115				532
Unallocated Salary			705				955
Unallocated facility cost			1,189				869
Unallocated other expenses			320				89
Total			3,730				3,466

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Selling and Marketing Expenses

In the three months ended March 31, 2013 and 2012, we incurred $0.5 million of selling and marketing expenses. Selling and marketing expenses accounted for approximately 4.1% and 2.4% of total revenues for the three months ended March 31, 2013 and 2012, respectively.

General and Administrative Expenses

In the three months ended March 31, 2013, we incurred $1.2 million of general and administrative expenses, compared to $1.3 million in the three months ended March 31, 2012, a decrease of $0.1 million, or approximately 8%. This decrease was primarily due to a decrease of consulting expenses. General and administrative expenses accounted for approximately 10.0% and 6.9% of total revenues for the three months ended March 31, 2013 and 2012, respectively.

Financial Income

In the three months ended March 31, 2013, we generated $0.1 million of financial income, compared to $0.2 million in the three months ended March 31, 2012, a decrease of $0.1 million, or approximately 53.0%. This decrease was due to a decrease in interest received from bank deposits and other short term investments.

Income (expense) in respect of exchange and translation differences and derivatives instruments

In the three months ended March 31, 2013, we generated $62,000 of income in respect of currency exchange differences on balances in other currencies versus the U.S. dollar compared $64,000 of expenses in respect of currency exchange and translation differences and derivatives instruments in the three months ended March 31, 2012.

Financial Expenses

In the three months ended March 31, 2013, we incurred $0.8 million of financial expenses, compared to $0.9 million in the three months ended March 31, 2012, a decrease of $0.1 million, or approximately 11.1%. This decrease was primarily due to a decrease in interest on our convertible debentures as a result of a decrease in its variable interest rate.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

Segment Results

		Year Ended December 31,								Change 2012 vs. 2011
		2012				2011				Amount				Percent
		(in thousands)
Revenues:
Proprietary Products		$	46,445			$	35,308			$	11,137				31.5	%
Distribution			26,230				24,175				2,055				8.5	%
Total		$	72,675			$	59,483			$	13,192				22.2	%
Cost of Revenues:
Proprietary Products		$	26,911			$	22,188			$	4,723				21.3	%
Distribution			23,071				20,574				2,497				12.1	%
Total		$	49,982			$	42,762			$	7,220				16.9	%
Gross Profit:
Proprietary Products		$	19,534			$	13,120			$	6,414				48.9	%
Distribution			3,159				3,601				(442	)			(12.3	%)
Total		$	22,693			$	16,721			$	5,972				35.7	%

Revenues

In the year ended December 31, 2012, we generated $72.7 million of total revenues, compared to $59.5 million in the year ended December 31, 2011, an increase of $13.2 million, or approximately 22.2%. This increase was primarily due to a $11.1 million increase in our Proprietary Products segment revenues, mainly attributable to an increase in sales volume of Glassia to Baxter mainly due to an increase in the number of patients treated with Glassia, offset by a decrease in milestone payments as we received a $5.0

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million milestone payment from Baxter for the achievement of a development-based milestone related to the transfer of technology to Baxter in 2011 that we did not receive in 2012, and a $2.1 million increase in Distribution segment revenues, mainly attributable to an increase in IVIG product sales volume, that grew since 2010 when one of our competitors halted sales of its IVIG product and we were able to fill the additional demand in the market. In our Distribution segment, we generated $19.2 million of revenues from IVIG products and $7.0 million of revenues from other products in the year ended December 31, 2012, compared to $17.5 million of revenues from IVIG products and $6.7 million of revenues from other products in the year ended December 31, 2011.

Cost of Revenues

In the year ended December 31, 2012, we incurred $50.0 million of cost of revenues, compared to $42.8 million in the year ended December 31, 2011, an increase of $7.2 million, or approximately 16.9%. The cost of revenues in our Proprietary Products segment increased by $4.7 million, which was primarily due to the increase in sales volume of Glassia. The cost of revenues in our Distribution segment increased by $2.5 million, which was primarily due to an increase in volume of products sold.

Gross profit in our Proprietary Products segment increased by $6.4 million, primarily due to an increase in production output during the period and improvement in our production processes which yielded higher outputs and resulted in increased profitability due to economies of scale, offset by a decrease in milestone payments as we received a $5.0 million milestone payment from Baxter for the achievement of a development-based milestone related to the transfer of technology to Baxter in 2011 that we did not receive in 2012. Gross profit in our Distribution segment decreased by $0.4 million, which was primarily due to change in the mix of products sold to products with lower margins. As a percentage of total revenues, gross margin was 31.2% and 28.1% for the years ended December 31, 2012 and 2011, respectively. Gross margin for the Proprietary Products segment, as a percentage of revenues from that segment, was 42.1% and 37.2% for the years ended December 31, 2012 and 2011, respectively. Gross margin for the Distribution segment, as a percentage of revenues from that segment, was 12.0% and 14.9% for the years ended December 31, 2012 and 2011, respectively. The increase in gross profit as a percentage of total revenues was primarily driven by our growth in the Proprietary Products segment attributed to growth in revenues from Glassia, which has better margins over our other products in this segment and the revenues recognized from our agreement with Chiesi since August 2012, offset by the decrease in milestone payments from Baxter that were recognized in 2011 but not 2012 and a decrease in the profitability in our Distribution segment. Distribution segment gross profit declined due to a change in the product mix in our Distribution segment that resulted from an increase in sales in 2012 of IVIG products that had lower margins compared to 2011, and from a decline in the gross profit of our non-IVIG products due to a decrease in gross margins for certain products.

Research and Development Expenses

In the year ended December 31, 2012, we incurred $11.8 million of research and development expenses, compared to $11.7 million in the year ended December 31, 2011, an increase of $0.1 million. This increase was primarily due to increases in expenses for Inhaled AAT for AATD trials, as described more fully below, offset by a $0.5 million decrease in manufacturing expenses allocated for research and development and a $0.1 million decrease in salary expenses. Research and development expenses accounted for approximately 16.3% and 19.7% of total revenues for the years ended December 31, 2012 and 2011, respectively.

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Set forth below are the research and development expenses associated with our major development programs in the years ended December 31, 2012 and 2011:

		Year ended December 31,								Total Expenses to Date through December 31, 2012
		2012				2011
		(in thousands)
Inhaled AAT		$	6,239			$	5,411			$	27,788
AAT for newly diagnosed Type-1 Diabetes			209				286				495
Unallocated salary			3,493				3,618
Unallocated facility cost allocated to research and development			1,066				1,545
Unallocated other expenses			814				869
Total research and development expenses		$	11,821			$	11,729

Research and development expenses for Inhaled AAT increased by $0.8 million due to an increase in expenses for clinical trials in Europe. Research and development expenses for Type-1 Diabetes trials decreased by $0.1 million due to expenses for a clinical trial that were incurred in 2011 but not 2012. Unallocated expenses are expenses that are not managed by projects and are allocated between various tasks that are not always related to a major project. In the years ended December 31, 2012 and 2011, we incurred $3.5 million and $3.6 million, respectively, of unallocated salary expenses, a decrease of $0.1 million due to a decrease in number of employees, $1.1 million and $1.5 million, respectively, of unallocated facility costs, a decrease of $0.4 million due to decrease in process conformance expenses, and $0.8 million and $0.9 million, respectively, of unallocated other expenses.

Our current intentions as to the short-term development timeline for our major development programs are described in “Business — Our Product Pipeline and Development Program,” and we have long-term development goals. However, we cannot determine with full certainty the duration and completion costs of the current or future clinical trials of our major development programs or if, when, or to what extent we will generate revenues from the commercialization and sale of any product candidates. We or our strategic partners may never succeed in achieving marketing approval for any product candidates. The duration, costs and timing of clinical trials and our major development programs will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rates and significant and changing government regulation and whether our current or future strategic partners are committed to and make progress in programs licensed to them, if any. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. See “Risk Factors — Risks Related to Our Business and Industry — We may not be able to commercialize our product candidates in development for numerous reasons.”

We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate's commercial potential. We cannot forecast with any degree of certainty which of our product candidates, if any, will be subject to future collaborations or how such arrangements would affect our development plans or capital requirements.

Selling and Marketing Expenses

In the year ended December 31, 2012, we incurred $1.9 million of selling and marketing expenses, compared to $2.3 million in the year ended December 31, 2011, a decrease of $0.5 million, or approximately (20.5%). This decrease was primarily due to a $0.4 million decrease in marketing activities related to promotions and trade show attendance. Selling and marketing expenses accounted for approximately 2.5% and 3.9% of total revenues for the years ended December 31, 2012 and 2011, respectively.

General and Administrative Expenses

In the year ended December 31, 2012, we incurred $4.8 million of general and administrative expenses, compared to $5.1 million in the year ended December 31, 2011, a decrease of $0.3 million, or approximately

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6.7%. This decrease was primarily due to a decrease of salary expenses. General and administrative expenses accounted for approximately 6.6% and 8.6% of total revenues for the years ended December 31, 2012 and 2011, respectively.

Financial Income

In the year ended December 31, 2012, we generated $0.6 million of financial income, compared to $0.9 million in the year ended December 31, 2011, a decrease of $0.3 million, or approximately 33.6%. This decrease was due to a decrease in interest received from bank deposits and other short term investments.

Income (expense) in respect of exchange and translation differences and derivatives instruments

On January 1, 2012 we changed our functional currency from NIS to U.S. dollars. See also Note 2d in our consolidated financial statements included in this prospectus.

In the year ended December 31, 2012, we incurred $0.1 million of expenses in respect of currency exchange differences on balances in other currencies versus the U.S. dollar compared to $0.9 million of income in respect of translation and currency exchange differences and derivatives in the year ended December 31, 2011.

Income (expense) in respect of revaluation of warrants to fair value

In the year ended December 31, 2012, we incurred $0.6 million of expenses in respect of revaluation of warrants to fair value, compared to $0.5 million of income in the year ended December 31, 2011, in respect of revaluation of warrants to fair value due to change in share prices and expected life of the warrants. In the year ended December 31, 2012, because our ordinary share price increased, the warrant liability increased with a corresponding expense in respect of revaluation of our warrants to fair value.

Financial Expenses

In the year ended December 31, 2012, we incurred $3.4 million of financial expenses, compared to $3.6 million in the year ended December 31, 2011, a decrease of $0.2 million, or approximately 6.7%. This decrease was primarily due to a decrease in interest on our convertible debentures as a result of a decrease in its variable interest rate.

Taxes on Income

In the year ended December 31, 2012, we incurred $0.5 million of taxes on income, compared to no taxes on income incurred in the year ended December 31, 2011. We incurred $0.6 million tax expense for tax withheld in a foreign jurisdiction, which we may not be able to offset against future taxes and generated $0.1 million of income taxes from deferred tax assets.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Segment Results

		Year Ended December 31,								Change 2011 vs. 2010
		2011				2010				Amount				Percent
		(in thousands)
Revenues:
Proprietary Products		$	35,308			$	22,980			$	12,328				53.6	%
Distribution			24,175				11,497				12,678				110.3	%
Total		$	59,483			$	34,477			$	25,006				72.5	%
Cost of Revenues:
Proprietary Products		$	22,188			$	18,878			$	3,310				17.5	%
Distribution			20,574				9,827				10,747				109.4	%
Total		$	42,762			$	28,705			$	14,057				49.0%

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		Year Ended December 31,								Change 2011 vs. 2010
		2011				2010				Amount				Percent
		(in thousands)
Gross Profit:
Proprietary Products		$	13,120			$	4,102			$	9,018				219.8	%
Distribution			3,601				1,670				1,931				115.6	%
Total		$	16,721			$	5,771			$	10,950				189.7	%

Revenues

In the year ended December 31, 2011, we generated $59.5 million of total revenues, compared to $34.5 million in the year ended December 31, 2010, an increase of $25.0 million, or approximately 73%. This increase was primarily due to a $12.3 million increase in our Proprietary Products segment revenues, mainly attributable to an increase in sales of Glassia as sales of Glassia to Baxter commenced in the second quarter of 2011, offset by a decrease of $1.3 million of revenues due to the decrease in payments from the Israeli government related to the development of our snake bite antiserum product in 2011, and a $12.7 million increase in Distribution segment revenues, mainly attributable to an increase in sales of IVIG products, which has grown since 2010 when one of our competitors in the market halted sales of its IVIG product and we were able to fill the additional demand in the market. In our Distribution segment, we generated $17.5 million of revenues from IVIG products and $6.7 million of revenues from other products in the year ended December 31, 2011, compared to $6.3 million of revenues from IVIG products and $5.2 million of revenues from other products in the year ended December 31, 2010.

Cost of Revenues

In the year ended December 31, 2011, we incurred $42.8 million of cost of revenues, compared to $28.7 million in the year ended December 31, 2010, an increase of $14.1 million, or approximately 49%. The cost of revenues in our Proprietary Products segment increased by $3.3 million, which was primarily due to the increase in sales volume of Glassia. The cost of revenues in our Distribution segment increased by $10.7 million, which was primarily due to an increase in volume of products sold.

Gross profit in our Proprietary Products segment increased by $9.0 million, primarily due to an increase in production output during the period and improvement in our production processes, which yielded higher outputs and resulted in increased profitability due to economies of scale. Gross profit in our Distribution segment increased by $1.9 million, which was primarily due to increased sales of IVIG, offset by higher cost of revenues. As a percentage of total revenues, gross margin was 28% and 17% for the years ended December 31, 2011 and 2010, respectively. Gross margin for the Proprietary Products segment, as a percentage of revenues from that segment, was 37% and 18% for the years ended December 31, 2011 and 2010, respectively. Gross margin for the Distribution segment, as a percentage of revenues from that segment, was 15% for both of the years ended December 31, 2011 and 2010, respectively. The increase in gross profit as a percentage of total revenues was primarily driven by our growth in the Proprietary Products segment attributed to growth in revenues from our AATD product.

Research and Development Expenses

In the year ended December 31, 2011, we incurred $11.7 million of research and development expenses, compared to $9.3 million in the year ended December 31, 2010, an increase of $2.5 million, or approximately 26%. This increase was primarily due to an increase in expenses for Inhaled AAT for AATD, offset by a $1.0 million decrease in professional services expenses associated with the BLA submission to the FDA in 2010 for Glassia. Research and development expenses accounted for approximately 20% and 27% of total revenues for the years ended December 31, 2011 and 2010, respectively.

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Set forth below are the research and development expenses associated with our major development programs in the years ended December 31, 2011 and 2010:

		Year ended December 31,
		2011				2010
		(in thousands)
Inhaled AAT		$	5.411			$	5,144
AAT for newly diagnosed Type-1 Diabetes			286				—
Unallocated salary			3,618				3,389
Unallocated facility cost allocated to research and development			1,545				267
Unallocated other expenses			869				479
Total research and development expenses		$	11,729			$	9,279

Research and development expenses for Inhaled AAT increased by $0.3 million due to an increase in expenses for clinical trials in Europe. Other research and development expenses are not managed by projects and are allocated between various tasks that are not always related to a major project. In the year ended December 31, 2011 and 2010, we incurred $3.6 million and $3.4 million, respectively, of unallocated salary expenses, an increase of $0.2 million due to a decrease in employee salaries in 2010, $1.5 million and $0.3 million, respectively, of unallocated facility costs, an increase of $1.2 million due to process conformance expenses, and $0.9 million and $0.5 million, respectively, of unallocated other expenses, an increase of $0.4 million due to various unallocated development tasks.

Selling and Marketing Expenses

In the year ended December 31, 2011, we incurred $2.3 million of selling and marketing expenses, compared to $2.2 million in the year ended December 31, 2010, an increase of $0.2 million, or approximately 8%. This increase was primarily due to FDA marketing authorization fees following approval of Glassia, product liability insurance expenses and professional advisor expenses, offset by a decrease in payroll and commission to distributors. Selling and marketing expenses accounted for approximately 4% and 6% of total revenues for the years ended December 31, 2011 and 2010, respectively.

General and Administrative Expenses

In the year ended December 31, 2011, we incurred $5.1 million of general and administrative expenses, compared to $4.5 million in the year ended December 31, 2010, an increase of $0.6 million, or approximately 13%. This increase was primarily due to an increase of $0.2 million in team development expenses and related corporate events, an increase of $0.2 million due to a decrease in the allocation of general and administrative expenses to the cost of establishing the facility to produce our snake bite antiserum product in 2011 compared to 2010 and an increase of $0.2 million in general, office-related expenses. General and administrative expenses accounted for approximately 9% and 13% of total revenues for the years ended December 31, 2011 and 2010, respectively.

Financial Income

In the year ended December 31, 2011, we generated $0.9 million of financial income, compared to $0.6 million in the year ended December 31, 2010, an increase of $0.3 million, or approximately 55%. This increase was primarily due to an increase of $0.4 million in income with respect to bank deposits and our short-term investments due to the increase in our cash on hand.

Income (expense) in respect of exchange and translation differences and derivatives instruments

In the year ended December 31, 2011, we generated $0.9 million of income in respect of translation and exchange differences and derivatives compared to $1.1 million of expense in the year ended December 31, 2010, primarily due to the volatility of the U.S. dollar to NIS exchange rate. During the year ending December 31, 2011 and 2010, we had excess assets over liabilities denominated in U.S. dollars. In 2011, the U.S. dollar devaluated against the NIS and we recognized financial income. In 2010, when the U.S. dollar appreciated against the NIS, we recognized financial expenses with respect to exchange rate differences.

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Income (expense) in respect of revaluation of warrants to fair value

In the year ended December 31, 2011, we generated $0.5 million of income in respect of revaluation of warrants to fair value, compared to $0.6 million of expense in the year ended December 31, 2010, in respect of revaluation of warrants to fair value. This decrease of $1.2 million was primarily due to the change in share prices and the expected life of warrants. In 2011, because our ordinary share price decreased, the warrant liability decreased with a corresponding income in respect of revaluation of our warrants to fair value.

Financial Expenses

In the year ended December 31, 2011, we incurred $3.6 million of financial expenses, compared to $3.1 million in the year ended December 31, 2010, an increase of $0.5 million, or approximately 17%. This increase was primarily due to a $0.2 million increase in the amortization of our convertible debt discount and an increase in $0.4 million of interest expenses with respect to our convertible debentures as a result of an increase in the variable interest rate of the debentures.

Taxes on Income

We did not incur any income tax expenses in the years ended December 31, 2011 and 2010.

Quarterly Results of Operations

The following tables set forth unaudited quarterly consolidated statements of operations data for the first quarter of fiscal year 2013, the four quarters of fiscal year 2012 and the last three quarters of fiscal year 2011. We have prepared the statement of operations data for each of these quarters on the same basis as the audited consolidated financial statements included elsewhere in this prospectus and, in the opinion of management, each statement of operations includes all adjustments, consisting solely of normal recurring adjustments, necessary for the fair statement of the results of operations for these periods. This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this prospectus. These quarterly operating results are not necessarily indicative of our operating results for any future period.

		Three Months Ended
		March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012				March 31, 2012				December 31, 2011				September 30, 2011				June 30, 2011
		(in thousands)
Revenues from Proprietary Products		$	8,060			$	15,913			$	11,030			$	7,024			$	12,478			$	13,420			$	7,282			$	7,106
Revenues from Distribution			4,536				5,730				6,648				6,728				7,124				7,737				6,028				5,249
Total revenues			12,596				21,643				17,678				13,752				19,602				21,157				13,310				12,355
Cost of revenues from Proprietary Products			4,562				8,382				6,278				4,679				7,595				8,429				5,461				5,374
Cost of revenues from Distribution			3,839				4,971				5,788				5,928				6,384				6,476				5,264				4,389
Total cost of revenues			8,401				13,353				12,066				10,607				13,979				14,905				10,725				9,763
Gross profit			4,195				8,290				5,612				3,145				5,623				6,252				2,585				2,592
Research and development expenses			3,730				2,842				2,769				2,744				3,466				3,350				2,688				2,595
Selling and marketing expenses			513				449				438				494				472				504				619				776
General and administrative expenses			1,256				1,216				1,132				1,085				1,348				1,579				1,217				1,219
Operating income (loss)			(1,304	)			3,783				1,273				(1,178	)			337				819				(1,939	)			(1,998	)
Financial income			86				123				119				153				183				150				251				256
Income (expense) in respect of translation differences and derivatives			62				(85	)			34				15				(64	)			302				1,021				(216	)
Income (expense) in respect of revaluation of warrants fair value			—				(22	)			19				(518	)			(55	)			10				448				501
Financial expense			(855	)			(812	)			(836	)			(836	)			(873	)			(826	)			(926	)			(952	)
Income (loss) before taxes on income			(2,011	)			2,987				609				(2,364	)			(472	)			455				(1,145	)			(2,409	)
Taxes on income			24				(77	)			600				—				—				—				—				—
Net income (loss)		$	(2,035	)			3,064				9				(2,364	)			(472	)			455				(1,145	)			(2,409	)