Enlivex Therapeutics Ltd. (Form: 6-K, Received: 03/27/2019 08:34:15)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of: March 2019

Commission file number: 001-36578

ENLIVEX THERAPEUTICS LTD.

(Translation of registrant’s name into English)

14 Einstein Street, Nes Ziona, Israel 7403618

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(7): ¨

This Report on Form 6-K is being furnished in connection with a series of transactions with respect to the business combination between Bioblast Pharma, Ltd. and Enlivex Therapeutics Ltd., which are described herein.

As used in this Report on Form 6-K, (1) the terms “Company,” “we,” “us,” and “our” refer to the combined enterprises of Bioblast Pharma Ltd., a company organized under the laws of the State of Israel (“ Bioblast ”), and Enlivex Therapeutics Ltd., a company organized under the laws of the State of Israel (“ Enlivex ”), after giving effect to the Merger (as defined below) and the related transactions described herein, (2) the term “Bioblast” refers to the business of Bioblast Pharma Ltd. prior to the Merger, and (3) the term “Enlivex” refers to the business of Enlivex Therapeutics Ltd., prior to the Merger, in each case unless otherwise specifically indicated or as is otherwise contextually required.

Merger

As previously reported in the Report on Form 6-K furnished by Bioblast with the Securities and Exchange Commission (“ SEC ”) on November 19, 2019 (the “ Previous 6-K ”), Bioblast entered into an Agreement and Plan of Merger (the “ Merger Agreement ”) with Enlivex and Treblast Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of Bioblast (“ Merger Sub ”), pursuant to which Merger Sub agreed to merge with and into Enlivex (the “ Merger ”), with Enlivex surviving the Merger as a wholly owned subsidiary of Bioblast. The Merger was structured as a statutory merger pursuant to Sections 314-327 of the Companies Law, 5759-1999 of the State of Israel.

On March 26, 2019 (the “ Closing Date ”), pursuant to the Merger Agreement, Merger Sub and Enlivex consummated the Merger, and Enlivex became a wholly owned subsidiary of Bioblast. In addition, upon completion of the Merger, the name of the Company changed to Enlivex Therapeutics Ltd., and the Company has been admitted for continued listing on the Nasdaq Capital Market under the new symbol “ENLV”.

Pursuant to the Merger Agreement, upon consummation of the Merger (the “ Effective Time ”), each outstanding ordinary share of Enlivex was converted into approximately 0.04841 ordinary shares of the Company (the “ Exchange Ratio ”).

In addition, all outstanding Enlivex options that were unexercised immediately prior to the Effective Time, whether or not vested, were assumed by the Company, and contain the same terms, conditions, vesting and other provisions, except that each such option is now exercisable for such number of ordinary shares of the Company, as adjusted in accordance with the Exchange Ratio and otherwise in accordance with the Merger Agreement.

Following the Merger, but prior to consummation of the concurrent Private Placement (as defined below), the former equityholders of Enlivex owned approximately 96% of the Company’s issued and outstanding equity, and Bioblast shareholders immediately prior to the Merger owned approximately 4% of the Company’s issued and outstanding equity, in each case on a fully-diluted basis in accordance with the treasury stock method.

As previously reported in the Previous 6-K, pursuant to a Contingent Value Rights Agreement (the “ CVR Agreement ”), Bioblast shareholders received one contingent value right (“ CVR ”) for each ordinary share of Bioblast held as of the record date, March 25, 2019, which CVRs entitle the holders to potential payments that the Company receives in connection with a Trehalose transaction, as further described in the Previous 6-K.

The foregoing descriptions of the Merger Agreement and CVR Agreement are only summaries, do not purport to be complete and are qualified in their entirety by reference to the full text of the Merger Agreement and the CVR Agreement, copies of which were filed as Exhibit 99.1 and Exhibit 99.2, respectively, to the Previous 6-K and are incorporated by reference herein.

Private Placement

Additionally, in connection with the Merger Agreement, Bioblast entered into a securities purchase agreement dated March 11, 2019 (the “ Purchase Agreement ”) with certain private investors (the “ Investors ”), pursuant to which the Investors agreed to purchase an aggregate of 437,733 ordinary shares of Bioblast for a purchase price of $12.25 per share (the “ Private Placement ”), which closed on the Closing Date upon consummation of the Merger.

None of the ordinary shares of the Company issuable pursuant to the Merger or upon exercise of options assumed in the Merger (collectively, the “ Merger Securities ”) or the ordinary shares issued and sold in the Private Placement have been registered under the Securities Act of 1933, as amended (the “ Securities Act ”). The Company offered and sold the Merger Securities and the ordinary shares in the Private Placement in reliance upon the exemptions from registration contained in Section 4(a)(2) of the Securities Act and/or Regulation S promulgated under the Securities Act.

The foregoing description of the Purchase Agreement is only a summary and is qualified in its entirety by reference to the complete text of the Purchase Agreement, which is filed as Exhibit 99.1 to this Report on Form 6-K and incorporated by reference herein.

Accounting Treatment

The Merger is being treated as a reverse acquisition of Bioblast for financial accounting and reporting purposes. As such, Enlivex is treated as the acquirer for accounting and financial reporting purposes while Bioblast is treated as the acquired entity for accounting and financial reporting purposes. Further, as a result, the assets and liabilities and the historical operations that will be reflected in the Company’s future financial statements filed with the SEC will be those of Enlivex, and the Company’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of Enlivex.

Amendment of Articles of Association

In connection with the consummation of the Merger, on the Closing Date, the Company amended its Articles of Association (the “ Amended and Restated Articles of Association ”), in order to change its name from “Bioblast Pharma Ltd.” to “Enlivex Therapeutics Ltd.” and to change the registered capital of the Company to NIS 18,000,000 divided into 45,000,000 ordinary shares with a nominal value of NIS 0.40 each.

The Amended and Restated Articles of Association are filed as Exhibit 99.2 to this Report on Form 6-K and incorporated by reference herein.

Business Overview

The Company is a clinical stage immunotherapy company, developing an allogeneic drug pipeline for immune system rebalancing. Immune system rebalancing is critical for the treatment of life-threatening immune and inflammatory conditions, which involve the hyper-expression of cytokines (Cytokine Release Syndrome) and for which there are no U.S. Food and Drug Administration (“ FDA ”)-approved treatments, as well as treating solid tumors via modulating immune-checkpoint rebalancing. The Company’s innovative immunotherapy candidate, Allocetra™, is a novel immunotherapy candidate based on a unique mechanism of action that targets clinical indications that are defined as “unmet medical needs” such as preventing or treating complications associated with bone marrow transplants (“ BMT ”) and/or hematopoietic stem cell transplants (“ HSCT ”), sepsis and acute multiple organ failure. The Company also intends to develop its cell-based therapy to be combined with effective treatments of solid tumors via immune checkpoint rebalancing to increase the efficacy of various anti-cancer therapies, including Chimeric Antigen Receptor T-Cell Therapy (“ CAR-T ”) and therapies targeting T-Cell Receptor Therapy (“ TCR ”).

Cytokines are a broad and loose category of small proteins (~5–20 kDa) that are important in immune cell signaling. They are released by cells and affect the behavior of other cells, and include chemokines, interferons, interleukins, lymphokines, tumor necrosis factors and others, but generally not hormones or growth factors.

Cytokines are produced by a broad range of cells, including immune cells, primarily macrophages and dendritic cells, and are especially important in the immune system as they promote, modulate and balance immune responses. Cytokines are important in health and disease, specifically in host responses to infection, immune responses, inflammation, trauma, sepsis, cancer and other conditions. Cytokine Release Syndrome (“ CRS ”) is a systemic inflammatory response in which cytokine release composition and amplitude spirals out of control. It is considered difficult to treat with traditional small molecules or biologics because the condition involves dozens of cytokines that induce multiple biological paths of hyper immune activity. Such hyper immune activity may result in an attack of immune killer cells (e.g., T-Cells, B-Cells and Natural Killer Cells) on healthy organs of the patient, including the heart, brain, lungs, liver, kidney and others, which may lead to organ damage, multiple organ failure and mortality. The Company believes that the only approach to handling such a multi-factorial complex life-threatening situation is via an integrated cell-based immunotherapy that induces the immune system to rebalance itself to normal levels of operation utilizing a mechanism of action used regularly by the immune system and developed through evolution.

There are many clinical conditions in which a patient has the potential to develop Cytokine Release Syndrome. Those clinical conditions include complications associated with HSCT, sepsis, and several autoimmune and inflammatory conditions, such as Crohn’s disease, rheumatoid arthritis, gout and multiple sclerosis.

Immune System Triggering and Relaxation

The immune system constantly handles multiple challenges of bacterial, viral, fungal and other infections via a sophisticated elevation of immune activity utilizing enhanced cytokine releases from macrophages and dendritic cells, resulting in recruitment of antibodies and immune cells (e.g., T-Cells, B-Cells and Natural Killer Cells). Once the threat has been eliminated, the immune system rebalances itself into a normal state. Such rebalancing occurs naturally through antigen presenting cells, macrophages and dendritic cells that engulf and clear infected cells that have been instigated into apoptosis and cells from the immune system that have gone through programmed cell death, causing a decrease to normal levels of cytokines and immune activity.

Apoptosis is a natural and critical process in tissue and organ maintenance that occurs when a cell is damaged beyond repair, infected with a virus or undergoing other stressful conditions. Apoptosis involves a series of biochemical events leading to changes in cell morphology and, ultimately, cell death. Immediate removal of the dying cell is performed by antigen presenting cells, macrophages and dendritic cells. The primary function of dendritic cells is phagocytosis, or the capturing and transportation of antigens to draining lymphoid tissues. Immature dendritic cells are capable of large-scale phagocytosis of apoptotic cells.

As many as 3×10 ⁸ cells undergo apoptosis every hour in the human body. One of the primary “eat me” signals expressed by apoptotic cells is phosphatidylserine (PtdSer). Apoptotic cells themselves serve as major contributors to the “non-inflammatory” nature of the engulfment process, some by secreting thrombospondin-1 (TSP-1) or adenosine monophosphate and possibly other immune modulating “calm-down” signals that interact with antigen presenting cells, macrophages and dendritic cells. Apoptotic cells also produce “find me” and “tolerate me” signals to attract and immune-modulate antigen presenting cells, macrophages and dendritic cells that express specific receptors for some of these signals (Trahtemberg and Mevorach; 2017).

Injection of a high volume of densely concentrated early apoptotic cells activates dendritic cells, causing them to migrate to the lymphoid tissues, such as the spleen, where they interact with T-cells and B-cells, which are lymphocytes involved in the regulation of the immune system, remove the apoptotic cells and suppress inflammation. The foregoing process induces immunotolerance, as opposed to general immunosuppression, which would otherwise make the patient more susceptible to infection and other immunological challenges.

The Company’s unique therapeutic approach is based on inducing immunotolerance and the specific normal rebalancing of the immune system by infusing early and stable apoptotic cells (dying cells) into the patient. Once infused, such apoptotic cells interact with macrophages and dendritic cells via well-defined mechanisms causing rebalancing of an over-agitated immune response.

Using this inherent immune pathway, the Company believes that it can use Allocetra™ to shape a patient’s innate immune response to a disease, leading to a decrease in unwanted immune response. During the apoptotic cell removal process, several therapeutic responses are induced, such as inflammation suppression, modulation of macrophage-directed deletion of invading pathogens and regulation of immune responses. These responses are the target of Allocetra™. The Company believes that Allocetra™ can specifically target the immune response without simultaneously diminishing the general immune capabilities of the patient or compromising the patient’s ability to respond to immunological challenges.

The Company’s current clinical development programs focus on preventing or treating complications associated with HSCT, sepsis and solid tumors. The Company’s most advanced product candidate, Allocetra™, has been developed for the prevention of complications post HSCT, treatment of patients who do not respond to steroid treatment upon occurrence of graft versus host disease (“ GvHD ”) (“steroid refractory patients”), and prevention of organ damage, or multiple organ failure in sepsis patients. Additionally, the Company is currently examining the potential for collaborating with leading CAR-T companies in clinical studies to evaluate the efficacy of immunotherapy treatments in combination with Allocetra™ for treatment of solid tumors.

Complications Associated with Bone Marrow Transplants

Allocetra™ for preventing or treating complications associated with HSCT is an immunomodulation cell-therapy drug in development that involves injection of early-apoptotic cells that have been retrieved from the blood of either (i) a donor matched by his or her human leukocyte antigen (i.e., a protein found on white blood cells that is the standard genetic marker for the regulation of the immune system and is used to match donors and recipients in transplantations), (ii) the patient, or (iii) an allogeneic, unmatched donor and have undergone ex-vivo (i.e., prior to infusion) manipulation to stabilize the “early apoptosis” status of the cells for a prolonged period of time. Allocetra’s™ specific clinical indications include (i) preventing complications associated with HSCT through an injection prior to and two weeks following the bone marrow transplantation procedure, and (ii) treatment of steroid refractory patients upon occurrence of GvHD post HSC transplantation. Systemic corticosteroids are the standard of care for the initial treatment of grade 2–4 GvHD. However, many patients with acute GvHD (“ aGvHD ”) do not experience sustained responses to corticosteroids which may lead to multiple organ failure and potential death, and for which 6-month survival rates among steroid-refractory patients are approximately 49% with long-term survival rates of only 5–30%.

Graft Versus Host Disease (GvHD)

Allogeneic hematopoietic stem-cell transplantation (HSCT) has revolutionized the treatment of hematopoietic malignancies, inherited hematopoietic disorders, aplastic anemia, and other severe diseases (Copelan 2006). The HSCT clinical benefit is in part a result of the graft-versus-leukemia (“ GVL ”) effect, in which a donor immune response is targeted against recipient malignant cells. Although alloreactive donor T-cells play an important role in GVL by targeting tumor cells for elimination, the serious complication of GvHD develops when alloreactive donor cells attack healthy host tissues. Despite promising advances in HSCT methodology, including prophylactic immunosuppressive therapies, approximately 50% of HSCT recipients develop GvHD. GvHD can present as an acute disease, aGvHD, or a chronic (“ cGvHD ”) disease. Both aGvHD and cGvHD are inflammatory disorders initiated by the infiltration of alloreactive T cells into target organs, followed by activation of proinflammatory signaling cascades, tissue damage and organ failure. Previously, the distinction between aGvHD and cGvHD was based solely on the time of onset (i.e., during or after 100 days post-transplant). However, important pathophysiological distinctions have since been identified, requiring evaluation of clinical presentation to make an accurate disease diagnosis. The skin is the organ most typically affected at the onset of aGvHD, followed by the gastrointestinal tract and liver. Several organ systems, including the skin and gastrointestinal tract, are also affected in cGvHD, but clinical distinctions can be made to differentiate cGvHD from aGvHD in these organ systems. Additional diagnostic symptoms of cGvHD manifest in the mouth, genitalia, lungs and muscles. The target organ damage observed in aGvHD is primarily characterized by apoptosis, whereas cGvHD is associated with fibrosis and many autoimmune features, indicative of an expanded role for macrophages and B cells compared with aGvHD (Jagasia et al; 2018). The Allocetra™ clinical development program is aimed to prevent, and in some cases treat, post transplantation complications such as aGvHD.

The standard of care for treatment of complications associated with HSCT, including GvHD, often involves immune-suppressants, such as corticosteroids. Some patients do not respond to corticosteroids, and lack of any other treatment alternative leave these patients with a bleak survival prognosis. The subset of patients who do respond to corticosteroids faces the risk that the immune system may become so suppressed that the ability of the immune system to fight pathogens severely deteriorates and becomes unable to fight severe infections, which are abundant in a typical hospital setting.

The Company conducted a Phase IIa clinical study, which evaluated the safety, tolerability and preliminary efficacy profile of Allocetra™ for the prevention of complications post HSCT. The study demonstrated that Allocetra™ has the potential to induce immune-tolerance and immune system rebalancing to normal activity levels in a patient post HSCT, thus preventing Cytokine Release Syndrome and complications associated with HSCT, without undermining the ability of the transplanted bone marrow to attack the remainder of the cancer disease in the patient. Specifically, patients who received effective doses of Allocetra™ experienced no Cytokine Release Syndrome and no GvHD grade II-IV and were discharged from the hospital after an average duration of 21 days of hospitalization compared to an historical data expected duration of 41-45 days. In trials to date, Allocetra™ has been well-tolerated, and there has been no observable, significant adverse side effects.

Summary of Allocetra ™ Clinical Trials

Phase IIa Trial: Allocetra™ for the prevention of aGvHD

After completing all pre-clinical safety and efficacy testing in animals, the Company began a multi-center Phase IIa clinical trial of Allocetra™ to evaluate the safety, tolerability and preliminary efficacy profile of the drug for the prevention of aGvHD in allogeneic HSCT patients at Hadassah Medical Center, Rambam and Sheba Medical Centers in Israel. The study protocol included 13 patients who were intravenously infused with ranging doses of Allocetra™ 24 hours prior to an allogeneic HSCT procedure and then monitored for 180 days following transplantation. The Company published a summary of the results from such trial in the peer-reviewed journal of the American Society for Blood and Marrow Transplantation, the Biology of Blood and Marrow Transplantation, titled “Single Infusion of Donor Mononuclear Early Apoptotic Cells as Prophylaxis for Graft-versus-Host Disease in Myeloablative HLA-Match Allogeneic Bone Marrow Transplantation: A Phase I/IIa Clinical Trial.”

The primary objective of the Phase IIa clinical trial in Israel was to determine the safety profile and tolerability, or dose limiting toxicity, of ascending doses of Allocetra™ within 180 days post-transplantation in subjects undergoing allogeneic HSCT from matched-related donors (i.e., donors’ whose tissues were immunologically compatible with the recipient). The secondary objectives of the trial were to determine (i) the success rate of allogeneic HSCT and the time to successful engraftment, (ii) the rates and severity of aGvHD following Allocetra™ infusion and (iii) the immunological function of the patient following the HSCT procedure and Allocetra™ infusion.

The Company’s clinical data from its Phase IIa trial indicate that Allocetra™ was well-tolerated at all doses administered for up to six months post-transplantation, which was the observed duration of the trial. The Company did not observe or receive reports of any definite or probable adverse effects related to Allocetra™. Although historical data shows that approximately 50% of patients with aGvHD are expected to advance to the most severe grades of GvHD (i.e., Grades II-IV), none of the six patients treated with the two highest doses of Allocetra™ (defined as the effective doses) in the study advanced to such grades. In fact, the number of overall adverse effects decreased with Allocetra™ dose escalation, Grade I aGvHD was 50% in the same cohorts, and mild chronic GvHD was present in a number of patients. This finding might suggest that Allocetra treatment, as a physiological modality, reduces high grade GvHD rather than abolishing it, supporting a favorable GvL response . In this trial, Allocetra™ injections were not associated with prolongation of time to engraftment, chimerism delay (i.e., an increase in the time it takes for donor immune cells to become immunologically effective in the patient’s body), increased mortality rate or serious infections when compared with similar patients described in scientific literature. Patients who received effective doses of Allocetra™ experienced no Cytokine Release Syndrome symptoms and were discharged from the hospital after an average duration of 21 days of hospitalization compared to an expected duration of 41 days as per historical controls, the charts above summarize certain of these findings.

Continuation with Phase II and II/III Clinical Trials

The Company plans, subject to regulatory approvals, to initiate clinical trials with Allocetra™ for the prevention and treatment of complications post-HSCT in early 2020: (i) Phase II/III for prevention of complications post-HSCT from matched unrelated donors (MURs) pursuant to which the Company currently intends to enroll up to 60 patients; and (ii) Phase II for the treatment of steroid-refractory patients with GvHD post-HSCT pursuant to which the Company currently intends to enroll up to 40 patients, both to be conducted in Israel and the European Union (EU).

The FDA granted the Company’s orphan drug designation request for the active moiety, or the part of the drug responsible for the physiological or pharmacological action of the drug substance, for the prevention of aGvHD. Orphan designation qualifies the sponsor of the drug or biologic for various development incentives, including tax credits for qualified clinical testing and 7-year marketing exclusivity post commercialization. In addition, Allocetra™ received from the European Medicinal Authority (the “ EMA ”) an (i) Advanced Therapy Medicinal Product (“ ATMP ”) certification for the prevention of aGvHD, and (ii) Orphan medicinal product designation for the indication: Prevention of graft-versus-host disease. This designation may provide Allocetra™ with a 10-year market exclusivity incentive upon commercialization.

Sepsis

The Company is also developing Allocetra™ as an adjunctive immunomodulating cell therapy for avoiding organ failure caused by sepsis. The drug would be administered intravenously to the patient following the diagnosis of sepsis in addition to standard of care treatment.

Sepsis is a highly heterogeneous syndrome that is caused by an unbalanced immune host response to an infection. Sepsis was not clinically defined until the early 1990s when a group of key opinion leaders released the first consensus definition of sepsis. Sepsis has been defined as a systemic inflammatory response syndrome (“ SIRS ”) caused by an infection; and increasing severities have been designated as ‘severe sepsis’ (referring to sepsis and organ dysfunction) and ‘septic shock’ (referring to sepsis and refractory hypotension). In the most recent ‘Sepsis-3’ consensus definition, sepsis is defined as a life-threatening organ dysfunction that is caused by a dysregulated host response to infection, and the term “severe sepsis” has been removed. Of note, although infection is the triggering event in this definition of sepsis, the aberrant immune response often remains after successful treatment of the infection. Sepsis imposes a substantial global burden in terms of morbidity and mortality. Nearly all patients with severe sepsis require treatment in an intensive care unit. Sepsis, which has been identified by the World Health Organization as a global health priority, has no proven pharmacologic treatment other than appropriate antibiotic agents, fluids, and vasopressors. Sepsis affects approximately 1.7 million adults in the United States each year and potentially contributes to more than 250,000 deaths. Various studies estimate that sepsis is present in 30% to 50% of hospitalizations that culminate in death (Rhee et al; 2019) P revious attempts to find a therapy for sepsis failed partially due to the parallel and complex course of biological activities that occur within a sepsis patient. For many years, a disproportionate inflammatory response to invasive infection was considered to be central to the pathogenesis of sepsis, but it is now clear that the host response is disturbed in a much more complex way, involving both sustained excessive inflammation and immune suppression, and a failure to return to normal homeostasis.

This outcome may lead to organ damage, multiple organ failure and mortality. If the immune system could be rebalanced, we believe that many of the outcomes, specifically organ damage and failure, could be prevented and significantly increase a patient’s chance of survival with reduced morbidity.

Preclinical Data, Sepsis

In its preclinical study, the Company utilized a murine cecal ligation puncture (“ CLP ”) sepsis model. The CLP model has been proposed to more closely replicate the nature and course of clinical sepsis, as compared to other models.

We evaluated the effect of Allocetra™ in mice, given 4 hours after the end of a CLP procedure, in combination with Ertapenem ^© a highly effective antibiotic commonly used for the treatment of severe or high-risk bacterial infections. Mice were monitored for clinical signs and determination of the murine sepsis score. The endpoint was defined as survival (either death or sacrifice when a total clinical score of 15 or maximum score in one of the categories was reached).

As shown in Figure 2A, antibiotic treatment showed a non-significant tendency to ameliorate mortality of the mice (Ertapenem + vehicle, n=15) compared to the control group (CLP only, n=16). Treating CLP mice with the combination of antibiotics and Allocetra™ significantly delayed and prevented mortality in 60% of the animals (Ertapenem + Allocetra™, n=20, p<0.001). In comparison to the control group, the Company’s study reflected an approximately 10-fold improvement in the survival rate (p<0.001 in a log-rank analysis). As shown in Figure 2B, Allocetra™ treated mice had significantly lower murine sepsis clinical scores indicating superior clinical condition. Finally, the Company correlated the clinical score to serum cytokines/chemokines in vivo measurements and as shown in Figure 2C. Allocetra™ downregulated pro-inflammatory cytokines/chemokines. In the preclinical study, Allotectra ^TM delayed and prevented mortality in animal models with sepsis by rebalancing the immune system.

Figure 2A

Figure 2B

Figure 2C

Initiation of Phase Ib and II clinical studies in Sepsis

The Company has initiated a “Prevention of sepsis related organ dysfunction with Allocetra ^TM (P-SOFA-1)” p Phase Ib clinical trial in the first quarter of 2019 pursuant to which it plans to enroll 10 patients. Upon the successful completion of this study, the Company is planning to initiate a randomized, multi-center, vehicle-controlled, comparative, open-label, study evaluating safety and efficacy of Allocetra™ for the prevention of cytokine storms and organ dysfunction in patients with sepsis. This study is currently planned to be initiated in late 2019. The study design includes planned enrollment of 40-50 patients. The primary objective will be to evaluate the safety of Allocetra ^TM and its efficacy in reducing cytokine storms, organ damage and organ failure in patients with sepsis. Secondary objectives will be to assess preliminary clinical efficacy and to support the proposed mechanism of action and biological effect. Each patient will be followed for a period of 28 days.

Solid Tumors, Macrophage Programming and CAR-T Treatments

The Company is also developing Allocetra™ as a next-generation solid cancer immunotherapy. While first-generation immuno-oncology therapies, such as checkpoint inhibitors, are a significant therapeutic advancement, most patients do not achieve durable clinical benefit. Companies such as Novartis, Juno and Kite have made significant advances in treatment of recurring blood cancers via CAR-T therapies, immunological treatments that use the body’s own immune system to treat cancerous cells. CAR-T therapies have not proven highly successful against solid tumors.

Solid tumors are harder to treat primarily due to the complex and interconnected tumor microenvironment. The Company believes that Allocetra™ presents a significant opportunity to engage the body’s immune system, enabling anti-cancer therapies such as CAR-T, TCR and others to effectively treat solid tumors thus improving cure rates for patients with a variety of solid cancers.

The data from the Company’s preclinical studies show that the Allocetra™ cells, which have demonstrated a strong safety profile in a previous clinical trial, have not only caused a significant increase in duration of survival compared with stand-alone CAR-T treatment, but also have demonstrated an ability for complete remission for some preclinical subjects.

In the Company’s preclinical study, SCID-Bg mice were injected intra-peritoneally with 2 consecutive doses of 0.25x10 ⁶ human HeLa-CD19-luciferase cells (HeLa cancer cells expressing CD19), on days 1 and 2 of the experiment. Mice also received 10x10 ⁶ Allocetra™ or vehicle, on day 9; and 10x10 ⁶ CD19-CAR-T (third generation) cells or mock T cells on day 10. Mice were weighed twice a week and monitored daily for clinical signs and peritoneal fluid accumulations. Pre-scheduled sacrifices were performed to characterize the cell and macrophage sub-population profile. The rest of the mice were kept for survival analysis. The survival endpoint was defined by a score based on severe peritoneal fluid accumulation manifested as an enlarged and tense abdomen, and reduced mobility or increased respiratory effort. These preclinical findings correlated to large accumulation of HeLa cells in the peritoneum. Survival analysis was performed according to the Kaplan-Meier Log rank statistical test. The Company is currently examining the potential for collaborating with companies developing leading potential immune therapies to evaluate the efficacy of immune therapy treatments in combination with Allocetra™ for the treatment of solid tumors.

Accelerated Regulatory Approval Processes for Life Saving Therapies

The Company anticipates that its therapeutic drugs and their respective indications could qualify under specific accelerated regulatory paths in both the EU and the United States. Specifically for the EU, an accelerated path allowing conditional marketing approval is available for certain therapeutic drugs following a Phase II study. There is no assurance that the Company will qualify for such accelerated regulatory paths.

If the Company’s products continue to indicate that they may increase long-term survival for patients in life-threatening indications, defined as “unmet medical needs,” such as sepsis and complications following bone marrow transplantation, the Company could be eligible to initiate marketing of these drugs in the EU if it receives conditional approval, following submission of a marketing application after completion of its Phase II study to the EMA.

In general, therapeutic products are eligible for conditional marketing approval if they meet at least one of the following categories:

Aimed at treating, preventing or diagnosing seriously debilitating or life-threatening diseases (complications post HSCT & sepsis fall within this category);

Intended for use in emergency situations; or

Designated as orphan medicines. (The Company has already obtained an orphan designation for Allocetra™ for prevention of GvHD post HSCT).

For a product to be granted a conditional marketing authorization following submission of a marketing application, it must fulfil all the following criteria:

The risk–benefit balance of the medicinal product is positive;

It is likely that the applicant will be able to provide the comprehensive clinical data in future studies post initiation of commercialization;

Unmet medical needs will be fulfilled; and

The benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required.

Clinical Trial and Commercial Manufacturing of Allocetra™

To prepare for the planned initiation of its clinical trials, the Company has constructed a good manufacturing process (“ GMP ”) manufacturing facility in Israel to support the production of the Allocetra™ drug product for any clinical trial that will be conducted in the EU or Israel.

The Company has filed several patent applications covering products under development. The first patent, titled “Disease Therapy Using Dying Or Dead Cells” was granted by the U.S. patent office (patent number 9,567,568), the EU (patent number 187, 9601), and Israel (patent number 187,122) with a term expiring in 2025-2026 in the United States and Israel, EU (DE, FR, IE, GB), respectively. The second patent, titled “Therapeutic Apoptotic Cell Preparations, Method for Producing Same and Uses Thereof” was granted by the U.S. patent office (patent number 10,077,426 B2) on September 18, 2018 with a term expiring in 2033 and is currently under prosecution in Australia, Canada, China, Europe, Israel and Japan. Various additional patent applications have been filed and are under prosecution.

License Agreements

Tolaren Ltd.

In April 2008, Tolaren Ltd., which we refer to as Tolaren, granted to us an exclusive, irrevocable, worldwide, royalty free and sublicensable license to research, develop, commercialize, manufacture, market, sell, distribute and otherwise use and exploit a certain patent, patent rights and pending patent applications relating to the method for using apoptotic cells as a treatment for various autoimmune and inflammatory disorders and the production processes with respect to the same. The license further stipulates that all intellectual property rights, including, any inventions, developments, discoveries, results, products data, information and know-how developed by the Company based on the licensed intellectual property rights, belong solely and exclusively to the Company and, to the extent such intellectual property rights are registrable, they may be registered in the name of the Company. We have used and continue to use such licensed technology to develop and produce Allocetra™. Pursuant to the license, we have agreed to manage, maintain and defend the licensed patents, including managing the registration of such patents in different countries. The license expires upon the expiration of the licensed patent; however, upon such expiration, we will have a fully paid-up, nonexclusive, unlimited, worldwide, sublicensable license to the technology developed on the basis of the patent and related patent rights and all inventions, know-how and other intellectual property owned or licensed by us and covered by the agreement or related thereto. The license is terminable by the Company upon 30-days prior written notice or by Tolaren if the Company ceases operations for a period of more than 360 days. Otherwise, the license for each of the patents endures until the expiration of such patent, and the license for any other licensed technology survives indefinitely.

Approximately 97% of the issued and outstanding share capital of Toleran is held by Hadasit Bio-Holdings Ltd., which currently holds approximately 18% of our issued and outstanding share capital.

Hadasit Medical Research Services and Development Ltd. and Yissum Research and Development Company Ltd.

In March 2006, the institutes jointly granted us an exclusive, worldwide, royalty free and sublicensable license to research, develop, commercialize, manufacture, market, sell, distribute and otherwise use and exploit a certain patent and patent rights relating to the therapeutic use of dead or dying cells, including apoptotic or necrotic cells, as well as any associated materials, methods or technology, as well as a method of using the heparin-binding domain of TSP thrombospondin-1, or TSP-1, which we may develop in the future as a molecular-based therapy for the treatment of inflammatory bowel disease. The license further stipulates that all intellectual property rights, including, any inventions, developments, discoveries, results, products data, information and know-how developed by the Company based on the licensed intellectual rights, belong solely and exclusively to the Company and, to the extent such intellectual property rights are registrable, they may be registered in the name of the Company. Pursuant to the license, we agreed to manage, maintain and defend the licensed patents, including managing the registration of such patents in different countries. The license expires upon the expiration of the licensed patent; however, upon such expiration, we will have a fully paid-up, nonexclusive, unlimited, worldwide, sublicensable license to the technology developed on the basis of the patent and related patent rights and all inventions, know-how and other intellectual property owned or licensed by us and covered by the agreement or related thereto. In addition to certain standard termination provisions relating to the financial condition of each party, we may terminate the license upon 30-days’ prior written notice, and the Institutes may terminate the license if we cease our operations for more than 120 days or if the Institutes determine, in their reasonable discretion, that we have ceased making reasonable efforts to commercialize the licensed technology.

Hadasit Medical Research Services and Development Ltd. is the technology transfer office of Hadassah Hospital in Jerusalem, where Prof. Dror Mevorach, one of our directors, is currently the Director of the Rheumatology Research Centre.

The Company’s Competitive Strengths

The Company believes that its clinical data relating to prevention of complications post HSCT, preclinical data in sepsis and solid tumors strategically position the Company to address the currently unmet medical needs of patients suffering from life-threatening clinical conditions involving an off-balance or uncontrolled immune system.

The Company’s competitive strengths include:

Systemic immune rebalancing instead of immunosuppression. Unbalanced immune response, which is associated with HSCT, sepsis, and a variety of autoimmune disorders, involve multiple cytokine expression and immune regulation pathways. Current therapies focus on attempts to resolve certain pathways or block certain cytokines. For clinical conditions in which the immune system is out of control, the Company believes that attempts to solve one pathway may not be effective because multiple clinical trials using this “single drug, single target” approach have failed to produce appropriate results. In contrast, Allocetra™ is designed to provide a comprehensive immunotherapy approach that focuses on rebalancing the mechanism of cytokine expression and regulation and thus may be able to provide more complete therapy than current therapies. The Company believes that the ability to induce immune-tolerance as opposed to general immunosuppression, and the use of a variety of immunological pathways as opposed to a single or few pathways or mechanisms of action, positively position Allocetra™ as a potential leader in the fight against complicated, multi-factorial, immune system imbalances.

Extensive knowledge and expertise in diseases associated with an unbalanced immune system combined with research and development involving clearance of apoptotic cells. The Company’s management team, scientific advisors, personnel and affiliates have extensive knowledge and experience in the treatment of immune and inflammatory disorders and the research and development of therapies based on the clearance of apoptotic cells. The Company’s founder and Chief Scientific & Medical Officer, Professor Dror Mevorach, is a leading physician and scientist who has been investigating over expression and hyper expression of cytokines for the past 18 years, as well as the biological cascade involved with the removal of apoptotic cells. The Company believes that his knowledge and experience will strongly support the clinical development of its product candidates.

Broad and comprehensive intellectual property position. The Company believes that its licensed and owned patents, and patents that may be issued pursuant to its licensed and owned pending patent applications, provide broad and comprehensive coverage for the production processes and use of Allocetra™ for its products under clinical development. Its policy is to pursue, maintain and defend patent rights, whether developed internally or licensed from third parties, and to protect the technology, inventions and improvements that are commercially important to the development of its business. The Company also relies on trade secrets, know-how and continuing technological innovation to develop and maintain its proprietary position. In addition, the FDA orphan drug designation granted to the active moiety of Allocetra™ for the prevention of aGvHD may result in additional marketing exclusivity for such indication for up to seven years following FDA regulatory approval, and the EMA orphan medicinal product designation granted to Allocetra™ for the prevention of GvHD may provide similar exclusivity in Europe for up to 12 years.

Strategy

The Company’s strategy is to build a specialized cell immunotherapy company that discovers, develops and commercializes novel autologous and allogeneic drugs for the treatment of immune, autoimmune and inflammatory conditions. Key elements of the Company’s strategy include:

Utilizing available accelerated regulatory programs for life-saving advanced therapies . The Company anticipates that it may be able to initiate commercialization of its products for bone marrow transplantation and sepsis in the EU following its planned Phase II clinical trials, subject to conditional marketing approval from the EMA.

Coordinating the European clinical and regulatory development with accelerated regulatory pathways available under FDA guidelines to seek FDA approval of the Company’s life-saving therapies, potentially a regenerative medicine advanced therapy designation, or RMAT, and other potential breakthrough designations.

Initiating two clinical trials in 2019 . The Company initiated a Phase Ib in the first quarter of 2019 and plans to initiate a Phase II clinical trial for sepsis in the fourth quarter of 2019, a Phase II/III clinical trial for the prevention of complications post bone marrow transplantation in the first quarter of 2020 and a Phase II clinical study for steroid refractory GvHD patients during 2020.

Seeking strategic partnerships during 2019 to explore the increased clinical benefit of the Company’s product candidate for treatment of solid tumors in combination with CAR-T and other anti-cancer therapies .

Description of Property and Facilities

The Company’s corporate headquarters are located at 14 Einstein Street, Nes Ziona, Israel 7403618, where it leases and occupies approximately 420 square meters of space. The facility includes office space and current good manufacturing practice (“ cGMP ”) clean rooms, which are designed to enable the manufacturing of clinical batches to support the planned clinical trials in Israel and EU and commercial products for these regions. The lease for this space expires on August 31, 2023 at which time the Company may extend the lease for an additional 60 months’ period. In addition, the Company leases and occupies approximately 283 square meters of office and research labs space at the BioPark Building, Hadassah Ein-Kerem Campus, Jerusalem, Israel. The lease for BioPark space expires on December 31, 2019 at which time the Company may extend the lease for an additional 48 months. The Company also leases 12 square meters of laboratory space from Hadassah Medical Center in Jerusalem, Israel to conduct its research and development activities. The Company also has access to and utilizes, on an as-needed basis, additional research and development facilities and services located at the Hadassah Medical Center, including, without limitation, testing equipment, cell collection equipment and services and blood bank services. The Company believes that its facilities are suitable and adequate for its current needs.

Employees

As of March 1, 2019, the Company had 31 full time employees. The Company’s Chief Scientific & Medical Officer provides services on a part-time basis pursuant to a consulting agreement. Twenty-five of such employees are involved in product development and six provide general and administrative services. All of these employees are located in Israel. Given its limited number of employees, in order to continue the development and planned commercialization of its product candidates and future products, if any, the Company will need to substantially increase its operations, including expanding its employee base of managerial, operational and financial personnel.

None of the Company’s employees are party to any collective bargaining agreements or represented by any labor unions. However, in Israel, the Company is subject to certain Israeli labor laws, regulations, rulings of Israeli labor courts and certain provisions of collective bargaining agreements that apply to its employees by virtue of extension orders issued by the Israel Ministry of Economy and which apply such agreement provisions to the Company’s employees even though they are not part of a union that has signed a collective bargaining agreement. These labor laws and regulations primarily govern the length of the workday, minimum daily wages for professional workers, pension fund benefits for all employees, insurance for work-related accidents, procedures for dismissing employees, determination of severance pay and other conditions of employment. The Company generally provides its employees with benefits and working conditions above the required minimums. The Company has never experienced any employment-related work stoppages and believes its relationship with its employees is good.

All of the Company’s employment agreements include employees’ undertakings with respect to non-competition, confidentiality and the assignment to the Company of intellectual property rights developed in the course of employment. However, under current applicable Israeli labor laws, the Company may not be able to enforce (either in whole or in part) covenants not to compete and therefore may be unable to prevent its competitors from benefiting from the expertise of some of the Company’s former employees.

Liquidity and Capital Resources

As of the date hereof and after giving effect to the Private Placement, we expect that our cash balance will suffice to fund operations and multiple potential clinical milestones during the next 24 months. The Company’s cash equivalents are short-term, highly liquid investments that are readily convertible into cash with maturities of three months or less. The Company’s cash equivalents are deposited in a major bank in Israel.

The Company’s capital resources are intended to be used primarily to fund the research and development of the product candidates in the Company’s pipeline and for working capital and general corporate purposes. The Company’s capital resources are expected to be sufficient to fund its business through multiple value creation milestones and into early clinical development during the two years following the date hereof, specifically, a Phase II trial in sepsis, estimated to enroll 40-50 patients with an expected total study cost of $2.5 million and interim results expected in 2020, the Phase II part of an intended Phase II/III trial in prevention of complications post bone-marrow transplantations, estimated to enroll up to 60 patients with a total anticipated study cost of $6.0 million and interim results expected in 2020, and a Phase II trial in steroid-refractory GvHD patients, estimated to enroll up to 40 patients with a total expected study cost of $3.5 million, pursuant to which interim results are expected in 2021.

Legal Proceedings

The Company currently is not a party to any legal, arbitration or governmental proceedings that have had or, in the opinion of the Company’s management, may have, material adverse effects on the Company.

Management Following the Merger

Executive Officers and Directors

Resignation of Former Executive Officers and Directors of Bioblast

The directors and executive officers of Bioblast immediately prior to the completion of the Merger have resigned.

Executive Officers and Directors of the Combined Company Following the Merger

Unless otherwise noted herein, and except for the composition of the Board of the Company and its committees, the policies and procedures of the Board and its committees will remain unchanged from the policies and procedures of Bioblast’s Board and its committees immediately preceding the closing of the Merger. Please refer to “Board practices” in Part I, Item 6.C of the Company’s Annual Report on Form 20-F for the year ended December 31, 2017 for a more detailed description of such practices.

The following table lists the names and positions of the current executive officers and directors of the Company:

Name	Age	Position
Shai Novik, MBA	53	Chairman of the Board
Shmuel Hess, Ph.D.	46	Chief Executive Officer
Prof. Dror Mevorach, M.D.	63	Chief Scientific & Medical Officer
Shachar Shlosberger, CPA	42	Chief Financial Officer
Abraham Havron, Ph.D.	71	Director
Gili Hart, Ph.D.	44	Director
Baruch Halpert	52	Director
Michel Habib	52	Director
Sangwoo Lee	47	Director
Hyun Gyu Lee, M.D, Ph.D	42	Director
Bernhard Kirschbaum, Ph.D	60	Director

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Shai Novik is the Company’s Executive Chairman of the Board and has been such since 2014. Mr. Novik founded PROLOR Biotech, Inc. in 2005, and served as its President until 2014. PROLOR Biotech was listed on the NYSE MKT (N/K/A NYSE American) in 2010 and was sold in 2013, the second largest biotech exit ($560 million) in the history of Israeli biotech. Mr. Novik has also served as the Chairman of Innovsion Labs Inc., a neuroscience technology company, since 2007, and as Vice Chairman of CRYPTALGO Holdings AG, a global cryptocurrency and security tokens secondary trading and liquidity platform. Mr. Novik previously served as Chief Operating Officer and Head of Strategic Planning of THCG, Inc., a technology and life sciences investment company. THCG was a portfolio company of Greenwich Street Partners, one of the largest U.S. private equity funds. THCG’s portfolio included several life sciences and medical devices companies. Mr. Novik received his M.B.A., with distinction, from Cornell University.

Shmulik Hess, Ph.D., has been the Company’s Chief Executive Officer since November 1, 2018. Dr. Hess received his Ph.D. in Pharmaceutical Science from the Hebrew University, Israel and was a research fellow at Harvard-MIT Health Sciences and Technology (HST). Prior to joining the Company, Dr. Hess served as the Chief Executive Officer of Valin Technologies Ltd. from its inception in 2009 until October 2018 and oversaw the execution of Valin’s activities and its achievements, including the development, technology transfer, and establishment of cGMP manufacturing facilities for several biosimilars, the first of which has received marketing approval in China; and the in-licensing and acquisition of three early stage innovative drugs. Formerly, Dr. Hess served in global operations at SciGen Ltd. Dr. Hess is the inventor of multiple patents and author of numerous publications in peer reviewed scientific journals.

Prof. Dror Mevorach, M.D. , the Company’s founder, has been the Company’s Chief Scientific & Medical Officer since 2009. Prof. Mevorach is a leading scientist on the removal of apoptotic cells and the Co-Chair of the 2015 Apoptotic Cell Recognition and Clearance Gordon Research Conference at the University of New England in Maine. Prof. Mevorach is currently the Director of the Rheumatology Research Centre of Hadassah Hospital and a Senior Lecturer in Medicine at the Hebrew University of Jerusalem, Hadassah School of Medicine. Since 2009, Prof. Mevorach has managed the internal medicine department at Hadassah Hospital in Jerusalem. Prof. Mevorach published more than 112 scientific papers, and lectures frequently at international conferences. Prof. Mevorach earned his M.D. from The Technion – Israel Institute of Technology in Haifa, Israel.

Shachar Shlosberger, CPA., has served as the Chief Financial Officer of the Company since 2016, bringing with her more than 11 years of financial experience in the Hi-Tech and Biotechnology Industries. Prior to her position at the Company, Mrs. Shlosberger worked for 4 years at PROLOR Biotech Ltd (NYSE-American: PBTH) as Finance Director where she was responsible for the overall financial operations in Israel and the US. Mrs. Shlosberger is a Certified Public Accountant and holds a M.B.A. in Accounting and Business Administration from the College of Management in Israel.

Bernhard Kirschbaum, Ph.D., has been a Director of the Company since 2018. Dr. Kirschbaum served as Executive Vice President and a member of the Board at Merck Serono, and Head of Global Research & Early Development reporting to the Chief Executive Officer of Merck Serono from 2011 to 2013. He led a global team of more than 1,200 employees, with a 400 million Euro annual budget. Since then, he has served as a member of the board of directors of several biotechnology companies, including Redx Pharma Plc, Protagen Diagnostics, Omeicos Therapeutics GmbH, BioMedx, KAHR Medical, Ltd. and FutuRx. Dr. Kirschbaum has significant expertise in a broad range of disease areas, including rheumatology/immunology, thrombosis, cardiometabolic diseases, oncology and neurology. He has successfully participated in the profiling of several drugs in their course to the market or during market expansion, including Arava, Velcade, Lovenox, Erbitux and Avelumab. Dr. Kirschbaum led drug portfolio re-allocation with focus on the therapeutic areas: oncology, neurodegenerative diseases (MS, Alzheimers, Parkinsons), autoimmune and inflammatory diseases. Dr. Kirschbaum has also been involved in research activities with respect to fertility, mainly focusing on embryo technologies. He implemented the new Merck Serono research organization, including an exploratory medicine department and all non-clinical development functions (toxicology, general & safety pharmacology, Chemistry, Manufacturing and Control (CMC) development and Drug Metabolism and Pharmacokinetics (DMPK)). Previously, Dr. Kirschbaum was Vice President Discovery Research, Global Head of Thrombosis and Angiogenesis at Sanofi-Aventis; and Vice President, Drug Innovation and Approval at Sanofi-Aventis. Dr. Kirschbaum earned his Ph.D. in biochemistry, summa cum laude, from the University of Konstanz, Germany, was a postdoctoral fellow with Dr. R.G. Roeder, at the Rockefeller University in New York, and a Research Associate with Dr. M. Buckingham at Institut Pasteur in Paris.

Abraham (Avri) Havron, Ph.D. , has been a Director of the Company since 2014. Dr. Havron served as the Chief Executive Officer of PROLOR Biotech, Inc. from 2005 through 2013. Dr. Havron is a 35-year veteran of the biotechnology industry and was a member of the founding team and Director of Research and Development of Interpharm Laboratories (then, a subsidiary of Serono, later acquired by Merck) from 1980 to 1987, and headed the development of the multiple sclerosis drug REBIF, with current sales of more than $1.5 billion annually. Dr. Havron served as Vice-President Manufacturing and Process-Development of BioTechnology General Ltd., from 1987 to 1999; and Vice President and Chief Technology Officer of Clal Biotechnology Industries Ltd. from 1999 to 2003. Dr. Havron’s managerial responsibilities included the co-development of several therapeutic proteins and other bio-pharmaceuticals currently in the market, including recombinant human growth hormone (BioTropin), recombinant Hepatitis B Vaccine (Bio-Hep-B), recombinant Beta Interferon (REBIF), recombinant human insulin and hyaluronic acid for ophthalmic and orthopedic applications. Dr. Havron earned his Ph.D. in Bio-Organic Chemistry from the Weizmann Institute of Science, and served as a Research Fellow in the Harvard Medical School, Department of Radiology. Dr. Havron served as a director of Kamada Ltd. (KMDA) from 2010 to 2018. Dr. Havron also currently serves on the board of directors of Collplant Holdings Ltd. (CLGN), which position he has held since 2016, and PamBio, a private biotech company.

Gili Hart, Ph.D. , has been a Director of the Company since 2014. Dr. Hart previously held various positions at OPKO Biologics (f.k.a. PROLOR Biotech) and led the pre-clinical, clinical and pharmacological activities there from 2008 until her move in 2018 to Mitoconix Bio Ltd., a biopharmaceutical company developing disease modifying therapies addressing unmet medical needs by improving mitochondrial health, where she currently serves as Chief Executive Officer. Dr. Hart was a research fellow in the Immunology Department of Yale University from 2005 to 2007 and a research fellow at the Immunology Department of the Weizmann Institute of Science in Israel. Dr. Hart currently serves as a member of the board of directors of Collplant Holdings Ltd. (CLGN), which position she has held since 2017. Dr. Hart received her Ph.D. with distinction from the Immunology Department of the Weizmann Institute of Science in Immunology, and a M.S. degree in Biotechnology Engineering, summa cum laude, from the Technion Institute in Israel. Dr. Hart has published numerous papers and patents, in each case focusing on autoimmunity disease and immune system activation.

Sangwoo Lee has been a Director of the Company since 2017. Mr. Lee has served as an Executive Director of the Investment Department at Korea Investment Partners Co. Ltd., the largest capital venture fund in Korea, since 2014 and head of its U.S. branch since 2017. Korea Investment Partners Co. Ltd. is an affiliate of KIP Global Pharma Private Equity Fund, one of the Company’s major shareholders. He is responsible for sourcing and evaluation of start-up companies, investment and participation in business development and growth expansion of the fund’s investments in the United States and Europe. Previously, from 2013 to 2014, Mr. Lee was General Manager of the MSC Department at Samsung Electronics, responsible for strategic and business planning; and from 2004 to 2013, Vice President, CTO & Foreign Marketing Group Leader at Polidigm Co. Ltd. Mr. Lee received his B.Sc. and M.Sc. from Seoul National University, Department of Control and Instrumentation.

Hyun Gyu Lee M.D, Ph.D has been a Director of the Company since 2017. Mr. Lee has served as an Executive Director, Investment Division, of Korea Investment Partners Co. Ltd., the largest venture capital fund in Korea, since 2016. Korea Investment Partners Co. Ltd. is an affiliate of KIP Global Pharma Private Equity Fund, one of the Company’s major shareholders. He was from 2011 to 2016 Research Assistant Professor with the Department of Microbiology and Immunology, Institute for Immunology and Immunological Diseases, Yonsei University, College of Medicine in Seoul, Korea. He received his Ph.D. in Immuno-Pathology from the Seoul National University, College of Medicine in Seoul, Korea, and his M.D. from Seoul National University, College of Medicine in Seoul, Korea.

Baruch Halpert has been a Director of the Company since 2017. With more than 20 years of experience in venture capital and private equity as an entrepreneur, corporate finance advisor, senior executive and an investor, Mr. Halpert has developed a large network of contacts across the globe. Since 2010, Mr. Halpert has been involved in turn-arounds through active management and private equity investments of high yield opportunities. In this capacity, Mr. Halpert is active in investing in companies with annual revenues of at least $100 million in special situations and took part in the successful turnarounds of, among others, Hemaclear (www.hemaclear.com), Apnano (www.nisusacorp.com) and HBL (www.hbl.co.il). Mr. Halpert currently serves as Executive Chairman of Terragenic International Limited, which position he has held since 2018. Early in his career, Mr. Halpert was active in oil and gas exploration in Israel. In that capacity he obtained, developed and sold the rights to an Israeli oil and gas exploration license, the Megiddo Prospect, to Ultra Petroleum Corp. (Nasdaq: UPL). In 1997, Mr. Halpert founded E*TRADE Israel (www.etrade.com). After obtaining a license from E*TRADE, Mr. Halpert put together a core management team and headed several successful rounds of financing. Following E*TRADE, Mr. Halpert was Head of Corporate Finance at Fantine Capital. Mr. Halpert holds an LLB Degree (Hons.) from Reading University, United Kingdom.

Michel Habib has been a Director of the Company since 2017. Mr. Habib is the Chief Executive Officer of Hadasit Bio-Holdings Ltd., which position he has held since 2018. Hadasit Bio-Holdings currently beneficially owns 18.23% of the outstanding shares of the Company. Mr. Habib was the co-founder and managed Agate Medical Investments and Agate MaC VC funds from 2007-2016 with over $100 million under management. His portfolio companies have attracted investments from leading global and Chinese companies, including Boston Scientific, Johnson & Johnson, Medtronic, Haisco, Longtech, and Xio. Currently, Mr. Habib serves on the board of several investment companies and startups, including Xenia Ventures, Kahr Medical (Chairman), Cellcure, Bioprotect and Ornim Medical. Prior to that he managed Matar Capital Advisors, a venture boutique. Mr. Habib served for nearly four years as Business Development Director of Elron (TASE: ELRN), focusing on the medical devices sector. Prior to Elron, he established and managed the investment banking activity of ING Barings in Israel. Formerly, he served as Vice President Investment Banking at Cukierman & Co. where he led private placements and IPOs in Europe. During the 1990s, Mr. Habib served as a diplomat in Israel’s foreign service, where he served as Economic Consul in Boston, and earlier as the first Commercial Attaché to Seoul, South Korea. As Navy Officer (Captain Res.) in the Israel Defense Forces, he was involved in the development of advanced Naval warfare systems for the Navy’s elite unit. Mr. Habib holds an Aeronautical Engineering degree from the Technion-Israel Institute of Technology, and is a graduate from Harvard Law School Executive Program On Negotiation. He is a graduate from the foreign service cadet school, and member of the Technion Alumni “100 Club.” Mr. Habib was born in Paris, France, and immigrated to Israel in 1973.

Board of Directors

Under the Articles, the Board must consist of at least five and not more than eleven directors. The Board of the Company is currently composed of eight members, and includes Mr. Shai Novik, Dr. Bernhard Kirschbaum, Dr. Abraham (Avri) Havron, Dr. Gili Hart, Mr. Sangwoo Lee, Mr. Hyun Gyu Lee, Mr. Baruch Halpert and Mr. Michel Habib. These directors were nominated immediately after the closing of the Merger and will serve until the next annual general meeting of shareholders of the Company or until their respective successors are duly elected and qualified.

Under the Israeli Companies Law 5759-1999 (the “ Companies Law ”), the Board must determine the minimum number of directors who are required to have accounting and financial expertise. Under applicable regulations, a director with accounting and financial expertise is a director who, by reason of his or her education, professional experience and skill, has a high level of proficiency in and understanding of business accounting matters and financial statements, sufficient to be able to thoroughly comprehend the financial statements of the combined company and initiate debate regarding the manner in which financial information is presented. In determining the number of directors required to have such expertise, the Board must consider, among other things, the type and size of the combined company and the scope and complexity of its operations. The existing Board of the Company has determined that the Company requires one director with such expertise, and that Mr. Shai Novik has such accounting and financial expertise.

External Directors

Under the Companies Law, except as provided below, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies with shares listed on the Nasdaq such as the Company, are required to appoint at least two external directors, who meet the qualifications requirements set forth in the Companies Law.

Pursuant to regulations under the Companies Law, the board of directors of a company, such as the Company, is not required to have external directors if: (i) the company does not have a controlling shareholder (as such term is defined in the Companies Law); (ii) a majority of the directors serving on the board of directors are “independent,” as defined under Nasdaq Listing Rule 5605(a)(2); and (iii) the company complies with the Nasdaq Listing Rules as to the required composition of the audit and compensation committees of the Board (which require that such committees consist solely of independent directors (at least three and two members, respectively)), as described under the Nasdaq Listing Rules. The Company meets all of these requirements and does not have external directors.

Leadership Structure of the Board

In accordance with the Companies Law and the Articles, the Board is required to appoint one of its members to serve as Chairman of the Board. The Board has appointed Mr. Shai Novik to serve as Chairman of the Board.

Audit Committee

Under the Nasdaq Listing Rules, the Company is required to maintain an audit committee consisting of at least three independent directors, all of whom are financially literate and one of whom has accounting or related financial management expertise.

The audit committee of the Company (the “ Audit Committee ”) consists of three members, all of whom are independent under the listing standards of the Nasdaq Listing Rules. The members of the Audit Committee are Mr. Shai Novik, Dr. Avri Havron, and Dr. Gili Hart. The Board of the Company has determined that Mr. Novik is an audit committee financial expert as defined by the SEC rules and has the requisite financial sophistication as defined by the Nasdaq Listing Rules. All of the members of the Audit Committee meet the requirements for financial literacy under the applicable Nasdaq Listing Rules.

Each member of the Audit Committee is required to be “independent” as such term is defined in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

Compensation Committee

Under the Nasdaq Listing Rules, the Company is required to maintain a compensation committee consisting entirely of independent directors (or the determination of such compensation solely by the independent members of the Board of the combined company).

The compensation committee of the Company (the “ Compensation Committee ”) consists of three members, Mr. Shai Novik, Dr. Avri Havron, and Dr. Gili Hart , all of whom are independent under the listing standards of the Nasdaq Listing Rules.

Employment Agreements and Arrangements with Directors and Related Parties

Agreement with A.S. Novik and Shai Novik

On September 7, 2018, we entered into an agreement with A.S. Novik Ltd., a company organized under the laws of Israel and family-owned entity of Shai Novik (“ A.S. Novik ”), pursuant to which we retained Shai Novik as our Executive Chairman of the Board for an initial term of two years, to be automatically extended for additional one-year periods, unless either party provides at least 180 days written notice prior to the expiration of the term. A.S. Novik is entitled to a base retainer of $150,000, payable in equal monthly installments, subject to review and adjustment upon certain specified events. Upon the closing of the Merger, A.S. Novik’s base retainer was increased to $250,000, which will increase to $350,000 upon the Company having a cash and cash equivalents balance of $20 million. A.S. Novik is eligible to receive an annual cash bonus up to 100% of the base retainer, as determined by the Board, which will be based upon performance criteria established by the Board. If we terminate Mr. Novik’s Board service other than for cause, A.S. Novik is entitled to the base retainer for the twelve-month period following the effective date of termination. We have also agreed to reimburse A.S. Novik for up to $3,000 of monthly expenses in connection with Mr. Novik’s Board service as our Executive Chairman. Mr. Novik is also entitled to certain other stock option payments upon termination.

Employment Agreement with Shmuel Hess

On November 1, 2018, we entered into an employment agreement (the “ Hess Employment Agreement ”) with Shmuel Hess, Ph.D., to serve as our Chief Executive Officer, for an undefined term, unless and until terminated by either party. Dr. Hess is entitled to a monthly salary of NIS 63,000. The Hess Employment Agreement provides for certain other benefits, including pension, expense reimbursement and use of a company car. The Hess Employment Agreement may be terminated by either party, at any time and for any reason, pursuant to 90-days prior written notice by the terminating party.

Employment Agreement with Shachar Shlosberger

On May 3, 2016, we entered into an employment agreement (the “ Shlosberger Employment Agreement ”) with Shachar Shlosberger, to serve as our Chief Financial Officer, for an undefined term, unless and until terminated by either party. The Shlosberger Employment Agreement may be terminated by either party, at any time and for any reason, pursuant to 30-days prior written notice by the terminating party. Ms. Shlosberger is entitled to a monthly salary of NIS 23,040 and an annual bonus of up to 15% of her annual salary, at the Company’s discretion. The Shlosberger Employment Agreement provides for certain other benefits, including pension benefits and use of a cellphone.

Consulting Agreement with Prof. Dror Mevorach and Hadasit Medical Research Services

Prof. Dror Mevorach, M.D., our founder, has also served as our Chief Scientific Officer and as a member of our Board since 2005. On January 1, 2017, we entered into a consulting agreement (the “ Consulting Agreement ”) with Hadasit Medical Research Services and Development (“Hadasit”) and Prof. Mevorach for the provision by Prof. Mevorach of services as our Chief Scientific Officer for an initial period of 12 months, which is automatically extended for additional twelve-month periods thereafter, unless earlier terminated by either party. The Consulting Agreement, which may be terminated upon certain breaches or actions, is also terminable by either party upon 30 days prior written notice. Prof. Mevorach is entitled to an annual fee of $180,000 to be paid in monthly installments. We paid Hadasit $63,333.33 pursuant to the Agreement. We also granted options to purchase pre-merger Enlivex ordinary shares to Prof. Mevorach and Hadasit pursuant to the Consulting Agreement, which include an aggregate of 419,281 ordinary shares of the Company granted to Prof. Mevorach and 110,304 ordinary shares of the Company granted to Hadasit which are exercisable at a price of $2.68 per share and additional grants of 145,237 and 29,047 ordinary shares of the Company to Prof. Mevorach and Hadasit, respectively, which are exercisable at a price of $6.22 per share.

Indemnification Agreements

Our Articles permit us to exculpate, indemnify and insure each of our directors and officers to the fullest extent permitted by the Companies Law. We have entered into agreements with each of our directors and Professor Mevorach, exculpating them, to the fullest extent permitted by the Companies Law, from liability for monetary or other damages due to, or arising or resulting from, a breach of the duty of care to the Company and undertaking to indemnify them to the fullest extent permitted by Israeli law, including with respect to liabilities resulting from certain acts performed by such office holders in their capacity as an office holder of the Company, our subsidiaries or affiliates. The indemnification is limited both in terms of amount and coverage.

Share Ownership of Major Shareholders and Directors and Officers

The following table and the related notes present information on the beneficial ownership of ordinary shares of the Company by:

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each shareholder known by us to beneficially own more than 5% of the Company’s outstanding ordinary shares immediately following the closing of the Merger and the Private Placement;

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each director of the Company;

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each executive officer of the Company; and

•

all of the Company’s directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. The number of ordinary shares beneficially owned and the percentage of ordinary shares beneficially owned represents amounts after the consummation of the Merger and the closing of the Private Placement, for a total of 9,868,809 ordinary shares issued and outstanding.

Ordinary shares of the Company that may be acquired by an individual or group within 60 days of the date hereof, pursuant to the exercise of options or warrants or the conversion of a security, are deemed outstanding for the purposes of computing the percentage of ordinary shares beneficially owned by such individual or group, but are not deemed outstanding for purposes of computing the percentage of ordinary shares beneficially owned by any other individual or group shown in the table.

Beneficial Owner	Number of Ordinary Shares Beneficially Owned		Percentage of Ordinary Shares Beneficially Owned
*The Company’s 5% or Greater Shareholders (other than Directors and Executive Officers)*

HBL-Hadasit Bio-Holdings Ltd		1,798,727		18.2	%
Michael Hobi		1,522,283		15.4	%
KIP Global Pharma-Ecosystem Private Equity Fund		1,417,950		14.4	%

*Directors and Executive Officers*

Shai Novik, Executive Chairman (1)		882,515		8.8	%
Avri Havron, Director (2)		488,356		4.9	%
Dror Mevorach (3)		455,591		4.4	%
Gili Hart, Director (4)		95,192			*
Sangwoo Lee (5)		13,298			*
Hyun-Gyu Lee (5)		13,298			*
Michel Habib (5)		13,298			*
Baruch Halpert (6)		24,412			*
Dr. Shmulik Hess		-			*
Shachar Shlosberger (7)		2,058			*

All directors and executive officers as a group		1,988,018		18.7	%

Less than 1%.

(1)

Includes 169,289 shares underlying options exercisable within 60 days from the date hereof.

(2)

Includes 53,192 shares underlying options exercisable within 60 days from the date hereof.

(3)

Includes 455,591 shares underlying options exercisable within 60 days from the date hereof.

(4)

Includes 66,490 shares underlying options exercisable within 60 days from the date hereof.

(5)

Includes 13,298 shares underlying options exercisable within 60 days from the date hereof.

(6)

Includes 24,412 shares underlying options exercisable within 60 days from the date hereof.

(7)

Includes 2,058 shares underlying options exercisable within 60 days from the date hereof.

Financial Statements

The unaudited financial statements for Enlivex as of and for the three and nine months ended September 30, 2018 and September 30, 2017 and the audited financial statements for Enlivex as of and for the years ended December 31, 2017 and 2016 are filed as Exhibit 99.3 and Exhibit 99.4, respectively, to this Report on Form 6-K and incorporated by reference herein. The audited financial statements for Enlivex as of and for the year ended December 31, 2018 will be filed with the Company’s annual report on Form 20-F for the year ended December 31, 2018 to be filed with the SEC within the period required pursuant to applicable SEC rules.

Press Release

On March 26, 2019, the Company issued a press release announcing the closing of the Merger. A copy of the press release is attached as Exhibit 99.5 to this Report on Form 6-K and incorporated by reference herein.

Cautionary Note Regarding Forward-Looking Statements

This Report on Form 6-K includes statements relating to current expectations, estimates, forecasts and projections about future events that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include but are not limited to statements about:

our ability to continue as a going concern and to meet our financial needs, as well as potential raising of funds and their effect on our shareholders;

our expectations regarding the timing of clinical trials with respect to Allocetra™, if at all;

the continued listing of our ordinary shares on Nasdaq;

our expectations regarding the progress of our clinical trials, including the duration, cost and whether such trials will be conducted at all;

our intention to successfully complete clinical trials in order to be in a position to submit applications for accelerated regulatory paths in the EU and the United States;

the possibility that we will apply in the future for regulatory approval for our current and any future product candidates we may develop, and the costs and timing of such regulatory approvals;

the likelihood of regulatory approvals for any product candidate we may develop;

the timing, cost or other aspects of the commercial launch of any product candidate we may develop, including the possibility that we will build a commercial infrastructure to support commercialization of our current and any future product candidates we may develop;

future sales of our product candidates or any other future products or product candidates;

our ability to achieve favorable pricing for our product candidates;

the potential for our product candidates to receive designation as an orphan drug and implications if they do not receive such designation;

that any product candidate we develop potentially offers effective solutions for various diseases;

whether we will develop any future product candidates internally or through strategic partnerships;

our expectations regarding the manufacturing and supply of any product candidate for use in our clinical trials, and the commercial supply of those product candidates;

third-party payer reimbursement for our current or any future product candidates;

our estimates regarding anticipated expenses, capital requirements and our needs for substantial additional financing;

patient market sizes and market adoption of our current or any future product candidates by physicians and patients;

completion and receiving favorable results of clinical trials for our product candidates;

protection of our intellectual property, including issuance of patents to us by the United States Patent and Trademark Office, or USPTO, and other governmental patent agencies;

our intention to pursue marketing and orphan drug exclusivity periods that are available to us under regulatory provisions in certain countries;

the development and approval of the use of our current or any future product candidates for additional indications other than complications associated with bone marrow transplants and GvHD;

our expectations regarding commercial and pre-commercial activities;

our expectations regarding licensing, acquisitions, and strategic operations; and

our liquidity.

Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “plan,” “project,” “hope,” “goal,” “target,” “suggest,” “likely” and other similar words and phrases of similar meanings, the negative of these terms, and similar references to anticipated or expected events, activities, trends, future periods or results. These forward-looking statements are based upon the Company’s current estimates and projections of future results or trends and are subject to a number of risks, uncertainties and assumptions, including those described above. Actual results may differ materially from those projected as a result of those and other risks and uncertainties. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This Report on Form 6-K as well as Exhibits 99.1, 99.2, 99.3 and 99.4 are incorporated by reference into the registration statements on Form S-8 (File No. 333-203114 and File No. 333-210459) of the Company, filed with the SEC, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibit No.

99.1	Securities Purchase Agreement, dated March 11, 2019
99.2	Amended and Restated Articles of Association
99.3	Unaudited financial statements for Enlivex as of and for the three and nine months ended September 30, 2018 and September 30, 2017
99.4	Audited financial statements for Enlivex as of and for the years ended December 31, 2017 and 2016

99.5	Consent of Yarel + Partners

99.6	Press Release issued by Bioblast Pharma Ltd. on March 26, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Enlivex Therapeutics Ltd.
	(Registrant)


	By:	/s/ Shai Novik
	Name:	Shai Novik
	Title:	Executive Chairman

Date: March 27, 2019

Exhibit 99.1

EXECUTION VERSION

March 11, 2019

SECURITIES PURCHASE AGREEMENT

AMONG

BIOBLAST pharma ltd.

and

THE INVESTORS PARTY HERETO

TABLE OF CONTENTS

Article I DEFINITIONS		1
1.1	Definitions	1

Article II PURCHASE AND SALE		3
2.1	Closing	3
2.2	Closing Deliveries.	3

Article III REPRESENTATIONS AND WARRANTIES		4
3.1	Incorporation of Certain Representations and Warranties from Merger Agreement	4
3.2	Representations and Warranties of the Investors	4

Article IV ADDITIONAL COVENANTS		8
4.1	Transfer Restrictions.	8
4.2	Registration	8

Article V CONDITIONS		8
5.1	Conditions Precedent to the Obligations of the Investors	8
5.2	Conditions Precedent to the Obligations of the Company	9

Article VI INDEMNIFICATION		10
6.1	Indemnification of Investors	10
6.2	Conduct of Indemnification Proceedings	10

Article VII MISCELLANEOUS		10
7.1	Termination	10
7.2	Fees and Expenses	10
7.3	Entire Agreement; Further Assurances	11
7.4	Notices	11
7.5	Amendments; Waivers	11
7.6	Construction	11
7.7	Successors and Assigns	11
7.8	No Third-Party Beneficiaries	12
7.9	Governing Law; Venue; Waiver of Jury Trial	12
7.10	Survival	12
7.11	Execution	12
7.12	Severability	12
7.13	Independent Nature of Investors’ Obligations and Rights	13
7.14	Representations	13

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “ Agreement ”), dated as of March 11, 2019, is by and among BioBlast Pharma Ltd., a company formed under the laws of the State of Israel (the “ Company ”), and each investor identified on the signature pages hereto (each, an “ Investor ” and collectively, the “ Investors ”).

RECITALS

A. The Company is a party to that certain Agreement and Plan of Merger, dated as of November 19, 2018 (the “ Merger Agreement ”), together with Enlivex Therapeutics Ltd., a company formed under the laws of the State of Israel (“ Enlivex ”), and Treblast Ltd., a company formed under the laws of the State of Israel and a wholly owned subsidiary of the Company (“ Merger Sub ”); and, pursuant to the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into Enlivex (the “ Merger ”) with Enlivex surviving the Merger as a wholly owned subsidiary of the Company, and the Company’s name will change to “Enlivex Therapeutics Ltd”, and Enlivex’s name will change to “Enlivex Therapeutics R&D Ltd.”

B. In connection with the transactions contemplated by the Merger Agreement, upon the terms and subject to the conditions stated in this Agreement, the Company desires to issue and sell, and each Investor, severally and not jointly with any other Investor, desires to purchase, that number of the Company’s ordinary shares, NIS 0.40 per share (the “ Ordinary Shares ”), set forth on such Investor’s signature page to this Agreement.

C. The Closing shall take place substantially concurrently with the consummation of the Merger.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investors, intending to be legally bound hereby, agree as follows:

Article I
DEFINITIONS

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

“ $ ” means U.S. dollars.

“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.

“ Agreement ” has the meaning set forth in the Preamble.

“ Business Day ” means any day other than a Friday, Saturday, Sunday, or any day which shall be a federal legal holiday in the United States or a legal holiday in Israel.

“ Closing ” means the closing of the purchase and sale of the Ordinary Shares pursuant to Section 2.1 .

“ Closing Date ” means the “Closing Date” as defined in the Merger Agreement, subject to the making of the deliverables required by Section 2.2 and satisfaction of the deliverables conditions set forth in Sections 5.1 and 5.2 (other than those to be satisfied at the Closing and those conditions waived by the Person entitled to the benefit of such conditions).

“ Company ” has the meaning set forth in the Preamble.

“ Enlivex ” has the meaning set forth in the Recitals.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ FINRA ” has the meaning set forth in Section 3.2(c) .

“ Indemnified Person ” has the meaning set forth in Section 6.2 .

“ Investor ” has the meaning set forth in the Preamble.

“ Investor Party ” has the meaning set forth in Section 6.1 .

“ Losses ” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees.

“ Merger ” has the meaning set forth in the Recitals.

“ Merger Agreement ” has the meaning set forth in the Recitals.

“ Merger Sub ” has the meaning set forth in the Recitals.

“ NIS ” means New Israeli Shekels.

“ Ordinary Shares ” has the meaning set forth in the Recitals.

“ Per Share Purchase Price ” hast the meaning set forth in Section 2.1 .

“ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing.

“ Prohibited Transaction ” has the meaning set forth in Section 3.2(i) .

“ Registrable Securities ” means the Ordinary Shares acquired hereunder any shares of capital stock issued or issuable with respect to such Ordinary Shares as a result of any stock split, dividend, distribution, recapitalization or similar transaction; provided , that the Registrable Securities shall cease to be Registrable Securities when (a) a registration statement covering such Registrable Securities has been declared effective by the SEC and such Registrable Securities have been disposed of pursuant to such effective registration statement, or (b) such Registrable Securities may be sold without restrictions or other limitations pursuant to Rule 144 (or any successor provision) under the Securities Act (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1).

“ Registration Statement ” has the meaning set forth in Section 4.2 .

“ Regulation S ” means Regulation S promulgated under the Securities Act.

“ Representatives ” has the meaning set forth in Section 7.14 .

“ Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder.

“ Short Sales ” means and includes, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.

“ Transaction Documents ” means this Agreement and each of the other agreements or instruments entered into or executed by the parties hereto in connection with the transactions contemplated by this Agreement and the other Transaction Documents.

Article II
PURCHASE AND SALE

2.1 Closing . Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall issue and sell to each Investor, and each Investor shall, severally and not jointly, purchase from the Company, such number of Ordinary Shares set forth on such Investor’s signature page to this Agreement, at a purchase price per Ordinary Share equal to $12.25 (the “ Per Share Purchase Price ”). The date and time of the Closing shall be 10:00 a.m., Eastern Time, on the Closing Date. The Closing shall take place at the offices of Greenberg Traurig, P.A., 333 S.E. 2 ^nd Avenue, Suite 4400, Miami, Florida 33131, (or pursuant to the electronic or other remote exchange of all executed documents and other deliverables required by this Agreement to be delivered at Closing) or at such other location as the parties determine.

2.2 Closing Deliveries .

(a) At the Closing, the Company shall deliver to each Investor a certificate, duly executed by the Company and registered in the name of such Investor, or, if so indicated on such Investor’s signature page, in such other name(s) as designated by such Investor, inclusive of such restrictive and other legends as set forth in Section 4.1(b) , evidencing such number of Ordinary Shares as is set forth on such Investor’s name on the Schedule of Investors. In lieu of such certificate, the Company may deliver a copy of issuance instructions in respect of such Investor’s Ordinary Shares delivered to the Company’s transfer agent.

(b) At the Closing, each Investor shall deliver or cause to be delivered to the Company the following:

(i) an aggregate amount equal to the Per Share Purchase Price multiplied by the number of Ordinary Shares to be purchased by such Investor hereunder, as set forth on such Investor’s signature page to this Agreement, in immediately available funds, by wire transfer to an account designated in writing to such Investor by the Company for such purpose; and

(ii) a completed and executed Investor Signature Page to this Agreement.

Article III
REPRESENTATIONS AND WARRANTIES

3.1 Incorporation of Certain Representations and Warranties from Merger Agreement . The Company hereby represents and warrants to the Investors as follows: The representations and warranties made by the Company and Merger Sub to Enlivex as set forth in Article III, Sections 3.01 through 3.27 of the Merger Agreement, and the representations and warranties made by Enlivex to the Company and Merger Sub as set forth in Article IV Sections 4.01 through 4.28 of the Merger Agreement, with such representations and warranties as qualified by the exceptions disclosed in the Bioblast Disclosure Letter (as defined in the Merger Agreement) and the Enlivex Disclosure Letter (as defined in the Merger Agreement), are incorporated herein by reference and deemed made by the Company to the Investors as of the Closing (except to the extent that any such representations and warranties are made as of a specific date, in which case such representations and warranties are made as of such date).

3.2 Representations and Warranties of the Investors . Each Investor hereby, as to itself only and for no other Investor, represents and warrants to the Company as follows:

(a) Organization; Authority . Such Investor, if such Investor is not a natural person, is an entity duly organized, validly existing and, to the extent applicable, in good standing under the laws of the jurisdiction of its organization with the requisite corporate, limited liability company, partnership or other power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The purchase by such Investor of the Ordinary Shares hereunder and the consummation of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership or other action on the part of such Investor. This Agreement and the Transaction Documents to which such Investor is a party or has or will execute have been duly executed and delivered by such Investor and constitute the valid and binding obligations of such Investor, enforceable against it in accordance with their terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) No Public Sale or Distribution . Such Investor is acquiring the Ordinary Shares in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and such Investor does not have a present arrangement to effect any distribution of the Ordinary Shares or any other Ordinary Shares to or through any person or entity.

(c) Investor Status . At the time such Investor was offered the Ordinary Shares, it was, and on the date hereof it is, and on the date on which it receives the Ordinary Shares it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not a registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. (“ FINRA ”) or an entity engaged in the business of being a broker dealer. Except as otherwise disclosed in writing to the Company in such Investor’s Investor Questionnaire, such Investor is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA or an entity engaged in the business of being a broker dealer.

(d) General Solicitation . Such Investor is not purchasing the Ordinary Shares as a result of any advertisement, article, notice or other communication regarding the Ordinary Shares published in any newspaper, magazine or similar media, broadcast over television or radio, disseminated over the Internet or presented at any seminar or any other general solicitation or general advertisement. Neither such Investor, nor any Person acting on behalf of such Investor, has offered or sold, and does not presently intend to offer and sell at any future time, any Ordinary Shares by any form of general solicitation or general advertising.

(e) Experience of Such Investor; Risk of Loss . Such Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Ordinary Shares, and has so evaluated the merits and risks of such investment. Such Investor understands that it must bear the economic risk of its investment in the Ordinary Shares indefinitely, and is able to bear such risk and is able to afford a complete loss of such investment. Such Investor has the ability to bear the economic risks of its prospective investment in the Ordinary Shares and can afford the complete loss of such investment.

(f) Access to Information . Such Investor acknowledges that it has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company and Enlivex concerning the Company and Enlivex and the terms and conditions of the offering of the Ordinary Shares and the merits and risks of investing in the Ordinary Shares; (ii) access to information about each of the Company and Enlivex and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company or Enlivex possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Investor has received and reviewed a complete copy of the Merger Agreement, together with all schedules, annexes and exhibits thereto, and such Investor has reviewed the Company’s Annual Report on Form 20-F for the year ended December 31, 2017, as filed with the SEC, including the exhibits filed therewith, as well as each report (including such report’s exhibits) filed with the SEC subsequent to the Company’s filing of such Form 20-F.

(g) No Governmental Review . Such Investor understands that no U.S. federal or state agency or any other government or governmental agency (whether of the United States or any other country or jurisdiction) has passed on or made any recommendation or endorsement of the Ordinary Shares or the fairness or suitability of the investment in the Ordinary Shares nor have such authorities passed upon or endorsed the merits of the offering of the Ordinary Shares.

(h) No Conflicts . The execution, delivery and performance by such Investor of this Agreement and each other Transaction Document and the consummation by such Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of such Investor to consummate the transactions contemplated hereby or perform its obligations hereunder or thereunder.

(i) Prohibited Transactions; Confidentiality . Such Investor has not, directly or indirectly, and no Person acting on behalf of or pursuant to any understanding with such Investor has, engaged in any purchases or sales in any of the Company’s securities, including derivatives thereof, including, without limitation, any Short Sales involving any of the Company’s securities (a “ Prohibited Transaction ”), since the time that such Investor was first contacted by the Company or any other Person regarding an investment in the Company. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with such Investor will engage, directly or indirectly, in any Prohibited Transactions in the securities of the Company prior to the time the transactions contemplated by this Agreement are publicly disclosed.

(j) No Legal, Tax or Investment Advice; No Representations by the Company . Such Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to such Investor in connection with the purchase of the Ordinary Shares constitutes legal, tax or investment advice. Such Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Ordinary Shares and has made its own assessment and has satisfied itself concerning the relevant tax and other economic considerations relevant to its investment in the Ordinary Shares. Such Investor acknowledges and agrees that none of the Company, Enlivex nor any of their respective Representatives has made any representations or warranties with respect to the tax consequences or obligations (including, without limitation, reporting, withholding or other obligations) applicable to any Person which may result from the consummation of the transactions contemplated by the Transaction Documents.

(k) Reliance on Exemptions . Such Investor understands that the Ordinary Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying upon the truth and accuracy of, and such Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Ordinary Shares.

(l) Residency . Such Investor is a resident of that jurisdiction specified below its address on such Investor’s signature page hereto.

(m) Transfer or Resale . Such Investor understands that: (i) the Ordinary Shares have not been and are not being registered under the Securities Act, any U.S. state securities laws or under the laws of any other jurisdiction, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or (B) such Investor shall have delivered to the Company an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Ordinary Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; (ii) any sale of the Ordinary Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Ordinary Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Ordinary Shares under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

(n) Legends . Such Investor understands that the certificates representing the Ordinary Shares shall bear any legend as required by the “blue sky” laws of any state and restrictive legends in substantially the following forms (and a stop-transfer order may be placed against transfer of such share certificates or any Ordinary Shares held electronically in book-entry with the Company’s transfer agent):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL SIX MONTHS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING THEREOF AND THE CLOSING DATE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. NO HEDGING TRANSACTION CAN BE CONDUCTED WITH REGARD TO THE SECURITIES EXCEPT AS PERMITTED BY THE SECURITIES ACT. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S PROMULGATED UNDER THE SECURITIES ACT.

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE (AND NON-U.S., AS APPLICABLE) SECURITIES LAWS OR BLUE SKY LAWS.

Such investor understands that the legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Ordinary Shares upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Ordinary Shares (x) are registered for resale pursuant to an effective registration statement under the Securities Act and (y) are resold pursuant to such registration statement or (ii) in connection with a sale, assignment or other transfer pursuant to Rule 144, such holder provides the Company with an opinion of a law firm reasonably acceptable to the Company, in a form reasonably acceptable to the Company, to the effect that such sale, assignment or transfer may be made in compliance with Rule 144.

(o) No Other Representations or Warranties; Reliance . Such Investor acknowledges and agrees that, except for the representations and warranties contained in this Agreement, none of the Company, Enlivex, Merger Sub nor any of their respective Affiliates nor any other Person makes any express or implied representation or warranty on behalf of the Company with respect to the offer, issuance and sale of the Ordinary Shares hereunder, and such Investor hereby disclaims any such representation or warranty whether by the Company, Enlivex, Merger Sub or any of their respective Affiliates or any other Person.

Article IV
ADDITIONAL COVENANTS

4.1 Transfer Restrictions .

(a) Each Investor covenants that the Ordinary Shares acquired by such Investor will be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with applicable state and foreign securities laws. In connection with any transfer of Ordinary Shares other than pursuant to an effective registration statement or to the Company, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act.

(b) The Investors agree to the imprinting, until no longer required by this Section 4.1(b) , of those legends set forth in Section 3.2(n) , together with such other legends as may be required by applicable law. The Ordinary Shares shall not be required to contain such legend or any other legend (i) following any sale of such Ordinary Shares pursuant to an effective registration statement under the Securities Act, (ii) pursuant to Rule 144 if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the Ordinary Shares can be sold under Rule 144 or (iii) if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the SEC).

4.2 Registration . Following consummation of the Merger and not later than the 60 ^th day following the date on which the Company files its Annual Report on Form 20-F for the year ended December 31, 2018, the Company file with the SEC a registration statement on Form F-1, Form F-3 or such other form under the Securities Act as is then available to the Company (including the prospectus, amendments and supplements to such registration statement or prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement, the “ Registration Statement ”), providing for the resale from time to time by the Investors of any and all Registrable Securities. The Company agrees to use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC as soon as practicable following such filing. The Company shall promptly, and in any event within five (5) Business Days, notify the Investors of the effectiveness of the Registration Statement. The Company shall maintain the effectiveness of the Registration Statement for so long as there are any Registrable Securities outstanding, with respect to such Registrable Securities.

Article V
CONDITIONS

5.1 Conditions Precedent to the Obligations of the Investors . The obligation of each Investor to acquire Ordinary Shares at the Closing is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties . The representations and warranties of the Company contained in Section 3.1 shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of the Closing Date (except for those representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such specified date).

(b) Performance . The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing.

(c) Transaction Documents . The Company shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Investors.

(d) No Injunction . No Proceeding shall have been filed and no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered or promulgated by any court or governmental authority of competent jurisdiction that prohibits or seeks to prohibit or otherwise challenges the consummation of any of the transactions contemplated by the Transaction Documents.

(e) Consummation of Merger . The Merger shall have been consummated or shall be consummated substantially concurrently with Closing.

5.2 Conditions Precedent to the Obligations of the Company . The obligation of the Company to issue and sell the Ordinary Shares at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties . The representations and warranties of the Investors contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of the Closing Date (except for those representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such specified date); and

(b) Performance . The Investors shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investors at or prior to the Closing.

(c) Transaction Documents . Each Investor shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company. The Investors shall have delivered to the Company those items required by Section 2.2(b) .

(e) Consummation of Merger . The Merger shall have been consummated or shall be consummated substantially concurrently with Closing.

Article VI
INDEMNIFICATION

6.1 Indemnification of Investors . The Company will indemnify and hold each Investor and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, an “ Investor Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and reasonable costs of investigation that any such Investor Party may suffer or incur, as a result of or relating to third party claims against such Investor relating to any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents, provided that such a claim for indemnification relating to any breach of any of the representations or warranties made by the Company in this Agreement is made within six months from the Closing. The indemnification provided by the Company under this Section 6.1 shall be the exclusive remedy available to the Investors against the Company or any of its directors and officers in connection with any inaccuracy or breach of any representation or warranty contained in Section 3.1 , except in the case of fraud. The Company will not be liable to any Investor Party under this Agreement to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Investor Party in this Agreement or in the other Transaction Documents.

6.2 Conduct of Indemnification Proceedings . Promptly after receipt by any Person (the “ Indemnified Person ”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 6.1 , such Indemnified Person shall promptly notify the Company in writing, and the Company shall assume the defense thereof, and shall assume the payment of all fees and expenses; provided , however , that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is actually prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Company shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified Person, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them in such proceeding; provided, that, in the case of the foregoing clauses (i) through (iii), the Company shall not pay for more than one counsel for all Indemnified Persons. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, delayed or conditioned, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.

Article VII
MISCELLANEOUS

7.1 Termination . This Agreement may be terminated by the Company or Investors having the right to acquire a majority of Ordinary Shares hereunder, by written notice to the other parties, if the Closing has not been consummated by June 30, 2019; provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties).

7.2 Fees and Expenses . Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement and the other Transaction Documents. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of Ordinary Shares.

7.3 Entire Agreement; Further Assurances . The Transaction Documents, together with the Exhibits, Annexes and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company and the Investors will execute and deliver to the Investors such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.

7.4 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified on the applicable signature page to this Agreement prior to 6:30 p.m. Eastern Time on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified on the applicable signature page to this Agreement on a day that is not a Business Day or later than 6:30 p.m. Eastern Time on any Business Day, (c) the Business Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.

7.5 Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Investors holding or having the right to acquire a majority of the Ordinary Shares subscribed for hereunder at the time of such amendment or, in the case of a waiver, by the party against whom enforcement of such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

7.6 Construction . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

7.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors entitled to purchase, or holding, as applicable, a majority of the Ordinary Shares subscribed for, or acquired, hereunder; provided , however that this Agreement shall be assigned to any corporation or association into which the Company may be merged or converted or with which it may be consolidated, or any corporation, association or other similar entity resulting from any merger, conversion or consolidation to which the Company shall be a party without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties to this Agreement except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding. Any Investor may assign its rights under this Agreement to any Person to whom such Investor assigns or transfers any Ordinary Shares, provided (i) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (ii) the Company is furnished with written notice of the name and address of such transferee or assignee, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (iv) such transferee agrees in writing to be bound, with respect to the transferred Ordinary Shares, by the provisions hereof that apply to the “Investors” and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.

7.8 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

7.9 Governing Law; Venue; Waiver of Jury Trial . ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ISRAEL. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN TEL AVIV-JAFFA, ISRAEL FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

7.10 Survival . Unless this Agreement is terminated pursuant to Section 7.1 , the representations and warranties contained herein shall survive for a period of six months immediately following the Closing Date, and the other agreements and covenants contained herein shall survive indefinitely.

7.11 Execution . This Agreement may be executed in counterparts, all of which when taken together shall be considered one and the same agreement. In the event that any signature is delivered by facsimile transmission or email attachment, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or email-attached signature page were an original thereof.

7.12 Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

7.13 Independent Nature of Investors’ Obligations and Rights . The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Documents. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no other Investor will be acting as agent of such Investor in connection with monitoring its investment hereunder. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose.

7.14 Representations . Each Investor agrees that, except for the representations and warranties contained in Section 3.1 , the Company makes no other representations or warranties, and the Company hereby disclaims any other representations or warranties made by itself or any of its directors, officers employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives (collectively, “ Representatives ”), with respect to the execution and delivery of this Agreement and the other Transaction Documents, notwithstanding the delivery or disclosure to any other party or any other party’s Representatives of any document or other information with respect to any one or more of the foregoing. Without limiting the generality of the foregoing, and notwithstanding any otherwise express representations and warranties made by the Company in this Agreement, each of the Investors agrees that none of the Company, Enlivex nor any of their respective Affiliates makes or has made any representation or warranty with respect to (i) any projections, forecasts, estimates, plans or budgets or future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of the Company or any of its subsidiaries or the future business, operations or affairs of the Company or any of its subsidiaries heretofore or hereafter delivered to or made available to it, or (ii) any other information, statements or documents heretofore or hereafter delivered to or made available to it with respect to the Company or any of its subsidiaries or the business, operations or affairs of the Company or any of its subsidiaries, except to the extent and as expressly covered by a representation and warranty made in this Agreement.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have executed or caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	BioBlast Pharma Ltd.

	By:
	Name:
	Title:

	Address for Notices:
	c/o Enlivex Therapeutics Ltd. Hadassah Ein Karem POB 12167 Jerusalem, Israel 91120 Attn: Shai Novik Email: shai.novik@gmail.com
	With a copy (which shall not constitute notice) to:

	Greenberg Traurig, P.A. 333 S.E. 2 ^nd Avenue Suite 4400 Miami, FL 33131 Attn: Robert L. Grossman Drew M. Altman Email: grossmanb@gtlaw.com altmand@gtlaw.com

[Company Signature Page to Securities Purchase Agreement]

Investor Signature Page

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the undersigned Investor hereby joins in and agrees to be bound by the terms and conditions of that certain Securities Purchase Agreement dated as of March __, 2019 (the “ Purchase Agreement ”), by and among BioBlast Pharma Ltd., a company formed under the laws of the State of Israel, and the Investors party thereto, as to the number of Ordinary Shares set forth below such Investor’s name below, and authorizes this signature page to be attached to the Purchase Agreement or counterparts thereof.

	Name of Investor:


	By:
	Name:
	Title:

	Number of Ordinary Shares Purchased:______________

	Aggregate Purchase Price: US$____________________

	Address:



	Telephone No.:

	Facsimile No.:

	Email Address:

Delivery Instructions (if different than above):

c/o:
Address:

Telephone No.:
Facsimile No. :
Other Special Instructions:

[Investor Signature Page to Securities Purchase Agreement]

Exhibit 99.2

Articles of Association of

Enlivex Therapeutics Ltd.

A Company Limited by Shares

Under The Companies Law, 5759-1999

Chapter 1 General	1
Chapter 2 Shares and Share Capital	2
Chapter 3 General Meetings	6
Chapter 4 The Board of Directors	10
Chapter 5 Committees of the Board of Directors	14
Chapter 6 General Manager	15
Chapter 7 Exemption, Insurance, and Indemnification	15
Chapter 8 Internal Auditor	17
Chapter 9 Auditing Accountant	17
Chapter 10 Signing in the Company’s Name	17
Chapter 11 Dividend and Benefit Shares	18
Chapter 12 Accounts	18
Chapter 13 Notifications	18

Chapter 1 General

1.1	Name of Company

The name of the Company is Enlivex Therapeutics Ltd.

1.2	Goals of the Company

The goal of the Company is to engage in any lawful business.

1.3	Interpretation

1.3.1

Any statement in the singular shall also include the plural and vice versa; any statement in the masculine shall also include the feminine and vice versa.

1.3.2

Except insofar as these Articles include special definitions of certain terms, any word and expression in these Articles shall have the meaning attributed thereto in the Companies Law, 5759-1999 (the “ Companies Law ”) unless this contradicts the written matter or the content thereof.

1.3.3

To prevent doubt it is clarified that regarding matters regulated in the Companies Law in such manner that the arrangements in these matters may be conditioned in the Articles, and in cases in which these Articles do not include different provisions from those in the Companies Law, the provisions of the Companies Law shall apply.

1.3.4

For the avoidance of doubt, the provisions of the Articles of Association of the Company as detailed below are in any event subject to the provisions of the Companies Law, the Securities Law, 5728-1968 (the “ Securities Law ”) and any other applicable law.

1.4	Limited Liability

The liability of the shareholders for the Company’s debts shall be limited to the full amount (nominal value with the addition of premium) required to be paid to the Company for the shares and which has not yet been paid.

1.5

Donations

The Company is entitled to donate a reasonable sum of money for a fit purpose. The Board of Directors of the Company is entitled to determine, at its discretion, rules for the making of donations by the Company.

Chapter 2 Shares and Share Capital

2.1	Share Capital and Rights Attached to Shares

2.1.1

The registered capital of the Company is NIS 18,000,000 divided into 45,000,000 ordinary shares with a nominal value of NIS 0.40 each.

2.1.2

The ordinary shares shall entitle their owners to –

2.1.2.1

An equal right to participate in and vote at the General Meetings of the Company, whether Annual Meetings or Extraordinary Meetings. Each of the shares in the Company shall entitle its owner present at the meeting and participating in the vote in person, by proxy, or by means of a voting deed, to one vote;

2.1.2.2

An equal right to participate in the distribution of dividends, whether in cash or assets, benefit shares, or any other distribution, according to the proportionate nominal value of the shares held thereby;

2.1.2.3

An equal right to participate in the distribution of the surplus assets of the Company in the event of its liquidation in accordance with the proportionate nominal value of the shares held thereby.

2.1.3

The Board of Directors is entitled to issue shares and other convertible securities or securities that may be realized as shares up to the limit of the Company’s registered capital. For the purpose of calculating the limit of the registered capital, convertible securities or securities that may be realized as shares shall be considered to have been converted or realized as of their date of issue.

2.2	Share Certificates

2.2.1

The owner of a share registered in the registry of shareholders is entitled to receive from the Company, without payment and within a period of three months following the allocation or the registration of transfer, one share certificate stamped with the Company’s stamp regarding all the shares registered in his name, which certificate shall detail the number of shares. In the event of a jointly owned share, the Company shall issue one share certificate for all the joint owners of the share, and the delivery of such a certificate to one of the partners shall be considered delivery to them all.

Each share certificate shall bear the signature of at least one Director, together with the Company stamp or its printed name.

2.2.2

A share certificate that has been defaced, destroyed, or lost may be renewed on the basis of such proof and guarantees as shall be required by the Company from time to time.

2.2.3

Shares of the Company may be certificated or uncertificated, subject to the Companies Law.

2.3	Reliefs relating to Shares that Have Not Been Fully Paid

2.3.1

If any or all of the remuneration the shareholder undertook to pay the Company in return for his shares has not been paid by such date and on such conditions as established in the conditions for the allocation of his shares and/or in the payment request as stated in Article ‎2.3.2 below, the Company is entitled, by way of a decision of the Board of Directors, to forfeit the shares whose remuneration has not been fully paid. The forfeiture of shares shall take place provided that the Company has sent the shareholder written warning of its intention to forfeit the shares after at least 7 days from the date of receipt of the warning, insofar as payment shall not be made during the period determined in the letter of warning.

The Board of Directors is entitled, at any time prior to the date on which the forfeited share is sold, reallocated, or otherwise transferred, to nullify the forfeiture on such conditions as it shall see fit.

2.3.2

If, in accordance with the conditions of allocation of the shares, there is no fixed date for the payment of any part of the price to be paid on account thereof, the Board of Directors is entitled, from time to time, to present payment requests to the shareholders on account of monies not yet removed for the shares they hold, and each shareholder shall be obliged to pay the Company the amount requested on the date determined as stated, provided that he shall receive prior notice of 14 days of the date and place of payment (a “ Payment Request ”). The notification shall specify that non-payment by or before the determined date and in the specified place may lead to the forfeiture of the shares regarding which payment is requested. A Payment Request may be nullified or postponed to another date, all as shall be decided by the Board of Directors.

2.3.3

Unless otherwise determined in the conditions of allocations of the shares, a shareholder shall not be entitled to receive a dividend or to exercise any right as a shareholder on account of shares that have not yet been fully paid.

2.3.4

Persons who are the joint owners of a share shall be liable jointly and severally for payment of the amounts due to the Company on account of the share.

2.3.5

The content of this section shall not derogate from any other relief of the Company vis-à-vis a shareholder who fails to pay his debt to the Company on account of his shares.

2.4	Transfer of Shares

2.4.1

The Company’s shares are transferable.

2.4.2

The transfer of shares must be made in writing, and it shall be recorded only if –

2.4.2.1

A proper certificate for the transfer of shares, together with the certificates of the share intended for transfer, if such were issued, are delivered to the Company at its registered office. The certificate of transfer shall be drafted in such form approved by the Board of Directors and signed by the transferor and by a witness confirming the signature of the transferor. In the event of the transfer of shares that are not fully paid as of the date of transfer, the certificate of transfer shall also be signed by the recipient of the share and by a witness testifying to the signature of the recipient; or

2.4.2.2

A court order for the amendment of the registration shall be delivered to the Company; or

2.4.2.3

It shall be proved to the Company that lawful conditions pertain for the transfer of the right to the share.

2.4.3

The transfer of shares that have not been fully paid requires the authorization of the Board of Directors, which is entitled to refuse to grant its authorization at its absolute discretion and without stating grounds therefore.

2.4.4

The recipient of the transfer shall be considered the shareholder regarding the transferred shares from the moment of the registration of his name in the registry of shareholders.

2.5	Changes in Capital

2.5.1

The General Meeting is entitled to increase the Company’s registered share capital by creating new shares of an existing class or a new class, all as shall be determined in the decision of the General Meeting.

2.5.2

Subject to the provisions of the Companies Law, the General Meeting is entitled to decrease the Company’s registered share capital or nullify registered share capital that has not yet been allocated (provided that there is no commitment, including a conditioned commitment, by the Company to allocate the shares).

2.5.3

The General Meeting shall be entitled, subject to the provisions of any law:

2.5.3.1

To unify and redivide its share capital, or any part thereof, into shares of a nominal value greater than the nominal value of the existing shares.

2.5.3.2

To divide, by way of the redivision of any or all of the existing shares, its share capital into shares of a nominal value smaller than the nominal value of the existing shares.

2.5.3.3

To reduce its share capital and any reserved fund for the repayment of capital in such manner and on such conditions and with the receipt of such authorization as shall be required by the Companies Law.

2.6	Changes in the Rights of Share Classes

2.6.1

Unless otherwise stated in the conditions of issue of the shares, and subject to the provisions of any law, the rights of any share class may be changed following a decision of the Company’s Board of Directors, and with the authorization of the General Meeting of shareholders of that class, or with the written consent of all the shareholders of that class. The provisions of the Company’s Articles of Association regarding General Meetings shall apply, mutatis mutandis , to a class meeting of class shareholders.

2.6.2

The rights granted to the holders of shares of a specific class issued with special rights shall not be considered to have been changed by virtue of the creation or issue of additional shares of equal grade, unless otherwise conditioned in the conditions of issue of the said shares.

2.7	Redeemable Securities

The Company is entitled, subject to any law, to issue redeemable securities on such conditions as shall be determined by the Board of Directors, provided that the General Meeting shall approve the recommendation of the Board of Directors and the conditions established thereby.

Chapter 3 General Meetings

3.1	Authorities of General Meeting

3.1.1

Company decisions on the following matters shall be taken at the General Meeting –

3.1.1.1

Changes to the Articles;

3.1.1.2

Exercising vital authorities of the Board of Directors in the event that the Board of Directors is unable to perform its function;

3.1.1.3

Appointment of the auditing accountant of the Company and the cessation of employment thereof;

3.1.1.4

Appointment of Directors, including External Directors;

3.1.1.5

Authorization of actions and transactions requiring the authorization of the General Meeting in accordance with the provisions of the Companies Law and any other law;

3.1.1.6

Increasing and decreasing the registered share capital;

3.1.1.7

Merger as defined in the Companies Law.

3.1.2

Subject to the provisions of the law, the General Meeting is entitled to assume authorities granted to another organ in the Company, including the Board of Directors, for a particular matter or for a given period of time required under the circumstances.

If the General Meeting has assumed authorities granted to the Board of Directors in accordance with the Companies Law, the shareholders shall bear the same rights, obligations, and liability as apply to the Board of Directors regarding the exercising of those same authorities, as detailed in section 50 of the Companies Law, as this shall be amended from time to time.

3.2	Convening of General Meetings

3.2.1

General meetings shall be convened at least once a year at such a venue and on such a date as shall be determined by the Board of Directors, and subject to the provisions of the law, but not later than 15 months after the previous General Meeting. These General Meetings shall be called “Annual Meetings.” The remaining meetings of the Company shall be called “Extraordinary Meetings.”

3.2.2

The agenda at the Annual Meeting shall include discussion of the report of the Board of Directors and financial statements as required by law. The Annual Meeting shall appoint an auditing accountant; shall appoint the Directors in accordance with these Articles; and shall discuss all other matters to be discussed at the Annual Meeting of the Company in accordance with these Articles or in accordance with the Companies Law, as well as any other matter as shall be determined by the Board of Directors.

3.2.3

The Board of Directors is entitled to convene an Extraordinary Meeting in accordance with its decision, and must convene a General Meeting if a written request is received from any of the following (a “ Request to Convene ”):

3.2.3.1

Two Directors or one-fourth of the incumbent Directors;

3.2.3.2

One or more shareholders holding at least five percent of the issued capital and at least one percent of the voting rights in the Company; or

3.2.3.3

One or more shareholders holding at least five percent of the voting rights in the Company.

3.2.4

Any Request to Convene must specify the goals for whose purpose the meeting is to be convened, and shall be signed by those requesting the convening and delivered at the Company’s registered office. The request may consist of a number of documents of identical format, each signed by one or more individuals making the request.

3.2.5

A Board of Directors required to convene an Extraordinary Meeting shall proceed to convene such meeting within twenty-one days from the date on which the Request to Convene was submitted thereto, for a date determined in an invitation in accordance with Article ‎‎3.2.6 below and subject to any law.

3.2.6

Notification of the members of the Company regarding the convening of a General Meeting shall be published or delivered to all the shareholders registered in the registry of shareholders in the Company in accordance with the requirements of the law. The notification shall include the agenda, the proposed decisions, and arrangements regarding voting in writing.

3.3	Discussion at General Meetings

3.3.1

The discussion at the General Meeting shall be opened only if a legal quorum is present at the time the discussion begins. A legal quorum is the presence of at least two shareholders holding at least one-third of the voting rights (including presence by means of proxy or through a voting deed) within an hour from the time specified for the opening of the meeting.

3.3.2

If, at the end of one hour from the time specified for the opening of the meeting, no legal quorum is present, the meeting shall be postponed by one week, to the same day, the same hour, and the same venue, or to a later date, if specified in the invitation to the meeting or in the notification of the meeting (the “ Postponed Meeting ”). Notification of a Postponed Meeting shall be made as stated in Article ‎3.2.6, mutatis mutandis , provided that notification and invitation regarding a Postponed Meeting postponed for a period of not more than 21 days shall be made not later than seventy-two hours prior to the Postponed Meeting.

3.3.3

The legal quorum for commencing a Postponed Meeting shall be the presence of any two shareholders (including presence by means of proxy or through a voting deed).

3.3.4

The chairperson of the Board of Directors shall serve as the chairperson of the General Meeting. If the chairperson of the Board of Directors is absent from the meeting after 15 minutes from the time specified for the meeting, or if he refuses to serve as the chairperson of the meeting, the chairperson shall be elected by the General Meeting.

3.3.5

A General Meeting with a legal quorum is entitled to decide on the postponement of the meeting to another date and to such venue as shall be determined and, in this case, notifications and invitations to the Postponed Meeting shall be made as stated in Article ‎3.3.2 above.

3.4	Voting at a General Meeting

3.4.1

A shareholder in the Company shall be entitled to vote at General Meetings in person or by means of a proxy or a voting deed.

Shareholders entitled to participate in and vote at the General Meeting are the shareholders as of such date as shall be determined by the Board of Directors in the decision to convene the General Meeting, and subject to any law.

3.4.2

In any vote, each shareholder shall have a number of votes equivalent to the number of shares in their possession entitling the holder to a vote.

3.4.3

A decision at the General Meeting shall be taken by an ordinary majority unless another majority is determined in the Companies Law or in these Articles.

3.4.4

The declaration by the chairperson of the meeting that a decision has been adopted unanimously or by a given majority, or rejected or not adopted by a given majority, shall constitute prima facie evidence of the content thereof.

3.4.5

If the votes at the meeting are equally divided, the chairperson of the meeting shall not have an additional or casting opinion and the decision presented for voting shall be rejected.

3.4.6

To the extent required by the Companies Law or otherwise resolved by the Board of Directors in its decision to convene the General Meeting, shareholders in the Company shall be entitled to vote on certain matters on the agenda of a General Meeting (including class meetings) by means of a voting deed.

3.4.7

In order to be considered tantamount to presence at the meeting, including for the matter of the presence of the legal quorum, a voting deed, stating the manner of voting as set forth in the Companies Law, must be delivered to the Company by such date prescribed by the Board of Directors, or, if no such date has been prescribed, up to 72 hours prior to the time of commencement of the meeting.

3.4.8

Appointment of a proxy shall be in writing, signed by the appointer (“ Power of Attorney ”). A corporation shall vote by means of its representatives, who shall be appointed in a document signed properly by the corporation (“ Letter of Appointment .”)

3.4.9

A vote in accordance with the conditions of a Power of Attorney shall be lawful even if the appointer dies before the voting, or becomes legally incompetent, is liquidated, becomes bankrupt, nullifies the Letter of Appointment, or transfers the share regarding which it was given, unless written notification is received at the Company’s office prior to the meeting that the shareholder has died, become legally incompetent, been liquidated, become bankrupt, or has nullified the Letter of Appointment or transferred the shares as stated.

3.4.10

The Letter of Appointment and the Power of Attorney, or a copy authorized by an attorney, shall be deposited at the Company’s registered offices at least 72 hours prior to the time determined for the meeting or for the Postponed Meeting at which the person mentioned in the document intends to vote in accordance therewith.

3.4.11

A shareholder in the Company shall be entitled to vote at the Company’s meetings by means of several proxies appointed thereby, provided that each proxy shall be appointed on account of different sections of the shares held by the said shareholder. There shall be no impediment to each proxy as stated voting in a different manner in the Company’s meetings.

3.4.12

If a shareholder is legally incompetent, he is entitled to vote by means of his trustees, the recipient of his assets, his natural guardian or other legal guardian, and these are entitled to vote in person or by proxy or a voting deed.

3.4.13

When two or more persons are the joint owners of a share, in a vote on any matter the vote of the person whose name is registered first in the registry of shareholders as the owner of that share shall be accepted, whether in person or by proxy, and he is entitled to deliver voting deeds to the Company.

Chapter 4 The Board of Directors

4.1	Authorities of the Board of Directors

The Board of Directors shall set the Company’s policy, supervise the execution of the functions and actions of the General Manager, and, within this, shall act and shall enjoy all the authorities detailed in section 92 of the Companies Law. In addition, any authority not granted in the Companies Law or in these Articles to another organ may be exercised by the Board of Directors, in addition to the authorities and functions of the Board of Directors in accordance with the content of any law.

4.2	Appointment of Board of Directors and Cessation of Office Thereof

4.2.1

The number of Directors in the Company shall be determined from time to time by the Annual Meeting, provided that this shall not be fewer than 5 and not more than 11 Directors, including External Directors. The number of External Directors in the Company shall not be less than the number determined in the Companies Law.

4.2.2

Other than External Directors (who shall be elected and serve in office in strict accordance with the provisions of the Companies Law), the Directors in the Company shall be elected at an Annual Meeting and shall serve in their office until the next Annual Meeting, or until they cease to serve in their office in accordance with the provisions of the Articles or any law, whichever is the earlier.

4.2.3

In addition to the content of Article ‎4.2.2 above, the Board of Directors is entitled to appoint a Director in place of a Director, other than an External Director, whose position has become vacant, or appoint new additions to the Board of Directors up to the maximum number of Directors set forth in Article ‎4.2.1 above. The appointment of a Director by the Board of Directors shall remain valid through the next Annual Meeting or until the Director shall cease to serve in their office in accordance with the provisions of these Articles or of any law, whichever is the earlier.

4.2.4

A Director whose period of office has expired may be reelected; an External Director may be reelected for additional periods of office in strict accordance with the provisions of the Companies Law.

4.2.5

The office of a Director shall commence on the date of appointment or on a later date if so determined in the decision of appointment.

4.2.6

The Board of Directors shall elect one of its members as the chairperson of the Board of Directors. The elected chairperson shall run the meetings of the Board of Directors and shall sign the minutes of the discussion. If no chairperson is elected, or if the chairperson of the Board of Directors is not present after 15 minutes from the time set for the meeting, the Directors present shall choose one of their number to serve as the chairperson at that meeting, and the chosen member shall run the meeting and sign the minutes of the discussion.

4.2.7

The chairperson of the Board of Directors shall not be the General Manager of the Company or a relative thereof unless the conditions stipulated in section 121(C) of the Companies Law apply.

4.2.8

The General Meeting is entitled to transfer any Director (other than an External Director) from their office prior to the end of the period of their office, whether the Director was appointed thereby in accordance with Article ‎4.2.2 above or was appointed by the Board of Directors in accordance with Article ‎4.2.3 above, provided that the Director shall be given a reasonable opportunity to state their case before the General Meeting.

4.2.9

Any Director is entitled, with the agreement of the Board of Directors and subject to the provisions of the Companies Law, to appoint a substitute for themselves (a “ Substitute Director ”), provided that a person who is not competent shall not be appointed to serve as a Substitute Director, nor a person who has been appointed as a Substitute Director for another Director and/or a person who is already serving as a Director in the Company, and further provided that a Substitute Director must posses the same qualifications as required of the appointing Director.

The appointment or cessation of office of a Substitute Director shall be made in a written document signed by the Director who appointed him; in any case, however, the office of a Substitute Director shall be terminated if one of the cases stipulated in the paragraphs in Article ‎4.2.10 below shall apply, or if the office of the member of the Board of Directors for whom he serves as a substitute shall become vacant for any reason.

A Substitute Director is considered tantamount to a Director and all the legal provisions and the provisions of these Articles shall apply, with the exception of the provisions regarding the appointment and/or dismissal of a Director as established in these Articles.

4.2.10

The office of a Director shall become vacant in any of the following cases:

4.2.10.1

He resigns from his office by means of a letter signed in his hand, submitted to the Company and detailing the reasons for his resignation;

4.2.10.2

He is removed from his office by the General Meeting;

4.2.10.3

He is convicted of an offense as stated in section 232 of the Companies Law;

4.2.10.4

In accordance with the decision of the administrative enforcement committee, as stated in section 232A of the Companies Law;

4.2.10.5

In accordance with a court decision as stated in section 233 of the Companies Law;

4.2.10.6

He is declared legally incompetent;

4.2.10.7

He is declared bankrupt and, if the Director is a corporation – it opted for voluntary liquidation or a liquidation order was issued against it.

4.2.11

In the event that the position of a Director becomes vacant, the remaining Directors shall be entitled to continue to act, provided the number of Directors remaining shall not be less than the minimum number of Directors as stated above. If the number of Directors falls below the above-mentioned minimum number, the remaining Directors shall be entitled to act solely in order to fill the place of the Director that has become vacant as stated in Article ‎4.2.3 above, or in order to convene a General Meeting of the Company, and pending the convening of the General Meeting of the Company as stated they may act to manage the Company’s affairs solely in matters that cannot be delayed.

4.2.12

The conditions of office of the members of the Board of Directors shall be authorized in accordance with the provisions of the Companies Law.

4.3	Meetings of the Board of Directors

4.3.1

The Board of Directors shall convene for a meeting in accordance with the needs of the Company, and at least once every three months.

4.3.2

The chairperson of the Board of Directors is entitled to convene the Board at any time. In addition, the Board of Directors shall hold a meeting on such subject as shall be specified in the following cases:

4.3.2.1

In accordance with the request of two Directors; however, if at the time the Board of Directors comprises five Directors or less – in accordance with the request of one Director;

4.3.2.2

In accordance with the request of one Director if, in his request to convene the Board, he states that he has learned of a matter in the Company ostensibly entailing a violation of the law or infringement of proper business practice;

4.3.2.3

If a notification or report by the General Manager require an action on the part of the Board of Directors;

4.3.2.4

If the auditing accountant has informed the chairperson of the Board of Directors – or, in the event that no chairperson was appointed for the Board of Directors, has informed the Board of Directors – of substantial defects in the accounting control of the Company.

4.3.3

Notification of the meeting of the Board of Directors shall be delivered to all members of the Board a reasonable period of time (taking into account the circumstances and urgency of the matter) prior to the date of convening of the Board. Notification shall be delivered to the address of the Director as forwarded to the Company in advance, and shall stipulate the time of the meeting and the venue at which it shall convene, as well as reasonable detail of all subjects on the agenda.

Notwithstanding the above, the Board of Directors is entitled to convene a meeting without notification, in urgent matters, with the consent of the majority of the Directors.

4.3.4

The agenda of the meetings of the Board of Directors shall be determined by the chairperson of the Board, or if no chairperson has been appointed the Directors convening the meeting, and shall include: Subjects determined by the chairperson of the Board; subjects deriving from the report of the General Manager and/or the auditing accountant; or any subject a Director or the General Manager have requested to be included on the agenda a reasonable period of time prior to the convening of the meeting of the Board.

4.3.5

The legal quorum for the commencement of a meeting of the Board of Directors shall be a majority of the members of the Board of Directors. If, within half an hour from the time set for the commencement of the meeting, no quorum is present, the meeting shall be postponed to another date as decided by the chairperson of the Board, or, in his absence, by the Directors present at the convened meeting, provided that reasonable prior notification be given to all Directors regarding the date of the Postponed Meeting. The legal quorum for the opening of a Postponed Meeting shall be any two Directors.

4.3.6

The Board of Directors is entitled to hold meetings by use of any means of communication, providing that all the participating Directors can hear each other simultaneously.

4.3.7

The Board of Directors is entitled to take decisions without actually convening, provided that all the Directors entitled to participate in the discussion and to vote on the subject brought for decision agree thereto. If decisions are made as stated in this section, the chairperson of the Board of Directors shall record minutes of the decisions stating the manner of voting of each Director on the subjects brought for decision, as well as the fact that all the Directors agreed to take the decision without convening.

4.4	Voting on the Board of Directors

4.4.1

Each Director shall have one vote when voting on the Board of Directors.

4.4.2

Decisions of the Board of Directors shall be taken by a majority vote. The chairperson of the Board of Directors shall not have any additional or casting opinion, and in the event of a tie vote, the decision brought for voting shall be rejected.

Chapter 5 Committees of the Board of Directors

5.1

The Board of Directors is entitled to establish committees and to appoint members thereto (“ Board’ Committee ”). If Board’ Committees are established, the Board of Directors shall determine, in the conditions of empowerment thereof, whether specific authorities of the Board of Directors shall be delegated to the Board’ Committees, in such manner that the decision of the Board’ Committee shall be considered tantamount to a decision of the Board of Directors, or whether the decision of the Board’ Committee shall merely constitute a recommendation, subject to the authorization of the Board of Directors; provided that authorities to make decisions in the matters stated in Article 112 of the Companies Law shall not be delegated to a committee.

5.2

A person who is not a Director shall not serve in a Board’ Committee to which the Board of Directors has delegated authorities. Persons who are not members of the Board of Directors may serve in a Board’ Committee whose function is merely to advise or submit recommendations to the Board of Directors.

5.3

The provisions included in these Articles relating to the meetings of the Board of Directors and voting therein shall apply, mutatis mutandis and subject to the decisions of the Board of Directors regarding the procedures for the meetings (if any) of any Board’ Committee comprising two or more members.

Chapter 6 General Manager

6.1	The Board of Directors of the Company shall appoint one or more General Managers. The General Manager shall be responsible for the routine management of the Company’s affairs within the framework of the policy set by the Board of Directors and subject to its guidelines.

Chapter 7 Exemption, Insurance, and Indemnification

7.1

Exemption

Subject to the provisions of the Companies Law and the Securities Law, the Company hereby releases, in advance, its Office Holders from liability to the Company for damage that arises from the breach of the Office Holder’s duty of care to the Company.

7.2

Insurance

Subject to the provisions of the Companies Law and the Securities Law, the Company may enter into a contract for the insurance of the liability, in whole or in part, of an Office Holder, with respect to an obligation imposed on such Office Holder due to an act performed by him in his capacity as such, arising from any of the following:

7.2.1

a breach of duty of care to the Company or to any other person;

7.2.2

a breach of the duty of loyalty to the Company provided that the Office Holder acted in good faith and had reasonable grounds to assume that the act would not harm the interests of the Company;

7.2.3

a financial liability imposed on such Office Holder in favor of any other person, including in favor of an injured party as set forth in section 52LIV(a)(1)(a) of the Securities Law, as well as expenses, including reasonable litigation expenses and attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder under Chapters VIII’3, VIII’4 or IX’1 of the Securities Law; and

7.2.4

any other incident for which it is or shall be permitted to insure the liability of an officer.

7.3	Indemnification

Subject to the provisions of the Companies Law and the Securities Law, the Company may undertake in advance to indemnify, or may indemnify retroactively, an Office Holder of the Company with respect to any of the following liabilities or expenses that arise from an act performed by the Office Holder by virtue of being an Office Holder of the Company:

7.3.1

a financial liability imposed on an Office Holder in favor of another person by any judgment, including a judgment given as a result of a settlement or an arbitrator’s award which has been confirmed by a court, provided however that an undertaking to indemnify the Office Holder for such liabilities shall be restricted to those events that the Board may deem foreseeable in light of the Company’s actual activities, at the time of giving of such undertaking, and to a specific sum or a reasonable criterion under such circumstances as determined by the Board;

7.3.2

reasonable litigation expenses, including attorney’s fees, incurred by him as a result of an investigation or proceeding instituted against him by an authority empowered to conduct an investigation or proceedings, which are concluded without the filing of an indictment against the Office Holder and without the levying of a monetary obligation in lieu of criminal proceedings upon the Office Holder, or which are concluded without the filing of an indictment against the Office Holder but with levying a monetary obligation in substitute of such criminal proceedings upon the Office Holder for a crime that does not require proof of criminal intent;

7.3.3

reasonable litigation expenses, including attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge on which the Office Holder was acquitted or in a criminal charge on which the Office Holder was convicted for an offense which did not require proof of criminal intent;

7.3.4

a financial liability imposed on an Office Holder in favor of an injured party as set forth in section 52LIV(a)(1)(a) of the Securities Law, as well as expenses, including reasonable litigation expenses and attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder under Chapters VIII’3, VIII’4 or IX’1 of the Securities Law; and

7.3.5

any other obligation or expense for which it is or shall be permitted to indemnify an officer.

7.4

The provisions of this ‎Chapter 7 are not intended, and shall not be interpreted, to restrict the Company in any manner in respect of the procurement of insurance or in respect of indemnification (i) in connection with any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder, or (ii) in connection with any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under the Companies Law; provided that the procurement of any such insurance or the provision of any such indemnification shall be approved by the Board.

7.5

Any modification of the provisions of this ‎Chapter 7, and any amendment to the Companies Law, the Securities Law or any other applicable law, shall be prospective in effect and shall not affect the Company’s obligation or ability to indemnify an Office Holder for any act or omission occurring prior to such modification or amendment, unless otherwise provided by the Companies Law, the Securities Law or such applicable law.

Chapter 8 Internal Auditor

8.1

The Board of Directors of the Company shall appoint an internal auditor in accordance with the proposal of the audit committee. A person who is an interested party in the Company, an office holder therein, or the relative or either of the above, as well as the auditing accountant or any person on his behalf, shall not serve as an internal auditor in the Company.

8.2	The Board of Directors shall determine which office holder shall be organizationally accountable for the internal auditor and, in the absence of such determination; this shall be the chairperson of the Board of Directors.

8.3	The internal audit plan prepared by the auditor shall be submitted to the audit committee for authorization; however, the Board of Directors is permitted to determine that the plan shall be examined by the audit committee and submitted to the Board of Directors for authorization.

Chapter 9 Auditing Accountant

9.1

The General Meeting shall appoint an auditing accountant for the Company. The auditing accountant shall serve in office through the end of the following Annual Meeting, or for a longer period as determined by the Annual Meeting, provided that the period of office shall not be extended beyond the end of the third Annual Meeting following that at which the auditing accountant was appointed.

9.2	The fee of the auditing accountant for the auditing operations shall be determined by the Board of Directors. The Board of Directors shall report to the Annual Meeting on the fee of the auditing accountant.

Chapter 10 Signing in the Company’s Name

10.1	The rights to sign in the Company’s name shall be determined from time to time by the Board of Directors of the Company.

10.2	The Company’s authorized signatory shall do so together with the Company’s stamp, or alongside its printed name.

Chapter 11 Dividend and Benefit Shares

11.1	The decision by the Company to allocate a dividend and/or to allocate benefit shares shall be taken by the Company’s Board of Directors.

11.2

Unless determined otherwise by the Board of Directors, it shall be permitted to pay any dividend by way of check or payment order to be sent by mail in accordance with the registered address of the shareholder or the personal eligible thereto or, in the case of joint registered owners of the same share, to that shareholder whose name is mentioned first in the registry of shareholders with regard to the joint ownership. Any such check shall be made out to order of the person to whom it is sent. A receipt from a person whose name, as of the date of declaration of the dividend, is registered in the registry of shareholders as the owner of any share or, in the case of joint owners, of one of the joint owners, shall serve as authorization regarding all payments made in connection with that share and regarding which the receipt was received.

11.3

For the purpose of executing any decision in accordance with the provisions of this section, the Board of Directors is entitled to resolve as it sees fit any difficulty that emerges regarding distribution of the dividend and/or the benefit shares, including determining the value for the purpose of the said division of certain assets, and to determine that payments in cash shall be made to members on the basis of the value so determined; to determine provisions regarding fractions of shares; or to determine that sums of less than NIS 50 shall not be paid to a shareholder.

Chapter 12 Accounts

12.1	The Company shall maintain accounts and shall prepare financial statements in accordance with the Companies Law.

12.2	The account ledgers shall be held at the Company’s registered offices or in any other place as the Directors shall see fit, and shall always be open for inspection by the Directors.

Chapter 13 Notifications

13.1

Subject to any law, a notification or any other document that shall be delivered by the Company, and which it is entitled or required to issue in accordance with the provisions of the Articles or any law, shall be delivered by the Company to any person in one of the following manners as decided by the Company in each individual case: (A) By dispatch by registered mail in a letter addressed in accordance with the registered address of that shareholder in the registry of shareholders, or in accordance with such address as stated by the shareholder in a letter to the Company as the letter for the delivery of notifications or other documents; (B) By dispatch by facsimile or other electronic form, in accordance with the number or address stated by the shareholder for the delivery of such notifications; or (C) By way of publication in applicable distribution site.

13.2

Any notification to be made to shareholders shall be made, regarding jointly owned shares, to that person whose name is mentioned first in the registry of shareholders as the holder of that share, and any notification made in this manner shall be sufficient notification for the holders of that share.

13.3

Any notification or other document sent in accordance with the provisions of Article ‎13.1 above shall be considered to have reached its destination: (A) Within 3 business days – if sent by registered mail in Israel; (B) On the first business day after its dispatch, if delivered by hand or sent by facsimile or other electronic method; or (C) On the date of publication on applicable distribution site.

In proving delivery, it shall be sufficient to prove that the letter sent by mail included the notification and that the document was addressed properly and was delivered to the post office as a letter bearing stamps, or as a registered letter bearing stamps, and, regarding a facsimile or other electronic method, it shall be sufficient to produce a dispatch confirmation sheet from the dispatching machine.

13.4	Any record made in an ordinary manner in the company’s registry shall be considered prima facie evidence of dispatch as recorded in that registry.

13.5	When it is necessary to provide prior notification of a certain number of days, or when notification is valid for a certain period, the date of delivery shall be included in reckoning the number of days or the period.

**************

Exhibit 99.3

ENLIVEX THERAPEUTICS LTD.

FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017

AND FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

ENLIVEX THERAPEUTICS LTD.

FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017

AND FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets	F-2
Statements of Operations and Comprehensive Loss	F-3
Cash Flow Statements	F-4
Notes to the Financial Statements	F-5 – F-15

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

ENLIVEX THERAPEUTICS LTD.

We have reviewed the condensed balance sheet of Enlivex Therapeutics Ltd. (the "Company") as of September 30, 2018, and the related condensed statements of operations and comprehensive income, and cash flows for the three and nine month periods ended September 30, 2018 and 2017. These financial statements are the responsibility of the company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the balance sheet of Enlivex Therapeutics Ltd. as of December 31, 2017, and the related statements of income, comprehensive income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated July 24, 2018, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 2017, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred operating losses and negative cash flows from operating activities and its ability to continue to operate as a going concern is dependent upon additional financial support. These conditions and others raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Yarel + Partners

Yarel + Partners

Certified Public Accountants (Isr.)

Tel-Aviv, Israel

January 10, 2019

F- 1

ENLIVEX THERAPEUTICS LTD.

BALANCE SHEETS

U.S. dollars in thousands

	September 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	11,351		$	9,005
Short term deposits		40			-
Prepaid expenses		38			14
Other receivables		161			95
Total Current Assets		11,590			9,114
Non-Current Assets
Restricted cash		58			27
Long-term prepaid expenses		13			11
Property and equipment, net		469			388
Total Non-Current Assets		540			426
Total Assets	$	12,130		$	9,540

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable trade	$	128		$	37
Accrued expenses and other liabilities		809			634
Related parties		23			25
Total Current Liabilities		960			696
Non-Current Liabilities
Retirement benefit obligations		7			7
Warrants		255			344
Total Non-Current Liabilities		262			351
Commitments and Contingent Liabilities		-			-
TOTAL LIABILITIES		1,222			1,047

SHAREHOLDERS' EQUITY
Common stock of NIS 0.01 ($0.003) par value: Authorized: 245,000,000 shares; Issued and outstanding: 72,488,316 shares		204			204
Preferred Stock, NIS 0.01 ($0.003) par value: Series A: Authorized: 65,000,000 shares; Issued and outstanding Series A 6% Cumulative Preferred Stock: 63,201,174 shares		160			160
Series B: authorized 72,000,000 shares; Issued and outstanding Series B 6% Cumulative Preferred Stock: 28,377,032 shares		81			81
Series C: authorized 65,000,000 shares; Issued and outstanding Series C 6% Cumulative Preferred Stock: 10,746,444 shares		30			-
Additional paid in capital		27,053			21,598
Foreign currency translation adjustments		(1,916	)		(1,503	)
Accumulated deficit		(14,704	)		(12,047	)
TOTAL SHAREHOLDERS' EQUITY		10,908			8,493
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	12,130		$	9,540

Approved by the Board on January 10, 2019		Shai Novik		Shmuel Hess
		Chairman of the Board		Chief Executive Officer

The accompanying notes are an integral part of the financial statements.

F- 2

ENLIVEX THERAPEUTICS LTD.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNADITED)

U.S. dollars in thousands (except shares and per share data)

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2018			2017			2018			2017

Revenues	$	-		$	-		$	-		$	-

Operating expenses:
Research and development expenses		1,045			325			2,631			1,106
General and administrative expenses		196			137			600			393
		1,241			462			3,231			1,499

Operating (loss)		(1,241	)		462	))		(3,231	)		(1,499	)

Financial income		140			9			576			12
Financial expenses		(1	)		-			(2	)		(222	)

Net (loss)		(1,102	)		(453	)		(2,657	)		(1,709	)

Other comprehensive (loss)
Exchange differences arising from translating financial statements from functional to presentation currency		(40	)		(33	)		(413	)		199
Total other comprehensive (loss)		(40	)		(33	)		(413	)		199
Total comprehensive (loss)	$	(1,142	)	$	(486	)	$	(3,070	)	$	(1,510	)

Basic & diluted (loss) per share	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.03	)
Weighted average number of shares outstanding		72,488,316			70,469,085			72,488,316			70,182,434

The accompanying notes are an integral part of the financial statements.

F- 3

ENLIVEX THERAPEUTICS LTD.

STATEMENTS OF CASH FLOWS (UNADITED)

U.S. dollars in thousands

	For the nine months ended September 30,
	2018			2017
Cash flows from operating activities
Net (loss)	$	(2,657	)	$	(1,709	)
Adjustments required to reflect net cash (used in) operating activities:
Income and expenses not involving cash flows:
Depreciation		82			59
Share-based compensation		341			158
Issuance expenses related to warrants exercisable into shares		-			18
Changes in values of warrants exercisable into shares liability		(75	)		-
Changes in operating asset and liability items:
(Increase) in prepaid expenses		(28	)		(25	)
(Increase) in other receivables		(72	)		(155	)
Increase (Decrease) in accounts payable trade		94			(11	)
Increase in accrued expenses and other liabilities		207			155
(Decrease) increase in related parties		(1	)		3
Net cash (used in) operating activities		(2,109	)		(1,507	)

Cash flows from investing activities
Short term bank deposit		(40	)		-
Restricted cash		(33	)		-
Purchase of property and equipment		(180	)		(91	)
Net cash (used in) investing activities		(253	)		(91	)

Cash flows from financing activities
Proceeds from issuance of preferred stock and warrants, net		5,144			6,018
Net cash provided by financing activities		5,144			6,018

Increase in cash and cash equivalents		2,782			4,420
Cash and cash equivalents - beginning of year		9,005			3,020
Exchange rate differences on cash and cash equivalents		(436	)		199
Cash and cash equivalents - end of period	$	11,351		$	7,639

Non-cash transactions:
Issuance of subscription Preferred Stock	$	-		$	2,050
Issuance of Common Stock	$	-		$	7

The accompanying notes are an integral part of the financial statements.

F- 4

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 1 - GENERAL

Enlivex Therapeutics Ltd. (the" Company”), headquartered in Jerusalem Israel, was incorporated under the laws of Israel and commenced operations on September 25, 2005.

Since inception, the Company has been engaged in the development of an autologous and allogeneic drug pipeline for the treatment of autoimmune and inflammatory conditions which involve over-expression or hyper-expression of cytokines (Cytokine Release Syndrome) such as CAR-T (Chimeric Antigen Receptor) cancer treatment procedures, Graft-versus-Host disease (GvHD) resulting from bone-marrow transplantations, solid organ transplantations and an assembly of autoimmune and inflammatory conditions, such as Crohn’s disease, rheumatoid arthritis, gout, multiple sclerosis, and other disorders. The development is based on the discoveries of Professor Dror Mevorach, an expert on clearance of dying (apoptotic) cells, in his laboratory in the Hadassah University Hospital ("Hadassah").

Financial resources

The Company devotes substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue for the foreseeable future. The Company has not generated any revenues or product sales and has not achieved profitable operations or positive cash flow from operations. The Company’s accumulated deficit aggregated $14,704 through September 30, 2018. There is no assurance that profitable operations, if ever achieved, could be sustained on a continuing basis. The Company's management plans to finance its operations with issuances of the Company's equity securities and, in the longer term, revenues. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing needed for the long-term development.

The Company's ability to continue to operate in the long term is dependent upon additional financial support.

The Company believes that its current cash sources will enable the continuance of the Company’s activities for at least a year with no need for additional fundraising.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such U.S. Securities and Exchange Commission (“SEC”) rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The financial statements have been prepared on the basis of historical cost, subject to adjustment of financial assets and liabilities to their fair value through profit or loss.

The Company classifies its expenses on the statement of operations and comprehensive loss based on the operating characteristics of such expenses.

The preparation of financial statements in conformity with U.S. GAAP requires the use of certain critical accounting estimates. It also requires that management exercise its judgment in applying the Company’s accounting policies as described below. Actual results may differ materially from estimates and assumptions used by the Company’s management.

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

F- 5

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Functional currency and translation to the reporting currency

The functional currency of the Company is the New Israeli Shekel (“NIS”), which is the local currency in which the entity operates.

The financial statements of the Company were translated into U.S. dollars in accordance with ASC 830, "Foreign Currency Matters". Accordingly, assets and liabilities were translated from local currencies to U.S. dollars using period end exchange rates, equity items were translated at the exchange rates of the date of the equity transaction, and income and expense items were translated at average exchange rates during the year.

Gains or losses resulting from translation adjustments (which result from translating an entity’s financial statements into U.S. dollars if its functional currency is different than the U.S. dollar) are reported in other comprehensive income (loss) and are reflected in equity, under “accumulated other comprehensive income (loss)”.

Balances denominated in, or linked to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of income, the exchange rates applicable on the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses as applicable.

The following table presents data regarding the dollar exchange rate and the Israeli CPI:

U.S. $ Exchange rate 1 $ = NIS As of:
September 30, 2018		3.627
December 31, 2017		3.467

Increase (decrease) during the three months period ended September 30, 2018:
Three months ended September 30, 2018		(0.63%)
Three months ended September 30, 2017		0.94%

Increase (decrease) during the nine months period ended September 30, 2018:
Nine months ended September 30, 2018		4.62%
Nine months ended September 30, 2017		(8.22%)

Research and development expenses

Research and development expenses are charged to the statement of operations and comprehensive loss as incurred. As of September 30, 2018, the Company has not yet capitalized development expenses.

Patents

The Company expenses all costs associated with patents for product candidates under development as incurred. As a result of the Company’s research and development efforts, the Company is applying for a number of patents to protect proprietary technology and inventions. To date, the Company has not capitalized patent costs. The Company has recorded a charge to operations of approximately $74, $160, $73 and $156 for the three and nine months ended September 30, 2018 and 2017, respectively, related to its patents costs.

Loss per share

Basic loss per share is calculated based on the weighted average number of ordinary shares outstanding during each period. Diluted net loss per share is calculated based on the weighted average number of ordinary shares outstanding during each period, plus dilutive potential in accordance with ASC 260, "Earnings per Share."

All outstanding preferred stock, options and warrants for the three and nine months ended September 30, 2018 and 2017 have been excluded from the calculation of the diluted net loss per share because all such securities are anti-dilutive for all periods presented. For the three months ended September 30, 2018 and 2017 the total weighted average number of shares related to outstanding potential shares excluded from the calculations of diluted net loss per share were 167,453,032 and 90,463,179 respectively. For the nine months ended September 30, 2018 and 2017 the total weighted average number of shares related to outstanding potential shares excluded from the calculations of diluted net loss per share were 165,626,700 and 84,259,286 respectively. The following data show the amounts used in computing income (loss) per share and the effect on income (loss):

F- 6

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

	Three months ended September 30,
	2018			2017
Basic and diluted (loss) per share:
(Loss) income from continuing operations	$	(1,102	)	$	(453	)
Interest of 6% to Cumulative Preferred Stock		(139	)		(170	)
	$	(1,241	)	$	(623	)

Number of common shares at the beginning of the year		72,488,316			70,038,316
Weighted average number of Common shares issued		-			430,769
Number of shares used in per share computation		72,488,316			70,469,085

Basic net income (loss) per share	$	(0.02	)	$	(0.01	)

	Nine months ended September 30,
	2018			2017
Basic and diluted (loss) per share:
(Loss) income from continuing operations	$	(2,657	)	$	(1,709	)
Interest of 6% to Cumulative Preferred Stock		(445	)		(441	)
	$	(3,102	)	$	(2,150	)

Number of common shares at the beginning of the year		72,488,316			70,038,316
Weighted average number of Common shares issued		-			144,118
Number of shares used in per share computation		72,488,316			70,182,434

Basic net income (loss) per share	$	(0.04	)	$	(0.03	)

Fair value of financial instruments

The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), pursuant to which fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.

The financial instruments presented on the balance sheet at fair value are grouped into classes with similar characteristics using the following fair value hierarchy which is determined based on the source of input used in measuring fair value:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - inputs other than quoted prices included within level 1 that are observable either directly or indirectly.

Level 3 - inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data).

The Company's warrants exercisable into shares liability are classified as level 3 in the fair value hierarchy, and measured at fair value on a recurring basis.

Comprehensive income (loss)

Comprehensive loss is the change in stockholders’ equity from transactions and other events and circumstances other than those resulting from investments by stockholders and distributions to stockholders.

The Company accounts for comprehensive income (loss) in accordance with ASC 220, "Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive income (loss) and its components in a full set of general purpose financial statements.

The Company’s other comprehensive income (loss) is currently comprised of gains or losses resulting from translation adjustments which result from translating the Company's financial statements into U.S. dollars when its functional currency is different than the U.S. dollar.

F- 7

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

New standards and interpretations

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows companies the option to reclassify to retained earnings the tax effects related to items in Accumulated other comprehensive income (loss) as a result of the Tax Cuts and Jobs Act that was enacted on December 22, 2017. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018, and early adoption is permitted. This guidance should be applied either in the period of adoption or retrospectively to each period in which the effects of the change in the U.S. federal income tax rate in the Tax Cuts and Jobs Act is recognized. The adoption of this standard is not expected to impact the Company’s financial condition, results of operations, and cash flows.

In May 2017, the FASB issued ASU No. 2017-09, Compensation (Topic 718), which provides clarity and reduces both the diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company has adopted ASU 2017-09 as of January 1, 2018 and the adoption of the amendment did not have a material impact on its financial condition, results of operations, and cash flows.

In January 2017, the FASB issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the goodwill impairment test by eliminating Step 2 from the test among other technical changes intended to streamline the impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments should be applied on a prospective basis. The Company is required to adopt ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and may early adopt as early as its first annual or interim impairment testing date following January 1, 2017. The adoption of this standard is not expected to impact the Company’s financial condition, results of operations, and cash flows.

In August 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 clarifies whether eight specifically identified cash flow issues should be categorized as operating, investing or financing activities in the statement of cash flows. The guidance is effective for the fiscal year beginning after December 15, 2017, including interim periods within that year. The Company has adopted ASU 2016-15 as of January 1, 2018, the adoption of the amendment did not have an impact on its financial condition, results of operations, and cash flows.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. The new standard replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2019 and early adoption is permitted for fiscal years and interim periods within those years beginning after December 15, 2018. The Company is currently evaluating the impact that the adoption of ASU 2016-13 will have on its financial statements, but expect the impact to be immaterial.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and, (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018 and requires modified retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its financial statements, but expect the impact to be immaterial.

F- 8

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 3 – CASH AND CASH EQUIVALENTS

	September 30,		December 31,
	2018		2017
	unaudited

Cash held in banks	$	1,849	$	498
Bank deposits in U.S.$ (annual average interest rates 2% and 1.37%)		9,502		8,507
	$	11,351	$	9,005

NOTE 4 – PROPERTY AND EQUIPMENT

	September 30,		December 31,
Property and equipment, net consists of the following:	2018		2017
	unaudited

Cost:
Laboratory equipment	$	671	$	533
Computers		81		80
Office furniture & equipment		54		55
Leasehold improvements		122		126
		928		794
Accumulated depreciation:
Laboratory equipment		311		266
Computers		60		51
Office furniture & equipment		12		10
Leasehold improvements		76		79
		459		406
Depreciated cost	$	469	$	388

For the three months ended September 30, 2018 and 2017, depreciation expenses were $27 and $21 respectively.

For the nine months ended September 30, 2018 and 2017, depreciation expenses were $82 and $59, respectively.

NOTE 5 – ACCRUED EXPENSES AND OTHER LIABILITIES

	September 30,		December 31,
	2018		2017
	unaudited

Vacation, convalescence and bonus accruals	$	103	$	133
Employees and payroll related		119		104
Accrued expenses and other		358		157
Tax provision for uncertain tax position		229		240

	$	809	$	634

F- 9

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 6 – WARRANTS

On September 15, 2017 the Company issued shares of Series B Preferred Stock and warrants exercisable into shares of Series B Preferred Stock.

	Three months ended September 30,
	2018			2017
Balance at June 30	$	323		$	-
Fair value of warrants at issuance date		-			344
Changes in fair value of warrants exercisable into shares liability		(70	)		-
Exchange differences arising from translation to presentation currency		2			(6	)
Balance at September 30	$	255		$	338

	Nine months ended September 30,
	2018			2017
Balance at January 1	$	344		$	-
Fair value of warrants at issuance date		-			344
Changes in fair value of warrants exercisable into shares liability		(75	)		-
Exchange differences arising from translation to presentation currency		(14	)		(6	)
Balance at September 30	$	255		$	338

The fair value of warrants granted was valued by using the OPM pricing model. Fair values were estimated using the following assumptions for the warrants call option:

	Nine months ended September 30,
	2018			2017
Dividend yield		0	%		-
Expected volatility		75.8	%		-
Risk-free interest		2.74			-
Expected life		2			-

NOTE 7 – COMMITMENTS AND CONTINGENT LIABILITIES

Obligation to pay royalties to the State of Israel

The Company is required to pay royalties to the State of Israel (represented by the Israel Innovation Authority), computed on the basis of proceeds from the sale or license of products which development was supported by State grants. In accordance with the terms of the financial participation, the State is entitled to royalties on the sale or license of any product which development was supported with State participation.

These royalties are generally 3% - 5% of sales until repayment of 100% of the grants (linked to the dollar) received by the Company plus annual interest at the LIBOR rate. The aggregate contingent obligation payable by the Company as of September 30, 2018 was approximately $4,863 which represents the gross amount of grants actually received by the Company from the Israel Innovation Authority, including accrued interest.

As of September 30, 2018, the Company had not paid any royalties to the Israel Innovation Authority.

On September 7, 2018, the Company signed a two-year consulting agreement with its Executive Chairman for an annual fee of $150, the term shall automatically extend for additional one-year periods unless either party provides a termination notice prior to expiration of the Term. Upon a financing event, as defined in the consulting agreement, the annual fee will be increased to $250 or $350 based on its proceeds. The Executive Chairman shall be eligible to receive an annual performance cash bonus of up to 100% of his annual fee, based upon performance criteria established by the Board. The minimum guaranteed performance bonus for the first two fiscal years after a public event shall be 50% of the annual fee. The Executive Chairman shall be eligible to receive a one-time bonus of $250 upon the closing of a public event and a simultaneous financing resulting in total cash and cash equivalents balance of the Company greater than $20 million. In the event of termination of the agreement by the Company prior to the last day of the term (as the same may be extended) for any reason other than a termination for cause, then the Company shall continue to pay the Executive Chairman for the twelve-month period following the effective date of termination.

F- 10

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 7 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.)

Lease agreements

Future minimum lease commitments under the abovementioned operating leases as of September 30, 2018, are as follows:

2018		75
2019		143
2020		94
2021		83
2022		83
2023		83
	$	561

NOTE 8 – TRANSACTIONS AND BALANCES WITH RELATED PARTIES

Expenses (income):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Benefits to related parties:
Compensation to non-employees directors	$	29	$	-	$	50	$	-
Share based Compensation to non-employees directors	$	23	$	10	$	34	$	21
Other related parties expenses	$	8	$	7	$	22	$	21

Key management compensation:

Key management includes directors (executive and non-executive) and executive officers. The compensation paid or payable to key management for services during each of the periods indicated is presented below.

	Three months ended September 30,					Nine months ended September 30,
	2018		2017			2018		2017
Salaries and employee benefits		147		106			448		313
Share-based compensation		208		(10	)		235		41
	$	355	$	96		$	683	$	354

Balances with related parties :

	September 30,		December 31
	2018		2017
	unaudited
Key management	$	23	$	25

NOTE 9 – EQUITY

On September 12, 2018 the Company issued a total of 10,746,444 shares of Series C Preferred Stock of the Company for a total cash consideration of $5,300. Issuance costs in relation to the financing round in the amount of $156 were allocated to additional paid in capital.

Shares of Preferred Stock confer on their holders all rights accruing to holders of Common Stock, and, in addition, bear certain conversion and preference rights. Preferred Stock also confer upon their holders the right to receive an annual dividend amount equal to the original issue price of each Preferred Stock plus a cumulative preference of 6% of the original issue price per annum compounded annually until the lapse of two years from their issuance date.

Accumulated undeclared dividends to series A, series B and series C Convertible Preferred Stock holders as of September 30, 2018 were $1,661.

F- 11

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 10 – SHARE-BASED COMPENSATION

Stock option plan – general

As of September 30, 2018 none of the shares under the 2007 Equity Incentive Plan and 832,849 shares under the 2014 Equity Incentive Plan were available for future grant.

Employees' and directors stock options

The following table contains additional information concerning options granted to employees and directors under the existing stock-option plans:

	Three months ended September 30,
	2018					2017
	Number of options			Weighted average exercise price		Number of options		Weighted average exercise price
Outstanding at beginning of period		20,973,980		$	0.1300		9,461,502	$	0.1300
Granted		1,113,716		$	0.3013		-	$	-
Forfeited and expired		(8,750	)	$	0.2279		-	$	-
Exercised		-		$	-		-	$	-
Outstanding at end of period		22,078,946		$	0.1380		9,461,502	$	0.1300
Exercisable at end of period		6,451,792		$	0.1300		5,027,065	$	0.1300

	Nine months ended September 30,
	2018					2017
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Outstanding at beginning of period		20,124,366		$	0.1300		9,377,172		$	0.1300
Granted		2,032,000		$	0.3013		168,000		$	0.1300
Forfeited and expired		(77,420	)	$	0.1300		(83,670	)	$	0.1300
Exercised		-		$	-		-		$	-
Outstanding at end of period		22,078,946		$	0.1460		9,461,502		$	0.1300

Following is a summary of changes in non-vested shares granted to employees and directors:

	Three months ended September 30,
	2018					2017
	Number of options			Weighted average exercise price		Number of options		Weighted average exercise price
Balance at beginning of the period		14,522,188		$	0.2400		4,434,437	$	0.1300
Granted		1,113,716		$	0.3013		-	$	-
Vested during the period		-		$	-		-	$	-
Forfeited during the period		(8,750	)	$	0.2279		-	$	-
Balance at the end of the period		15,627,154		$	0.2200		4,434,437	$	0.1300

F- 12

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 10 – SHARE-BASED COMPENSATION (cont.)

Employees' and directors stock options (cont.)

	Nine months ended September 30,
	2018					2017
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Balance at beginning of the period		15,097,300		$	0.2600		6,403,280		$	0.13
Granted		2,032,000		$	0.3013		168,000		$	0.13
Vested during the period		(1,493,396	)	$	0.1300		(2,121,843	)	$	0.13
Forfeited during the period		(8,750	)	$	0.2279		(15,000	)	$	0.13
Balance at the end of the period		15,627,154		$	0.2770		4,434,437		$	0.13

The total unrecognized estimated compensation cost related to non-vested employees' stock options granted as of September 30, 2018 was $253 which is expected to be recognized over a weighted average period of 2.3 years.

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2018 and 2017 was $ 0.097, and $0.04, respectively.

Non-employees' stock options

The following is a summary of the stock options granted to non-employees under the Equity Incentive Plan:

	Three months ended September 30,
	2018				2017
	Number of options		Weighted average exercise price		Number of options		Weighted average exercise price
Outstanding at beginning of period		14,739,022	$	0.1300		10,939,022	$	0.13
Granted		50,000	$	0.3013		-		0.13
Forfeited and expired		-	$	-		-		-
Exercised		-	$	-		-		-
Outstanding at end of period		14,789,022	$	0.1380		10,939,022	$	0.13
Exercisable at end of period		10,939,022	$	0.3010		10,939,022	$	0.13

	Nine months ended September 30,
	2018				2017
	Number of options		Weighted average exercise price		Number of options		Weighted average exercise price
Outstanding at beginning of period		14,139,022	$	0.1300		8,240,373	$	0.13
Granted		650,000	$	0.3013		2,698,649	$	0.13
Forfeited and expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding at end of period		14,789,022	$	0.1380		10,939,022	$	0.13

F- 13

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 10 – SHARE-BASED COMPENSATION (cont.)

The following is a summary of changes in non-vested options to non-employees:

	Three months ended September 30,
	2018				2017
	Number of options		Weighted average exercise price		Number of options		Weighted average exercise price
Balance at beginning of the period		3,800,000	$	0.3013		-	$	-
Granted		50,000	$	0.3013		-	$	-
Vested during the year		-	$	-		-	$	-
Forfeited during the year		-	$	-			$
Balance at the end of the period		3,850,000	$	0.3013		-	$	-

	Nine months ended September 30,
	2018				2017
	Number of options		Weighted average exercise price		Number of options			Weighted average exercise price
Balance at beginning of the period		3,200,000	$	0.1300		-		$	-
Granted		650,000	$	0.3013		2,698,649		$	0.1300
Vested during the year		-	$	-		(2,698,649	)	$	0.1300
Forfeited during the year		-	$	-		-		$	-
Balance at the end of the period		3,850,000	$	0.1630		-		$	-

The total unrecognized estimated compensation cost related to non-employees’ for non-vested stock options granted through September 30, 2018 was $396, which is expected to be recognized over a weighted average period of 3.25 years.

Set forth below is data regarding the range of exercise prices and remaining contractual life for all options outstanding at September 30, 2018:

exercise price		Number of options outstanding		Remaining contractual Life (in years)		Intrinsic Value of Options Outstanding		No. of options exercisable
$	0.0900		11,012		.001		0.65		11,012
$	0.1300		15,203,351		5.75		-		13,805,956
$	0.1300		741,447		1.79		-		741,447
$	0.1300		151,000		7.42		-		75,500
$	0.1300		2,847,899		8.44		-		2,756,899
$	0.1300		1,373,395		9.20		-		-
$	0.3013		13,857,864		9.20		-		-
$	0.3013		1,518,284		9.30		-		-
$	0.3013		1,098,716		9.82		-		-
$	0.3013		65,000		9.96		-		-
			36,867,968						17,390,814

The total intrinsic value of options exercised during the three and nine month periods ended September 30, 2018 and 2017 was $0.

F- 14

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 (UNAUDITED)

U.S. dollars in thousands

NOTE 10 – SHARE-BASED COMPENSATION (cont.)

The following table summarizes share-based compensation expenses related to grants under the Equity Incentive Plan to employees and directors included in the statements of operations:

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Research & development	$	267	$	43	$	283	$	131
General & administrative		31		1		58		27
Total	$	298	$	44	$	341	$	158

NOTE 11 – FAIR VALUE MEASUREMENT

The Company's financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of September 31, 2018 and December 31, 2017:

	September 30, 2018
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	11,351	$	11,351	$	-	$	-
Restricted cash		58		58		-		-
Total financial assets	$	11,409	$	11,409	$	-	$	-

Warrants	$	255	$	-	$	-	$	255
Total financial liabilities	$	255	$	-	$	-	$	255

	December 31, 2017

	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	9,005	$	9,005	$	-	$	-
Restricted cash		27		27		-		-
Total financial assets	$	9,032	$	9,032	$	-	$	-

Warrants	$	344	$	-	$	-	$	344
Total financial liabilities	$	344	$	-	$	-	$	344

NOTE 12 – EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

The Company evaluated all events and transactions that occurred subsequent to the balance sheet date and prior to the date on which these financial statements were issued, and determined that the following events necessitate disclosure:

On November 19, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Bioblast Pharma Ltd., a company organized under the laws of the State of Israel (“Bioblast”) and which shares are listed for trading on The Nasdaq Stock Market, Inc., and Treblast Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of Bioblast (“Merger Sub”), pursuant to which Merger Sub will merge (the “Merger”) with and into the Company, with the Company surviving as the continuing company in the Merger and becoming wholly owned by Bioblast upon the terms and subject to the conditions set forth in the Merger Agreement. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger each outstanding ordinary share and all outstanding options of the Company will be converted into Bioblast ordinary shares and options.

The Company's equity holders are expected to own approximately 96% of the combined company at the closing, and current Bioblast shareholders are expected to own approximately 4% of the combined company at the closing, subject to adjustments and prior to any concurrent financing, as agreed upon in the Merger Agreement.

The closing of the Merger is subject to the approval of certain matters by the parties and subject to several other conditions, such as statutory waiting period, tax ruling, the Nasdaq Stock Market's approval, the consummation of a private offering, and additional other conditions.

The Company anticipates that the Merger will be completed during the first quarter of 2019.

F- 15

Exhibit 99.4

ENLIVEX THERAPEUTICS LTD.

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2016 AND 2017

AND FOR THE YEARS THEN ENDED

ENLIVEX THERAPEUTICS LTD.

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2016 AND 2017

AND FOR THE YEARS THEN ENDED

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-1
Statements of Financial Position	F-2
Balance Sheets	F-3
Statements of Operations and Comprehensive Loss	F-4
Statements of Changes in Shareholders’ Equity	F-5
Statements of Cash Flows	F-6 – F-18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

ENLIVEX THERAPEUTICS LTD.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Enlivex Therapeutics Ltd. (the "Company") as of December 31, 2016 and 2017, and the related statements of operations and comprehensive (loss), changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Going Concern

/s/ Yarel + Partners

Yarel + Partners

Certified Public Accountants (Isr.)

Tel-Aviv, Israel

July 24, 2018

We have served as the Company's auditor since 2013.

F- 1

ENLIVEX THERAPEUTICS LTD.

BALANCE SHEETS

U.S. dollars in thousands

	December 31,
	2016			2017

ASSETS
Current Assets
Cash and cash equivalents (notes 2d, 3)	$	3,020		$	9,005
Prepaid expenses		46			14
Other receivables		47			95
Total Current Assets		3,113			9,114

Non-Current Assets
Restricted cash (note 2e)		25			27
Long-term prepaid expenses (note 2f)		7			11
Property and equipment, net (notes 2g, 4)		314			388
Total Non-Current Assets		346			426
TOTAL ASSETS	$	3,459		$	9,540

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable trade	$	32		$	37
Accrued expenses and other liabilities (note 5)		583			634
Payables to related parties (note 8)		28			25
Total Current Liabilities		643			696

Non-Current Liabilities
Retirement benefit obligations (note 2j)		6			7
Warrants (note 6)		-			344
Total Non-Current Liabilities		6			351
Commitments And Contingent Liabilities (note 7)		-			-
TOTAL LIABILITIES		649			1,047

SHAREHOLDERS' EQUITY
Common stock of NIS 0.01 ($0.003) par value: (note 9) Authorized: 160,000,000 and 245,000,000 shares as of December 31, 2016 and 2017; Issued and outstanding: 70,038,316 and 72,488,316 as of December 31, 2016 and 2017;		197			204
Preferred Stock, NIS 0.01 ($0.003) par value: (note 9) Series A: Authorized: 65,000,000 shares as of December 31, 2016 and 2017; Issued and outstanding Series A 6% Cumulative Preferred Stock: 63,201,174 shares as of December 31, 2016 and 2017		160			160
Preferred Stock, NIS 0.01 ($0.003) par value: (note 9) Series B: authorized: 0 and 72,000,000 shares as of December 31, 2016 and 2017; Issued and outstanding Series B 6% Cumulative Preferred Stock: 0 and 28,377,032 shares as of December 31, 2016 and 2017		-			81
Additional paid in capital		13,835			21,598
Foreign currency translation adjustments (note 2c)		(1,839	)		(1,503	)
Accumulated deficit		(9,543	)		(12,047	)
TOTAL SHAREHOLDERS' EQUITY		2,810			8,493
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	3,459		$	9,540

The accompanying notes are an integral part of the financial statements.

F- 2

ENLIVEX THERAPEUTICS LTD.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

U.S. dollars in thousands (except shares and per share data)

	Year ended December 31,
	2016			2017

Revenues	$	-		$	-
Operating expenses:
Research and development expenses, net (notes 2k, 13a)		2,029			1,691
General and administrative expenses (note 13b)		793			480
		2,822			2,171

Operating loss		(2,822	)		(2,171	)

Financial income (note 13c)		30			37
Financial expenses (note 13d)		(86	)		(370	)

Net (loss)	$	(2,878	)	$	(2,504	)

Other comprehensive gain (loss)
Interest on convertible notes		(67	)		-
Exchange differences arising from translating financial statements from functional to presentation currency (note 2c)		88			336
Total other comprehensive gain (loss)		21			336
Total comprehensive (loss)	$	(2,857	)	$	(2,168	)

Basic & diluted (loss) per share (note 2n)	$	(0.05	)	$	(0.05	)
Weighted average number of shares outstanding		69,354,899			70,765,239

The accompanying notes are an integral part of the financial statements.

F- 3

ENLIVEX THERAPEUTICS LTD.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

U.S. dollars in thousands (except share data )

	Common stock				Preferred Stock
	Number of shares		Share capital		Number of shares		Share capital		Additional paid in capital			Convertible notes			Currency translation adjustments			Accumulated deficit			Total

JANUARY 1, 2016		63,375,813	$	181		-	$	-	$	5,008		$	8,798		$	(1,932	)	$	(6,598	)	$	5,457
Stock options exercised		217,816		-		-		-		27			-			-			-			27

Issuance of Common and Preferred Stock Series A in connection with conversion of convertible notes		6,444,687		16		63,201,174		160		8,689			(8,865	)		-			-			-
Interest on convertible notes		-		-		-		-		-			67			-			(67	)		-
Stock based compensation		-		-		-		-		111			-			-			-			111
Other comprehensive gain		-		-		-		-		-			-			93			-			93
Net loss		-		-		-		-		-			-						(2,878	)		(2,878	)

DECEMBER 31, 2016		70,038,316	$	197		63,201,174	$	160	$	13,835		$	-		$	(1,839	)	$	(9,543	)	$	2,810

JANUARY 1, 2017		70,038,316	$	197		63,201,174	$	160	$	13,835		$	-		$	(1,839	)	$	(9,543	)	$	2,810
Issuance of Common Stock in connection with conversion of notes in 2016		2,450,000		7		-		-		(7	)		-			-			-			-

Issuance of Preferred Stock Series B for cash ($8,249 net of $519 issuance costs)		-		-		28,377,032		81		7,649			-			-			-			7,730

Stock options forfeited and expired		-		-		-		-		-			-			-			-			-
Stock based compensation		-		-		-		-		121			-			-			-			121
Other comprehensive gain		-		-		-		-		-			-			336			-			336
Net loss		-		-		-		-		-			-			-			(2,504	)		(2,504	)

DECEMBER 31, 2017		72,488,316	$	204		91,578,206	$	241	$	21,598		$	-		$	(1,503	)	$	(12,047	)	$	8,493

The accompanying notes are an integral part of the financial statements.

F- 4

ENLIVEX THERAPEUTICS LTD.

STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Year ended December 31,
	2016			2017
Cash flows from operating activities
Net (loss)	$	(2,878	)	$	(2,504	)
Adjustments required to reflect net cash used in operating activities:
Income and expenses not involving cash flows:
Depreciation		58			83
Share-based compensation		111			121
Accrued income on deposits		(2	)		-
Issuance expenses related to warrants exercisable into shares		-			19
Changes in operating asset and liability items:
Decrease in prepaid expenses		108			33
Decrease (increase) in other receivables		465			(40	)
(Decrease) increase in accounts payable trade		(42	)		1
(Decrease) in accrued expenses and other liabilities		(10	)		(11	)
(Decrease) increase in payables to related parties		-			(6	)
Net cash (used in) operating activities		(2,190	)		(2,304	)

Cash flows from investing activities
Purchase of property and equipment		(182	)		(130	)
Investment in restricted bank deposits		(5	)		-
Release of short term bank deposits, net		5,011			-
Net cash provided by (used in) investing activities		4,824			(130	)

Cash flows from financing activities
Proceeds from issuance of preferred stock and warrants		-			8,055
Proceeds from exercise of options		27			-
Net cash provided by financing activities		27			8,055

Increase in cash and cash equivalents		2,661			5,621
Cash and cash equivalents - beginning of year		262			3,020
Exchange rate differences on cash and cash equivalents		97			364
Cash and cash equivalents - end of year	$	3,020		$	9,005

Non cash transactions:

Issuance of Common and Preferred Stock in connection with conversion of Convertible Notes and accrued interest	$	8,865		$	7

Interest on convertible notes	$	67		$	-

The accompanying notes are an integral part of the financial statements.

F- 5

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 1 – GENERAL INFORMATION

	a.	General
		Enlivex Therapeutics Ltd. (the" Company”), headquartered in Jerusalem Israel, was incorporated under the laws of Israel and commenced operations on September 25, 2005. Since inception, the Company has been engaged in the development of an autologous and allogeneic drug pipeline for the treatment of autoimmune and inflammatory conditions which involve over-expression or hyper-expression of cytokines (Cytokine Release Syndrome) such as CAR-T (Chimeric Antigen Receptor) cancer treatment procedures, Graft-versus-Host disease (GvHD) resulting from bone-marrow transplantations, solid organ transplantations and an assembly of autoimmune and inflammatory conditions, such as Crohn’s disease, rheumatoid arthritis, gout, multiple sclerosis, and other disorders. The development is based on the discoveries of Professor Dror Mevorach, an expert on clearance of dying (apoptotic) cells, in his laboratory in the Hadassah University Hospital ("Hadassah").
	b.	Financial resources
		The Company devotes substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue for the foreseeable future. The Company has not generated any revenues or product sales and has not achieved profitable operations or positive cash flow from operations. The Company’s accumulated deficit aggregated $12,047 through December 31, 2017. There is no assurance that profitable operations, if ever achieved, could be sustained on a continuing basis. The Company's management plans to finance its operations with issuances of the Company's equity securities and, in the longer term, revenues. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing needed for the long-term development. The Company's ability to continue to operate in the long term is dependent upon additional financial support. The Company believes that its current cash sources will enable the continuance of the Company’s activities for at least a year with no need for additional fundraising.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Company’s financial statements as of December 31, 2016 and 2017, and for each of the years in the two year period ended December 31, 2017, have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). The significant accounting policies described below have been applied on a consistent basis for all years presented.

The financial statements have been prepared on the basis of historical cost, subject to adjustment of financial assets and liabilities to their fair value through profit or loss.

The Company classifies its expenses on the statement of comprehensive loss based on the operating characteristics of such expenses.

The preparation of financial statements in conformity with U.S. GAAP requires the use of certain critical accounting estimates. It also requires that management exercise its judgment in applying the Company’s accounting policies. Actual results may differ materially from estimates and assumptions used by the Company’s management.

Use of estimates

Functional currency and translation to the reporting currency

The functional currency of the Company is the New Israeli Shekel (“NIS”), which is the local currency in which the entity operates.

F- 6

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)

Functional currency and translation to the reporting currency (cont.)

The financial statements of the Company were translated into U.S. dollars in accordance with ASC 830, "Foreign Currency Matters". Accordingly, assets and liabilities were translated from local currencies to U.S. dollars using yearend exchange rates, equity items were translated at the exchange rates of the date of the equity transaction, and income and expense items were translated at average exchange rates during the year.

The following table presents data regarding the dollar exchange rate and the Israeli CPI:

	Israeli CPI			U.S. $ Exchange rate
	In Points (*)			1 $ = NIS
At the end of:
2017		101.3			3.467
2016		100.9			3.845
Increase (decrease) during the year:
2017		0.4	%		(9.8	)%
2016		(1.2	)%		(1.5	)%
(*) CPI basis of 2012 = 100 points.

Cash and cash equivalents

Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at acquisition.

Restricted cash:

Restricted cash held in interest bearing saving accounts which are used as a security for the Company's facility leasehold bank guarantee.

Non-current prepaid expenses:

Non-current prepaid expenses consist of non-current lease deposits as security for the Company's motor vehicles leases.

Property and equipment

Property and equipment are stated at historical cost less depreciation. Assets are depreciated using the straight-line method over the estimated useful lives of the assets. The annual depreciation rates are as follows:

		%
Computers		33
Office furniture and equipment		7
Leasehold improvements		10
Laboratory equipment		15-33

F- 7

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)

	h.	Impairment of non-financial assets
		The long-lived assets of the Company are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment", whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years 2016, and 2017, no impairment losses have been identified.

Stock-based compensation

ASC 718 - “Compensation-stock Compensation”- (“ASC 718”) requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option Pricing Model ("OPM"). The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods.

The Company estimates the fair value of stock options granted using the Black-Scholes Merton OPM. The OPM requires a number of assumptions. There is no active external or internal market for the Company's common shares. Thus, it was not possible to estimate the expected volatility of the Company's share price in estimating fair value of options granted. Accordingly, as a substitute for such volatility, the Company used the historical volatility of comparable companies in the industry. The expected term of options granted represents the period of time that options granted are expected to be outstanding, the company uses management's estimates for the expected term of options due to insufficient readily available historical exercise data. The risk-free interest rate is based on the yield rates of U.S. Government Treasury Bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.

The Company used the following weighted-average assumptions for options granted to employees and directors:

	Year ended December 31, 2016			Year ended December 31, 2017

Weighted Average Risk free interest rate		1.32	%		2.22	%
Dividend yield		-			-
Weighted Average Volatility factor		71.94	%		73.85	%
Weighted Average Expected life of the options		6			6

	j.	Employees benefits
		Post-employment benefits
		The majority of the Company's employees in Israel are signed on Section 14 of Israel's Severance Pay Law, 5723-1963 (“Section 14”). Pursuant to Section 14, the employees are entitled only to an amount of severance pay equal to monthly deposits, at a rate of 8.33% of their monthly salary, made on their behalf by the Company. Payments in accordance with Section 14 release the Company from any future severance liabilities in respect of those employees, consequently a severance pay liability is not recorded on the Company's balance sheet.
		With respect to employees that are not covered by section 14 or those who are covered from May 2014 onwards and not since commencement of their employment, the Company records a liability net of the plan assets for the period not covered by Section 14.
		Short term employee benefits
		Labor laws in Israel entitle every employee to vacation days, paid sick leave and recreation pay, computed annually. The Company recognizes a liability and an expense in respect of vacation and recreation pay based on the individual entitlement of each employee.

F- 8

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)

	k.	Research and development expenses
		Research and development expenses are charged to the statement of operations and comprehensive loss as incurred. As of December 31, 2017, the Company has not yet capitalized development expenses.

	l.	Patents
		The Company expenses all costs associated with patents for product candidates under development as incurred. As a result of the Company’s research and development efforts, the Company is applying for a number of patents to protect proprietary technology and inventions. To date, the Company has not capitalized patent costs. The Company has recorded a charge to operations of approximately $87 and $219 for the years ended December 31, 2016 and 2017, respectively, related to its patents costs.

Income taxes

The Company accounts for income taxes in accordance with ASC 740-10 "Accounting for Income Taxes". This Statement requires the use of the liability method of accounting for income taxes, whereby deferred tax asset and liability account balances are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. As the Company is currently engaged primarily in development activities and is not expected to generate taxable income in the foreseeable future, the Company provides a valuation allowance, to reduce deferred tax assets to their estimated realizable value.

ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740-10.

Loss per share

Basic loss per share is calculated based on the weighted average number of ordinary shares outstanding during each year. Diluted net loss per share is calculated based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential in accordance with ASC 260, "Earnings per Share."

All outstanding preferred stock, options and warrants for the years ended December 31, 2016 and 2017 have been excluded from the calculation of the diluted net loss per share because all such securities are anti-dilutive for all periods presented. As of December 31, 2016 and 2017 the total weighted average number of shares related to outstanding potential shares excluded from the calculations of diluted net loss per share were 76,584,576 and 101,763,319, respectively.

The following data show the amounts used in computing income (loss) per share and the effect on income (loss):

	Year ended December 31,
	2016			2017
Basic and diluted (loss) per share:
(Loss) income from continuing operations	$	(2,878	)	$	(2,503	)
Interest on convertible notes		(67	)
Interest of 6% to Cumulative Preferred Stock		(497	)		(717	)
	$	(3,442	)	$	(3,220	)

Number of common shares at the beginning of the year		63,375,813			70,038,316
Stock options exercised		81,756			-
Common shares issued in connection with conversion of convertible notes, February 1, 2016		5,897,330			726,923
Number of shares used in per share computation		69,354,899			70,765,239

Basic net income (loss) per share	$	(0.05	)	$	(0.05	)

F- 9

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)

	o.	Concentrations of credit risk:
		Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and restricted cash.
		Cash and cash equivalents are invested in major banks in Israel. Such deposits in Israel are not insured. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.
		The Company has no foreign exchange contracts or any other hedging arrangements.

	p.	Fair value of financial instruments
		The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), pursuant to which fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.
		ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.
		The financial instruments presented on the balance sheet at fair value are grouped into classes with similar characteristics using the following fair value hierarchy which is determined based on the source of input used in measuring fair value:
		Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
		Level 2 - inputs other than quoted prices included within level 1 that are observable either directly or indirectly.
		Level 3 - inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data). The Company's warrants exercisable into shares liability are classified as level 3 in the fair value hierarchy, and measured at fair value on a recurring basis.

Comprehensive income (loss)

New standards and interpretations

In May 2017, the FASB issued ASU No. 2017-09, Compensation (Topic 718) , which provides clarity and reduces both the diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company has adopted ASU 2017-09 and the adoption of the amendment did not have an impact on its financial condition, results of operations, and cash flows.

In January 2017, the FASB issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . ASU 2017-04 simplifies the goodwill impairment test by eliminating Step 2 from the test among other technical changes intended to streamline the impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments should be applied on a prospective basis. The Company is required to adopt ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and may early adopt as early as its first annual or interim impairment testing date following January 1, 2017. The adoption of this standard is not expected to impact the Company’s financial condition, results of operations, and cash flows.

F- 10

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)

	r.	New standards and interpretations (cont.)
		In August 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 clarifies whether eight specifically identified cash flow issues should be categorized as operating, investing or financing activities in the statement of cash flows. The guidance will be effective for the fiscal year beginning after December 15, 2017, including interim periods within that year. The Company is currently evaluating the impact that the adoption of ASU 2016-15 will have on its financial statements, but expect the impact to be immaterial.
		In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. The new standard replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2019 and early adoption is permitted for fiscal years and interim periods within those years beginning after December 15, 2018. The Company is currently assessing the impact of this ASU on its financial statements.
		In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and, (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018 and requires modified retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its financial statements, but expect the impact to be immaterial.
		In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”) that requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The guidance is effective for fiscal years beginning after December 15, 2016 including interim periods within those fiscal years. The guidance must be applied on a prospective basis. The guidance has not had an impact on the Company's financial statements.
		In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers and has subsequently issued several supplemental and/or clarifying ASUs, which comprise the new comprehensive revenue recognition standard that will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company has determined that the adoption of ASU 2014-09 will not have a material effect on its financial statements.

NOTE 3 – CASH AND CASH EQUIVALENTS

	December 31,
	2016		2017

Cash held in banks	$	516	$	498
Bank deposits in U.S.$ (annual average interest rates 0.98% and 1.37%)		2,504		8,507
	$	3,020	$	9,005

F- 11

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following:

	December 31,
	2016		2017

Cost:
Laboratory equipment	$	396	$	533
Computers		56		80
Office furniture & equipment		41		55
Leasehold improvements		102		126
		595		794
Accumulated depreciation:
Laboratory equipment		179		266
Computers		33		51
Office furniture & equipment		6		10
Leasehold improvements		63		79
		281		406
Depreciated cost	$	314	$	388

For the years ended December 31, 2016 and 2017, depreciation expenses were $58 and $83, respectively.

NOTE 5 – ACCRUED EXPENSES AND OTHER LIABILITIES

	December 31,
	2016		2017

Vacation, convalescence and bonus accruals	$	64	$	133
Employees and payroll related		117		104
Tax provision for uncertain tax position		216		240
Accrued expenses and other		186		157
	$	583	$	634

NOTE 6 – WARRANTS

On September 15, 2017 the Company issued shares of Series B Preferred Stock and warrants exercisable into shares of Series B Preferred Stock, see note 9c.

	Year ended December 31,
	2016		2017
Balance at January 1	$	-	$	-
Fair value of warrants at issuance date		-		344
Changes in values of warrants exercisable into shares liability		-		-
Balance at December 31	$	-	$	344

The fair value of warrants granted was valued by using the OPM pricing model. Fair values were estimated using the following assumptions for the warrants call option:

	Year ended December 31,
	2016		2017
Dividend yield		-		-
Expected volatility		-		75.83	%
Risk-free interest		-		1.39
Expected life		-		2

F- 12

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 7 – COMMITMENTS AND CONTINGENT LIABILITIES

Obligation to pay royalties to the State of Israel

In accordance with the terms of the financial participation, the State is entitled to royalties on the sale or license of any product which development was supported with State participation.

These royalties are generally 3% - 5% of sales until repayment of 100% of the grants (linked to the dollar) received by the Company plus annual interest at the LIBOR rate.

The aggregate contingent obligation payable by the Company as of December 31, 2017 was approximately $4,864 which represents the gross amount of grants actually received by the Company from the Israel Innovation Authority, including accrued interest.

As of December 31, 2017, the Company had not paid any royalties to the Israel Innovation Authority.

Lease agreements

	-	On April 1, 2013, a rental contract was signed between the Company and a third party for approximately 12 square meters of laboratory space in the Hadassah University Hospital. The rental agreement is for a period of five years and can be terminated by either party with a 60 days' notice, it also stipulates that the Company will pay a monthly rent of NIS 2 ($0.5) linked to the Israeli CPI.
	-	On September 17, 2015 the Company entered into a rental agreement for approximately 284 square meters of offices and laboratory space in the biotechnology park in the Hadassah University Hospital. The rental agreement is for a period of 4 years and can be extended by an additional period of 4 years. The monthly rental and management fees are NIS 21 ($5) linked to the Israeli CPI. To secure the liability of the Company for the new lease, the Company provided the lessor a bank guarantee in an amount of approximately $22 thousand (NIS 75 thousand).

On January 1, 2016 the Company entered into a rental agreement for approximately 66 square meters of offices in Ness Ziona. The rental agreement is for a period of 3 years and can be extended by an additional period of 3 years. The monthly rental and management fees are NIS 7 ($2). To secure the liability of the Company for the new lease, the Company provided the lessor a bank guarantee of approximately $5 (NIS 20).

The Company has entered into operating lease agreements during 2015 with respect to motor vehicles. The agreements are for a period of 36 months and will expire in 2018.

Future minimum lease commitments under the abovementioned operating leases as of December 31, 2017, are as follows:

2018	$	131
2019		96
2020		11
	$	238

NOTE 8 – TRANSACTIONS AND BALANCES WITH RELATED PARTIES

Expenses (income):

	Year ended December 31,
	2016		2017
Benefits to related parties:
Compensation to non-employees directors	$	21	$	-
Share based Compensation to non-employees directors	$	47		(29	)
Other related parties expenses	$	20	$	21
Other Comprehensive loss - interest on convertible notes	$	67	$	-

F- 13

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 8 – TRANSACTIONS AND BALANCES WITH RELATED PARTIES (cont.)

Key management compensation:

Key management includes directors (executive and non-executive) and executive officers. The compensation paid or payable to key management for services during each of the years indicated is presented below.

	Year ended December 31,
	2016		2017
Salaries and employee benefits	$	436	$	437
Share-based compensation		61		50
	$	497	$	487

Payables to related parties :

	December 31,
	2016		2017
Key management	$	28	$	25

NOTE 9 – EQUITY

Shares of Common Stock confer upon their holders the right to participate and vote in general stockholders’ meetings, to share in the distribution of dividends if declared by the Company and the right to receive assets of the Company upon its liquidation.

Shares of Preferred Stock confer on their holders all rights accruing to holders of Common Stock, and, in addition, bear certain conversion and preference rights. Preferred A and B Stock also confer upon their holders the right to receive an annual dividend amount equal to the original issue price of each Preferred Stock plus a cumulative preference of 6% of the original issue price per annum compounded annually until the lapse of two years from their issuance date.

Accumulated unpaid dividends to series A and series B Convertible Preferred Stock holders as of December 31, 2016 and 2017 were $496 and $1,213, respectively.

On February 1, 2016 the entire aggregate principal amount of convertible notes issued by the Company in 2014 with all accrued and unpaid interest thereon, in the amount of $8,865 was converted into 63,201,174 shares of Series A convertible preferred stock.

6,444,687 and 2,450,000 shares of common stock have been issued to several shareholders, who were entitled to certain anti-dilution rights on February 1, 2016 and September 14, 2017, respectively.

On September 15, 2017 and October 20, 2017 the Company issued a total of 28,377,032 shares of Series B Preferred Stock of the Company, and a total of 36,630,970 warrants exercisable into shares of Series B Preferred Stock for a total cash consideration of $8,550 comprising of:

Shares of Series B Preferred Stock	$	7,730
issuance costs allocated to Preferred Stock		519
		8,249
Fair value attributed to the investors' warrants		301
	$	8,550

Each warrant is exercisable into 1 share of Series B Preferred Stock of the Company at an exercise price of $0.3013 per share subject to the fulfillment of an exercise event. The warrants will expire at the earlier of 36 months from the issuance date or an exercise event as defined in the investment agreements, the exercise period may be extended under certain conditions. The investment agreement also stipulates that the warrants will be canceled and nullified prior to its expiration date upon the consummation of a public listing of the Company’s shares on a non-Asian-Pacific stock exchange or upon the consummation of an M&A transaction with a non-Asian-Pacific company. The warrants may be exercised via a cashless exercise mechanism, whereby the number of shares the value of which equals the exercise premium in cash will be deducted from the number of shares to be issued upon exercise of the warrant. In addition, the number of warrants outstanding will be adjusted to certain events specified in the warrant agreement.

F- 14

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9 – EQUITY (cont.)

The Company issued additional warrants in settlement of issuance costs to purchase 995,685 shares of Series B Preferred Stock at $0.3013 per warrant, subject to certain adjustments, for a period of 7 years. These warrants may also be exercised on a cashless basis. The fair value of these warrants issued at grant date was $37 and was considered as additional issuance costs.

In accordance with ASC 815: “Derivatives and Hedging”, one of the characteristics of a derivative is that its terms require or permit net settlement. Accordingly all warrants were classified as a non-current liability measured at fair value.

The Company first allocated the proceeds of the issuance to the warrants; the remaining proceeds were allocated to the shares and were recorded to equity.

The total issuance costs in relation to the financing round in the amount of $538 were allocated between the warrants and the shares in proportion to the allocation of the proceeds. The portions of the issuance costs in the amount of $19 that were allocated to the warrants and recorded as financial expense in the Company's statement of comprehensive loss. The portions of the issuance costs that were allocated to the Preferred Stock of $519, were recorded to the additional paid in capital in the Company's balance sheet.

NOTE 10 – SHARE-BASED COMPENSATION

	a)	Stock option plan – general
		Options granted under the Equity Incentive Plans and agreements expire after ten years from the date of grant. Upon termination of the optionee’s employment or other relationship with the Company, options cease vesting, vested options forfeit. Ordinary shares underlying options that are canceled or not exercised within the option term become available for future grant.
		In 2007, the Company adopted its 2007 Incentive Compensation Plan (the “Equity Incentive Plan”) under which 1,001,100 shares were authorized for issuance to its employees, outside directors and consultants.
		In 2014, the Company adopted its Global Share Incentive Plan (2014) (the “2014 Equity Incentive Plan”) under which 30,492,144 shares are authorized for issuance to its employees, officers, directors and consultants. In September 2017 the Company approved an increase in the number of Shares authorized under the 2014 Equity Incentive Plan by 7,415,477 Ordinary Shares. As of December 31, 2017 none of the shares under the 2007 Equity Incentive Plan and 3,437,429 shares under the 2014 Equity Incentive Plan were available for future grant.

Employees' and directors stock options

The following table contains additional information concerning options granted to employees and directors under the existing stock-option plans:

	For the year ended December 31,
	2016					2017
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Outstanding at beginning of period		18,227,069		$	0.13		17,617,545		$	0.13
Granted		241,000			0.13		4,240,044		$	0.13
Granted		-			-		13,862,864		$	0.3013
Forfeited and expired		(632,708	)		0.13		(1,457,066	)	$	0.13
Exercised		(217,816	)		0.13		-		$	-
Outstanding at end of period		17,617,545		$	0.13		34,263,387		$	0.199
Exercisable at end of period		11,214,265		$	0.13		15,966,087		$	0.13

F- 15

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 10 – SHARE-BASED COMPENSATION (cont.)

Following is a summary of changes in nonvested shares granted to employees and directors:

	For the year ended December 31,
	2016					2017
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Balance at beginning of the period		17,416,526		$	0.13		6,403,280		$	0.13
Granted		241,000			0.13		4,240,044		$	0.13
Granted		-			-		13,862,864		$	0.3013
Vested during the year		(10,621,538	)		0.13		(4,820,492	)	$	0.13
Forfeited during the year		(632,708	)		0.13		(1,388,396	)		0.13
Balance at the end of the period		6,403,280		$	0.13		18,297,300		$	0.255

The total unrecognized estimated compensation cost related to non-vested employees' stock options granted until December 31, 2016 and 2017 was $84 and $185, which is expected to be recognized over a weighted average period of 2.46 and 3.05 years.

Set forth below is data regarding the range of exercise prices and remaining contractual life (in years) for the employees options outstanding at the December 31, 2017:

exercise price		Number of options outstanding		Remaining contractual Life (in years)		Intrinsic Value of Options Outstanding		No. of options exercisable
$	0.09		11,012		1.75		0.65		11,012
$	0.13		15,272,020		6.44		-		12,477,229
$	0.13		741,447		2.54		-		741,447
$	0.13		151,000		8.17		-		37,750
$	0.13		2,851,649		9.18		-		2,698,649
$	0.13		1,373,395		9.95		-		-
$	0.3013		13,862,864		9.95		-		-
			34,263,387						15,966,087

The total intrinsic value of options exercised during 2016 and 2017 was $0 and $0.

The following table summarizes share-based compensation expenses related to grants under the Equity Incentive Plan to employees and directors included in the statements of operations:

	Year ended December 31,
	2016		2017
Research & development	$	21	$	123
General & administrative		90		(2	)
Total	$	111	$	121

NOTE 11 – TAXES ON INCOME

	a.	The Israeli corporate tax rate was 25% in 2016. As of January 1, 2017 the corporate tax rate was reduced to 24% and to 23% as of January 1, 2018.
	b.	The Company has not been assessed for tax purposes since its incorporation. Tax assessments through the year ended December 31, 2012 are deemed to be final.
	c.	As of December 31, 2017, the Company had carry-forwards losses amounting to approximately $12,637. These carried forward losses have no expiration date.

F- 16

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 11 – TAXES ON INCOME (cont.)

The components of the provision for income taxes are as follows:

	Year ended December 31,
	2016		2017
Current tax	$	-	$	-
Deferred tax		-		-
Provision for income taxes, net	$	-	$	-

Reconciliation of the theoretical tax expenses:

	Year ended December 31,
	2016			2017
Loss before taxes	$	2,878		$	2,503
Statutory tax rate		25	%		24	%
Tax benefit		719			601

Permanent differences		(28	)		(30	)
Valuation allowance		(652	)		(501	)
Differences in tax rate		(65	)		(36	)
Translation differences		26			(34	)
Tax expenses	$	-		$	-

Deferred income taxes:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes.

As of December 31, 2017 the Company has provided full valuation allowance in respect of deferred tax assets. Management currently believes that since the Company has a history of losses it is more likely than not that the deferred tax regarding the loss carry-forward and other temporary differences will not be realized in the foreseeable future.

Components of the Company's deferred tax liabilities and assets are as follows:

	December 31,
	2016			2017
Tax assets in respect of:
Accrued severance pay and accrued vacation pay		17			18
Research and development expenses		414			379
Net loss carry forward		1,707			2,242
Total deferred tax assets		2,138			2,639
Less - valuation allowance		(2,138	)		(2,639	)
Deferred tax assets	$	-		$	-

NOTE 12 – FAIR VALUE MEASUREMENT

The Company's financial assets measured at fair value on a recurring basis, consisted of the following types of instruments as of December 31, 2016 and 2017:

	December 31, 2016
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	3,020	$	3,020	$	-	$	-
Restricted cash		25		25		-		-
Total financial assets	$	3,045	$	3,045	$	-	$	-

	December 31, 2017
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	9,005	$	9,005	$	-	$	-
Restricted cash		27		27		-		-
Total financial assets	$	9,032	$	9,032	$	-	$	-

Warrants	$	344	$	-	$	-	$	344
Total financial liabilities	$	344	$	-	$	-	$	344

F- 17

ENLIVEX THERAPEUTICS LTD.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 13 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

Research and development expenses – net

	Year ended December 31,
	2016		2017
Payroll and related expenses	$	732	$	593
Research and development services		832		493
Patent-related expenses		87		219
Share Based Compensation		21		123
Depreciation		58		83
Other		203		180
		1,933		1,691
Israel Innovation Authority participation in research and development costs and royalties payable		96		-
	$	2,029	$	1,691

General and administrative expenses

	Year ended December 31,
	2016		2017
Payroll expenses and management fees	$	409	$	365
Professional fees		211		70
Office maintenance and other		60		23
Share Based Compensation		90		(2	)
Travel Expenses		23		24
	$	793	$	480

Financial income

	Year ended December 31,
	2016		2017
Interest income	$	30	$	37
	$	30	$	37

Financial expenses

	Year ended December 31,
	2016		2017
Issuance expenses related to warrants exercisable into shares	$	-	$	19
Net change in fair value warrants exercisable into shares		-		-
Exchange differences, net		84		350
Bank commissions		2		1
	$	86	$	370

NOTE 14 – EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

In January 2018, 918,284 stock options were granted to a director with a cash exercise price of $0.3013, vesting yearly over a period of four years with 100% acceleration of the vesting upon a consummation of a public event.

Additional 600,000 stock options were granted to related parties with cash exercise price of $0.3013, vesting yearly over a period of four years.

F- 18

Exhibit 99.5

Consent of Independent Registered Public Accounting Firm

To the Board of Directors

Enlivex Therapeutics Ltd.

Gentlemen:

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-203114 and File No. 333-210459) of Enlivex Therapeutics Ltd. of our report dated July 24, 2018 relating to the financial statements of Enlivex Therapeutics Ltd. which appear in this Form 6-K.

/s/ Yarel + Partners

Yarel + Partners

Certified Public Accountants

Tel Aviv, Israel

March 26, 2019

Exhibit 99.6

Immunotherapy Company Enlivex Therapeutics Announces Nasdaq Listing Under Symbol “ENLV” and Closing of Private Placement of Ordinary Shares Priced at $12.25 Per Share

Nes Ziona, Israel, March 26, 2019 (GLOBE NEWSWIRE) -- Enlivex Therapeutics Ltd. (Nasdaq: ENLV), a clinical-stage immunotherapy company, today announced its Nasdaq listing under the symbol “ENLV” and the concurrent closing of a private placement of ordinary shares priced at $12.25 per share.

The financing was led by institutional investors KIP Global Pharma Private Equity Fund, and HBL - Hadasit Bio Holdings, a life-sciences investment company. Pursuant to the financing, Enlivex expects its cash balance to allow initiation of several late-stage immunotherapy clinical trials, and potentially reach multiple clinical milestones through (i) a Phase II/III trial studying prevention of complications post bone-marrow transplantations; (ii) a Phase II trial studying prevention of cytokine storms associated with sepsis, and (iii) a unique program surrounding a proprietary “immune checkpoint” for solid cancers discovered by Enlivex.

Shai Novik, Chairman of Enlivex, commented, “We are pleased to announce listing of Enlivex on Nasdaq. We believe that the Company’s cash balance and public platform will enable Enlivex to progress with the clinical development of Allocetra ^TM , our unique immunotherapy product candidate, which targets various life-threatening conditions for which there are no approved or currently effective treatments. These indications potentially represent multi-billion dollar revenue opportunities.”

Sangwoo Lee, Managing Director of the Investment Department & Head of the U.S. Branch at Korea Investment Partners Co. Ltd and KIP Global Pharma Private Equity Fund, commented: “We continue to support the path forward of Enlivex in the clinical development of a potentially paradigm-changing immune therapy for indications that have thus far been proven too difficult for traditional one-drug, one-target approaches.”

Michel Habib, CEO of HBL, commented, “We are proud to be part of an innovation process, where world leading research originated in Hadassah Hospital evolves into a promising clinical stage immunotherapy company addressing some of the world's largest unmet medical needs. Enlivex is an excellent example of this journey from basic research to global markets potential realization”.

Enlivex is developing a novel immunotherapy candidate with a unique mode of action that targets clinical indications defined as “life-threatening, unmet medical need,” such as preventing or treating complications associated with bone-marrow transplantations, sepsis – which is the third-leading cause of mortality in the United States after cardiovascular and cancer diseases, as well as treatment of solid tumors via immune checkpoint reprogramming, potentially increasing the efficacy of CAR-T, TCR and other anti-cancer therapies.

The private placement, in which 437,733 shares of unregistered ordinary shares of Enlivex were issued at a price of $12.25 per share, closed in concurrence with the closing of the previously announced merger of Bioblast Pharma Ltd.’s wholly owned subsidiary with and into Enlivex Therapeutics Ltd., following which Enlivex survived as a wholly owned subsidiary of Bioblast. The surviving company in the merger for accounting purposes is Enlivex Therapeutics Ltd. Upon completion of the merger, the board of directors and executive management of Enlivex Therapeutics Ltd. replaced the board directors and executive management of Bioblast, respectively. Concurrently with consummation of the merger, Bioblast changed its name to Enlivex Therapeutics Ltd. and its trading symbol to ENLV. Following the closing of the private placement and the merger, Enlivex Therapeutics Ltd. had 9,868,809 ordinary shares outstanding. Immediately prior to consummation of the merger, Bioblast distributed a contingent value right (“CVR”) to all shareholders of record of Bioblast as of close of business on March 25, 2019. The CVR provides certain rights of shareholders as of the record date to receive, under certain terms and conditions, a percentage of potential future payments from revenues that may be generated by Enlivex from Bioblast’s historical Trehalose program, which is the clinical program previously developed by Bioblast and sold prior to the merger with Enlivex. Each CVR holder as of the record date of March 25, 2019 will be entitled to such holder’s pro rata share of consideration that may be received in connection with the sale of the Trehalose program. Distribution to the CVR holders of the amount received by the Company, net of associated expenses, is expected to take place after receipt of a tax ruling from the Israeli tax authorities and court approval from applicable Israeli court.

ABOUT ENLIVEX
Enlivex is a clinical stage immunotherapy company, developing an allogeneic drug pipeline for immune system rebalancing. Immune system rebalancing is critical for the treatment of life-threatening immune and inflammatory conditions which involve hyper-expression of cytokines (Cytokine Release Syndrome) and for which there are no approved treatments (unmet medical needs), as well as solid tumors immune-checkpoint rebalancing. For more information, visit http://www.enlivex.com .

Safe Harbor Statement: This press release contains forward-looking statements, which may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “would”, “intends,” “estimates,” “suggests,” “has the potential to” and other words of similar meaning, including statements regarding expected cash balances, market opportunities for the results of current clinical studies and preclinical experiments, the effectiveness of, and market opportunities for, ALLOCETRA ^TM programs, and potential future payments to holders of CVRs which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect Enlivex’s business and prospects, including the risks that Enlivex may not succeed in generating any revenues or developing any commercial products; that the products in development may fail, may not achieve the expected results or effectiveness and/or may not generate data that would support the approval or marketing of these products for the indications being studied or for other indications; that ongoing studies may not continue to show substantial or any activity; that the Trehalose program may not generate any revenues, and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. The results of clinical trials in humans may produce results that differ significantly from the results of clinical and other trials in animals. The results of early-stage trials may differ significantly from the results of more developed, later-stage trials. The development of any products using the ALLOCETRA ^TM product line or the Trehalose program could also be affected by a number of other factors, including unexpected safety, efficacy or manufacturing issues, additional time requirements for data analyses and decision making, the impact of pharmaceutical industry regulation, the impact of competitive products and pricing and the impact of patents and other proprietary rights held by competitors and other third parties. In addition to the risk factors described above, investors should consider the economic, competitive, governmental, technological and other factors discussed in Enlivex’s filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release speak only as of the date the statements were made, and we do not undertake any obligation to update forward-looking statements, except as required under applicable law.

ENLIVEX CONTACT :
Shachar Shlosberger, CFO
Enlivex Therapeutics, Ltd.
shachar@enlivexpharm.com