4.A. History and Development We were originally incorporated on January 22, 2012 under the laws of the State of Israel as Bioblast Pharma Ltd. (“Bioblast”). On March 26, 2019, Bioblast and Enlivex R&D (formerly known as Enlivex Therapeutics Ltd.) consummated a merger transaction whereby Enlivex R&D merged with a wholly owned subsidiary of Bioblast, with Enlivex R&D as the surviving entity in the merger (the “Merger”). As a result of the Merger, Enlivex R&D became a wholly owned subsidiary of Bioblast. In connection with the consummation of the Merger, Bioblast changed its name from “Bioblast Pharma Ltd.” to “Enlivex Therapeutics Ltd.” In February 2026, the Company changed its name to “Enlivex Ltd.” 47 Our primary operating subsidiary, Enlivex R&D, was originally incorporated as Tolarex Ltd. in September 2005 under the laws of the State of Israel. In February 2010, Enlivex R&D changed its name to Enlivex Therapeutics Ltd., and upon consummation of the Merger, to Enlivex Therapeutics R&D Ltd. In June 2021, Enlivex Therapeutics RDO Ltd. was established in Israel as a wholly owned subsidiary. Our principal executive offices are located at 14 Einstein Street, Ness Ziona, Israel 7403618 and our telephone number is: +972 26208072. Our wholly owned U.S. subsidiary, Enlivex Therapeutics Inc., incorporated in Delaware, has been appointed our agent in the United States, and its registered address is 1811 Silverside Road, Wilmington, Delaware 19810. Our website address is https://www.enlivex.com. The information contained on, or that can be accessed through, our website is not part of this Annual Report on Form 20-F. We have included our website address herein solely as an inactive textual reference. The SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of this website is http://www.sec.gov. Our capital expenditures for the three years ended December 31, 2025, 2024 and 2023 were insignificant. See “Operating and Financial Review and Prospects—Liquidity and Capital Resources.” 4.B. Business Overview Overview We are a quality longevity company focused on advancing therapies designed to extend health span and improve quality of life, powered by a prediction markets treasury. We operate a dual strategy that combines clinical development in quality longevity therapeutics, currently focused on the treatment of osteoarthritis as our primary inflammatory indication, with a treasury model anchored in decentralized prediction markets infrastructure through the RAIN protocol. Our lead therapeutic candidate, Allocetra™, is a macrophage reprogramming therapy designed to restore immune balance and address inflammatory and degenerative conditions associated with aging. In November 2025, we announced positive six-month efficacy data from the Phase IIa stage of our randomized, multi-country Phase I/II Allocetra™ trial (ENX-CL-05-001) in patients with moderate to severe knee osteoarthritis (OA). The six-month follow-up has now been completed for all patients. The results re-affirm the three-month data reported previously and substantiate the identification of an age-related primary OA responder population. We are currently preparing to commence a Phase IIb global, multicenter, randomized, double-blind, placebo-controlled trial to evaluate the efficacy and safety of intra-articular injections of Allocetra™ in age-related primary knee osteoarthritis, in patients with moderate to severe disease. In March 2026, we received FDA clearance of our IND application for the Phase IIb trial in the United States and we expect the trial to also be conducted in several European countries. We currently expect three and six-month topline data in the second quarter and third quarter of 2027, respectively. For additional information, see below “Clinical Operations.” New Treasury Reserve Policy On November 24, 2025, in connection with the consummation of the Private Placement, we launched our new cryptocurrency and digital asset Treasury Reserve Policy, pursuant to which we acquired RAIN, and may acquire certain other digital assets. We entered into the Asset Management Agreement (as defined below) to guide us through the implementation of our cryptocurrency and digital asset treasury. We intend to pursue our digital asset treasury strategy together with our existing clinical operations focused on the development of AllocetraTM. The fair value of the Company’s digital asset treasury as of December 31, 2025 was $606.781 million. On March 23, 2026, we partially exercised the RAIN Option to acquire an additional 3,030,303,030 RAIN tokens at $0.0033 per token, for aggregate consideration of $10 million. To the extent available our asset manager, at its discretion, may utilize a range of capital markets and on-chain strategies, including staking, restaking, liquid staking, and participation in decentralized finance (“DeFi”) protocols as part of the asset manager’s efforts to enhance returns on our holdings of RAIN. We cannot assure you that any such strategies will be available to us or, if they are available, successfully employed to enhance returns. 48 Specifically, our Treasury Reserve Policy allows our asset manager to utilize the following activities: ● Utilizing intelligent capital markets issuances, including the issuance of equity, where we may issue capital for the benefit of shareholders to purchase and hold more RAIN; ● Staking (and where possible restaking), in each case if and to the extent available, RAIN in our treasury to earn a staking yield and turn the treasury into a productive asset; ● Liquid staking a portion of the RAIN in our treasury to enable us to receive staking rewards while simultaneously receiving liquid tokens that may be utilized for additional treasury operations, liquidity management, and risk-adjusted yield opportunities; ● Utilizing DeFi tools to increase the effective yield of our RAIN holdings and increase the capital efficiency of our treasury reserve assets; and ● Selling our RAIN holdings, whether on the open market, through block trades, or other negotiated transactions, at such times as we may deem sales appropriate or advantageous. RAIN is a fully decentralized predictions and options protocol built on the Arbitrum network. The RAIN protocol is fully permissionless, allowing any user to create and trade custom predictions on any market. Market outcomes are AI-resolved, and the platform is governed by the RAIN token. We believe that RAIN has long-term utility, scarcity characteristics through its deflationary buyback and burn mechanism, and potential ecosystem growth prospects. There can be no assurance that the value of RAIN will increase, and investors should carefully consider the risks associated with digital assets. For additional information, see Item 3.D. “Risk Factors - Risks Related to Our Cryptocurrency and Digital Asset Treasury Strategy.” We May Earn Staking Rewards To potentially earn yields, we have authorized our asset manager to delegate our RAIN to third-party DeFi platforms on Arbitrum, as the RAIN protocol currently has no native in-protocol staking or other delegation system. We intend to keep the RAIN purchased pursuant to our digital asset Treasury Reserve Policy held by third-party custodians. We intend tohold our RAIN primarily in qualified custodial accounts and may from time to time supply a portion to DeFi protocols on Arbitrum for yield generation, such as liquidity provision in prediction markets or other protocol-supported activities where available. We plan to maintain strict long-only exposure (i.e., we do not intend to short RAIN, borrow against it to create leveraged or synthetic downside positions, or engage in any strategy that would reduce our net economic exposure to RAIN upside). We believe that our strategy will benefit indirectly from the RAIN protocol’s deflationary mechanics, whereby a portion of trading volume on the platform is used to buy back and burn RAIN tokens, potentially increasing scarcity and value accrual to holders over time. How We Manage Liquidity We acknowledge that certain DeFi strategies (such as liquidity provision in prediction or options markets) may impose withdrawal delays, impermanent loss risks, or position-specific restrictions depending on the protocol. We factor these into our overall liquidity and risk management framework. RAIN supplied to protocol markets or positions can typically be withdrawn on-demand or within short protocol-specific delays (often near-instantaneous under normal conditions on Arbitrum); however, high network congestion, unresolved market disputes, arbitration processes, or smart contract restrictions could extend this period. To mitigate liquidity risk, we maintain a portion of our treasury in uncommitted, fully liquid RAIN and cash equivalents (such as stablecoins) to meet short-term obligations, as well as to provide reasonable funding for our clinical development of AllocetraTM. From time to time, we may provide liquidity or participate in markets on the RAIN protocol to earn trading fees, secondary market spreads, or any available protocol incentives, all while benefiting from the ongoing token burn mechanism. 49 Custodians and Storage of RAIN We intend to solely utilize third-party qualified custodians to hold our RAIN, other than the portion of our RAIN, if any, directly supplied to DeFi protocols. We do not self-custody any of our RAIN. We use qualified custodians that employ risk management and operational best practices related to hot vs. cold storage, access controls, custody technology, and insurance, among other practices. Our primary custodians generally maintain the vast majority of custodied assets in cold storage (>95%), with hot wallets used only for limited operational needs. Custodians employ SOC 2-audited security controls, geographic redundancy, multi-person approval processes, and conduct key-generation ceremonies in offline, secure facilities. Private keys are never exposed to networked devices. Custodians maintain insurance coverage. Our qualified custodians are permitted to rehypothecate or otherwise use our RAIN for their own purposes. Use of DeFi Protocols We may from time to time interact with DeFi protocols, including the RAIN prediction markets protocol itself or related Arbitrum-based venues, either directly or indirectly through liquidity provision, market creation/participation, or other yield-generating activities. We intend to conduct any such interactions on a long-only basis with the goal of increasing our effective RAIN-per-share over time through a combination of direct protocol usage and indirect benefits from the deflationary buy-and-burn mechanism. DeFi protocols generally rely on open-source smart contracts deployed on public blockchains, including Arbitrum, on which the RAIN protocol has been built. While these smart contracts are intended to operate automatically according to their code, they may contain coding errors, vulnerabilities, or design flaws that can be exploited. We intend to actively evaluate DeFi and prediction market opportunities involving RAIN to enhance treasury productivity where risk-adjusted returns are attractive, while maintaining robust risk management practices. RAIN - The Token of the RAIN Ecosystem RAIN is the native governance and utility token of RAIN, a fully decentralized prediction markets and options protocol built on Arbitrum (with cross-chain support). Launched in 2025, RAIN has stated a maximum supply of approximately 1.14 trillion tokens (with circulating supply progressively increasing). According to RAIN, the token follows a deflationary model where 2.5% of platform trading volume is allocated to automatically buy back and burn RAIN, reducing supply over time based on protocol activity. There is no native proof-of-stake mechanism on the RAIN protocol, inflationary emissions for staking, validators, restaking, or liquid-staked derivatives. Yield for holders is primarily indirect through token burns (value accrual from increased scarcity) and governance participation via the RAIN decentralized autonomous organization (“DAO”), supplemented by any opportunistic DeFi activities such as liquidity provision or market participation that generate fees. How RAIN is Used RAIN is used for governance through the protocol’s DAO, where holders can propose and vote on upgrades, parameters, and certain other matters. It also benefits from the deflationary burn tied to platform volume. The RAIN Ecosystem Rain operates as a permissionless “Uniswap of prediction markets” on Arbitrum, enabling anyone to create public or private markets for forecasting events, options trading, or custom outcomes. Public markets are resolved via an integrated AI oracle, with disputes handled by decentralized arbitration. The protocol features a user-friendly experience, and strong emphasis on decentralization. Listing of RAIN on Cryptocurrency Exchanges The RAIN token has been listed on the KuCoin cryptocurrency exchange since January 6, 2026, WhiteBIT cryptocurrency exchange since January 21, 2026, and on the Kraken cryptocurrency exchange since February 9, 2026. KuCoin is a global cryptocurrency exchange serving more than 40 million users worldwide, with its strongest user base in Southeast Asia. Founded in 2017, KuCoin consistently ranks among the top ten cryptocurrency exchanges globally. 50 WhiteBIT is the largest European cryptocurrency exchange by traffic. Founded in 2018, the platform is part of W Group, which serves more than 35 million customers globally. The Kraken cryptocurrency exchange is the second-largest U.S.-based cryptocurrency exchange. Founded in 2011, the Kraken exchange serves 5.7 million users across numerous jurisdictions and supports a broad range of digital assets through spot and derivatives markets. Asset Management Agreement In connection with the establishment of our digital asset treasury, on November 20, 2025, we entered into an asset management agreement (the “Asset Management Agreement”) with Elinnovation Labs Ltd., a company organized under the laws of the State of Israel (the “Asset Manager”), pursuant to which we appointed the Asset Manager to provide asset management services with respect to the certain cash proceeds of the Private Placement and our future securities offerings and other capital we may from time to time designate, together with digital assets and other assets acquired with or in respect of such proceeds (the “Account Assets”) held in accounts and cryptocurrency wallets controlled by the Company. As compensation for its services, the Asset Manager is entitled to specified management fees. Subject to the terms of the Asset Management Agreement, the Asset Manager is responsible for its own overhead and for the fees and expenses of any custodian, and we are obligated to reimburse only certain pre-approved, reasonable and documented out-of-pocket expenses incurred on the Asset Manager’s behalf. The Asset Management Agreement has an initial term of three years and renews for successive one-year periods unless we or the Asset Manager terminates or elects not to continue the Asset Management Agreement in accordance with its terms, including the ability of either party to terminate without cause after the first anniversary upon prior written notice and to terminate earlier for specified causes, including certain acts of fraud, bad faith, gross negligence, material breach or insolvency. The Asset Management Agreement also contains customary representations, covenants, confidentiality, indemnification and limitation of liability provisions. In connection with the closing of the Lind Private Placement (as defined in Item 5.B. “Liquidity and Capital Resources”), on March 23, 2026, we, Lind Global Asset Management XIV, LLC, a Delaware limited liability company (“Lind”) and the Asset Manager entered into a Joinder and First Amendment to the Asset Management Agreement (the “Asset Management Agreement Amendment”), pursuant to which we granted Lind certain rights with respect to certain of our accounts containing our digital assets, including our RAIN token portfolio, including, among other things, all digital assets and other assets in such accounts, all books and records related thereto and any and all proceeds thereof (the “Collateral”) to secure the Company’s obligations under the Lind Note (as defined in Item 5.B. “Liquidity and Capital Resources”). Option to Purchase RAIN In connection with the establishment of our cryptocurrency and digital asset Treasury Reserve Policy, on November 13, 2025, we entered into an agreement with the RAIN Foundation, the foundation that independently oversees the RAIN protocol, pursuant to which we obtained an exclusive option (the “RAIN Option”) to purchase up to an aggregate of 278,181,818,181 RAIN tokens, exercisable in whole or in part at our discretion, at a price of $0.0033 per RAIN token. We may exercise the RAIN Option in one or more tranches by delivering an exercise notice to the RAIN Foundation and paying the applicable aggregate exercise price in cash. On December 1, 2025, we partially exercised the RAIN Option and acquired 3,030,303,030 RAIN tokens for consideration of $10 million. The fair value of the RAIN Option as of December 31, 2025 was $1.709 billion. On March 23, 2026, we partially exercised the RAIN Option to acquire an additional 3,030,303,030 RAIN tokens, for aggregate consideration of $10 million. The RAIN Option was initially in effect until December 1, 2026, and the RAIN Foundation extended the duration of the RAIN Option to December 31, 2027. For risks related to our cryptocurrency and digital asset treasury strategy, see Item 3.D. “Risk Factors - Risks Related to Our Cryptocurrency and Digital Asset Treasury Strategy.” Clinical Operations We are a quality longevity company focused on advancing therapies designed to extend health span and improve quality of life, powered by a prediction markets treasury. Our clinical longevity therapeutics operations are currently focused on the treatment of osteoarthritis as our primary inflammatory indication. Our lead therapeutic candidate, Allocetra™, is a macrophage reprogramming therapy designed to restore immune balance and address inflammatory and degenerative conditions associated with aging. 51 Macrophages are tissue-resident or infiltrating immune cells critical for innate immunity, normal tissue development, and repair of damaged tissue. Macrophages’ function is a result of their original designation, their local micro-environment, and the type of metabolites, substances or pathogens to which they are exposed. When reprogrammed out of their homeostatic state, macrophages contribute to the pathophysiology of multiple inflammatory diseases, including osteoarthritis, sepsis and various inflammatory disorders. We believe the Company’s primary innovative immunotherapy, AllocetraTM, represents a paradigm shift in macrophage reprogramming, moving from targeting a specific subset of macrophages or a specific pathway affecting macrophage activity, to a fundamental view of macrophage homeostasis. Restoring macrophage homeostasis may induce the immune system to rebalance itself to normal levels of operation, thereby promoting disease resolution. We are focused on osteoarthritis as our main chronic inflammatory indication. Osteoarthritis is a degenerative joint disease, characterized by low-grade inflammation, that affects more than 32.5 million adults in the United States. Treatment of osteoarthritis represents a substantial unmet medical need, particularly non-invasive treatments, as current therapeutic options are largely limited to pain management, lifestyle modifications, and, ultimately, joint replacement surgery. We believe that negatively reprogrammed macrophages may be key contributors to disease severity in osteoarthritis and that the effective reprogramming of these negatively reprogrammed macrophages into their respective homeostatic states may facilitate disease resolution. In 2025, we made significant progress in our osteoarthritis clinical program, with a primary focus on the moderate to severe knee osteoarthritis multi-center Phase I/II clinical trial, which consists of two stages. The first stage of this trial was a Phase I safety run-in, open-label dose escalation phase to characterize the safety and tolerability of Allocetra™ injections to the target knee, in order to identify the dose and injection regimen for the subsequent Phase IIa stage. Following the completion of the Phase I safety run-in stage, we announced positive interim results, demonstrating statistically significant improvements in pain, function, and stiffness at both three- and six-months post-treatment. The Phase IIa stage is a double-blind, randomized, placebo-controlled multi-center trial, which aims to evaluate the efficacy and safety of Allocetra™ in patients with moderate to severe knee osteoarthritis. In addition, the study protocol was designed to efficiently detect a strong signal in a responder population to guide future development, and includes an interim statistical evaluation, conducted by an independent third party and blinded to the Company, to assess the potential value of enrollment of up to 50 patients in addition to the original randomized sample size of 130, and its marginal impact on the p-value of the statistical estimation of the total group and specifically to identify a potential responder sub-group. The trial’s key efficacy endpoints evaluate joint-pain and joint-function in comparison to placebo at three months, six months and 12 months post treatment. In April 2025, we completed the recruitment of the Phase IIa stage. In August 2025, we announced the three-month topline data, reporting that Allocetra™ demonstrated, in the primary age group (60+), substantial reduction in pain and improvement in function across multiple efficacy endpoints that were evaluated, compared to placebo. The analysis revealed a robust positive correlation between patients’ age and the magnitude of the clinical effect and its statistical significance. In November 2025, we announced our six-month topline data, which re-affirmed the three-month results and substantiated the identification of a positive correlation between patients’ age and the magnitude of the clinical effect and its statistical significance. At six months, Allocetra™ continued to demonstrate substantial and durable reduction in pain and improvement in function across multiple efficacy endpoints evaluated in the primary age group (60+), as compared to placebo. For additional information, see below “Moderate to Severe Knee Osteoarthritis.” We are currently preparing to commence a Phase IIb global, multicenter, randomized, double-blind, placebo-controlled, multi-country trial to evaluate the efficacy and safety of intra-articular injections of Allocetra™ in age-related primary knee osteoarthritis, in patients with moderate to severe disease. In March 2026, we received FDA clearance of our IND application for the Phase IIb trial in the United States and we expect the trial to also be conducted in several European countries. The Phase IIb trial has been designed to be statistically powered to evaluate key efficacy endpoints, including change from baseline in pain and physical function compared with placebo, measured at three- and six-months following treatment. Additional endpoints include changes in quality-of-life measures and functional mobility assessments. We currently expect three and six-month topline data in the second quarter and third quarter of 2027, respectively. 52 Additionally, a long-term follow-up investigator-initiated trial in end-stage knee osteoarthritis is ongoing, and a Phase I investigator-initiated trial in temporomandibular joint osteoarthritis is also ongoing. All planned and expected timelines for the execution of our clinical trials are subject to certain risks and uncertainties. For further discussion of risks and uncertainties related to our clinical trials, see Item 3.D. “Risk Factors” above. In addition, following the finalization of the Phase II trial evaluating Allocetra™ in patients with sepsis resulting from pneumonia, biliary, urinary tract, or peritoneal infections, in 2024, we completed all required operational activities in connection with the trial’s close-out. We plan to seek potential external collaborations or out-licensing opportunities for the continued clinical development of Allocetra™ for use in patients with sepsis. Osteoarthritis Clinical Program Since our inception, due to its inherent properties, we have considered Allocetra™ as an innovative, highly differentiated modality for immune resolution across inflammatory and auto-immune indications. In September 2023, we initiated a clinical program in osteoarthritis, a degenerative disease characterized by low-grade inflammation that represents a substantial unmet medical need. The pathogenesis of osteoarthritis affects the entire joint, including cartilage, subchondral bone, and the joint capsule, further involving inflammation of the synovial lining tissue. Low-grade synovial inflammation has been implicated in the pathogenesis at both early and late stages of the disease. In osteoarthritis, levels of immune cells concentrate in the joint synovium, predominated by activated macrophages. Such pro-inflammatory macrophages release a broad spectrum of inflammatory factors and immune mediators into the synovial cavity, leading to chronic inflammatory conditions manifested by breakdown of the cartilage extracellular matrix and cartilage loss, as well as bone structure disruption. Since such pro-inflammatory macrophages play a crucial role in the initiation of osteoarthritis immunopathogenesis and the propagation of low-grade chronic inflammation, reprogramming them into pre-resolution macrophages is considered an emerging target for osteoarthritis treatment. We believe that Allocetra™, which targets macrophages and macrophage-associated inflammatory pathways, may be a promising therapeutic strategy in the treatment of osteoarthritis. The initiation of our osteoarthritis clinical program followed preclinical evidence demonstrating Allocetra’s™ potential mechanism of action in resolving chronic low-grade inflammation in joints affected by osteoarthritis. This was further supported by observed recovery in a case study involving a 70-year-old patient with Gorham-Stout syndrome, a rare disease characterized by destruction of osseous matrix and proliferation of vascular structures. The patient, who had experienced complete destruction and absorption of the shoulder joint, showed substantial improvement following five intra-articular Allocetra™ injections, with maintained improvement documented at a two-year follow-up. Moderate to Severe Knee Osteoarthritis In January 2024, following receipt of the approval of the IMOH, we initiated a Company-sponsored multi-center, multi-country, double-blinded, placebo-controlled and statistically powered Phase I/II trial to evaluate efficacy as well as safety of AllocetraTM in patients with moderate to severe knee osteoarthritis and potentially allow the Company to design and initiate a clinical confirmatory trial upon its completion. This Phase I/II clinical trial completed the enrollment of149 patients in two study stages. The first stage, which we successfully completed, was a Phase I safety run-in, open-label dose escalation phase to characterize the safety and tolerability of Allocetra™ injections to the target knee in order to identify the dose and injection regimen for the subsequent Phase II stage. The Phase II stage is a double-blind, randomized, placebo-controlled, multi-center trial. In addition to evaluating safety, the trial’s key efficacy endpoints will evaluate joint pain and joint function compared to placebo at three-, six- and 12-months post-treatment. The study design includes an interim statistical evaluation, conducted by an independent third party and blinded to the Company, to assess the potential value of enrolling up to 50 additional patients beyond the original randomized sample size of 130 and its marginal impact on the p-value of the statistical estimation for the total group and/or specific sub-group. In addition, the study incorporates an independent DSMB that reviews the safety data at three predefined time points. 53 In September 2024, we announced the recommendation by the independent DSMB to proceed with the randomized Phase II stage at the highest tested dose, as well as the Danish Medicines Agency’s authorization to initiate this next trial stage. In December 2024 and March 2025, we announced positive interim three-month and six-month efficacy data for the first 12 patients treated in the Phase I stage, demonstrating marked statistically significant improvements in all key efficacy endpoints. The three-month and six-month efficacy data included a 50% and 47% average pain reduction compared to baseline, respectively, as measured by the Numeric Rating Scale (NRS) pain screening tool. The reported reduction in pain measured by the NRS was consistent with data from the Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) questionnaire, a widely used, standardized tool for evaluating osteoarthritis of the knee and hip, assessing pain, stiffness, and physical function. The three-month and six-month efficacy data showed a 52% and 51% reduction in WOMAC pain, respectively, 42% and 46% improvements in functionality, respectively, and 37% and 40% improvements in stiffness, respectively, in each case compared to baseline. At both three-month and six-month, 83% of the patients were considered responders to treatment (Fig 1). No serious adverse events were reported, although some patients experienced mild, transient discomfort or swelling in the knee following injection. In April 2025, we announced the completion of the recruitment of all patients for the Phase II stage of the study. Overall, 134 patients were randomized and treated in the Phase II stage. In August 2025, the Company announced the three-month topline data, reporting that Allocetra™ demonstrated, in the primary age group (60+), a substantial reduction in pain and improvement in function across multiple efficacy endpoints that were evaluated, compared to placebo. The analysis revealed a robust positive correlation between patients’ age and the magnitude of the clinical effect and its statistical significance. In a substantial portion (54%) of the overall mITT population (69 of 129 patients aged 60, including 48 patients aged 64+), Allocetra™ showed a substantial, clinically meaningful, and highly statistically significant improvement over placebo across pain, function, and composite (pain + function + stiffness) endpoints. These are measured using WOMAC, a standard knee questionnaire evaluating pain, stiffness & physical function and translating those into numerical scores (scale 0-100). ● WOMAC Pain: mean change from baseline −27.82 (SD 20.76) with Allocetra™ versus −16.22 (SD 22.54) with placebo, a 72% relative improvement (p=0.03). ● WOMAC Function: mean change from baseline of −26.45 with Allocetra™ versus −12.63 with placebo, a 109% relative improvement (p=0.007). ● WOMAC Total (pain + function + stifness): mean change from baseline −26.43 with Allocetra™ versus −13.75 with placebo, a 92% relative improvement (p=0.012). In November 2025, the Company announced six-month topline data for the Phase II study stage, which re-affirmed the three-month results and substantiated the identification of a positive correlation between patients’ age and the magnitude of the clinical effect and its statistical significance. At six months, Allocetra™ continued to demonstrate substantial and durable reduction in pain and improvement in function across multiple efficacy endpoints evaluated in the primary age group (60+), as compared to placebo. Allocetra™ demonstrated a clinically meaningful improvement in pain and function, a composite endpoint which the Company expects will be a key endpoint in the follow-up pivotal studies, reaching statistical significance at three-month in patients aged 60+ (-26.8 points in the AllocetraTM treated group versus -13.4 points in the placebo group, corresponding to 99% improvement over the placebo group (scale 0-100; p=0.008), and at six-month in patients aged 61+ (-27.8 points in the AllocetraTM treated group versus -15.5 points in the placebo group corresponding to 80% improvement over the control group (scale 0-100; p=0.02).) Allocetra™ continued to demonstrate a favorable safety profile through the six-month follow-up, consistent with the previously reported three-month data. End Stage Knee Osteoarthritis During the third quarter of 2023, we announced the dosing of the first patient in a Phase I/II investigator-initiated clinical trial of AllocetraTM in patients with end-stage knee osteoarthritis who had been indicated for knee replacement surgery. In this study, patients with end-stage knee osteoarthritis were offered a single AllocetraTM injection to the knee as a potential “last resort” alternative for pain resolution and knee functionality in lieu of knee-replacement surgery. 54 In June 2024, we announced positive interim 3-month data for the trial, which showed a significant reduction in pain and a favorable safety profile. A total of nine patients were enrolled and treated with a single AllocetraTM injection to the knee and evaluated for at least three months following treatment. Patients reported pain using a scale of zero (0, representing no pain) to ten (10, representing maximum pain). At the three-month follow up, a substantial reduction (64%) in average reported pain was observed compared to baseline, with 89% (8/9) of treated patients reporting an improvement in their knee pain compared to their baseline pain prior to treatment, and 33% (3/9) of the patients reporting complete pain relief from an average pain level of 9 to a pain level of 0. During the three-month period post injection of AllocetraTM, only a single patient (1/9, 11%) decided to move forward with knee-replacement surgery, while 89% (8/9) of the patients decided not to proceed with such surgery (Fig 2). In all cases, dosing was successfully completed, and no severe related adverse events were reported following treatment. Recruitment to the study was completed and long-term follow up is ongoing. The study enrolled a total of 18 patients who were treated with a single or two injections of AllocetraTM to the afflicted knee. Patients are assessed for safety following dosing, and pain and function responses to treatment for up to 24 months following injection. Basal Thumb Osteoarthritis In June 2024, following approval by the IMOH, we announced the dosing of the first patient in an investigator-initiated, randomized, placebo-controlled Phase I/II trial evaluating the efficacy and safety of Allocetra™ following injection into patients with basal thumb joint (first carpometacarpal (CMC) joint) osteoarthritis, for which conventional therapies have failed. This Phase I/II investigator-initiated, randomized, placebo-controlled trial planned to recruit up to 46 patients and is composed of two stages. The Phase I stage would be a safety run-in, open-label dose escalation phase to characterize the safety and tolerability of Allocetra™ injection to patients with osteoarthritis of the first basal thumb joint (first CMC joint) of the target thumb who have failed conventional therapies, to identify the dose for the randomized stage. The Phase II stage would be a planned double-blind, randomized, placebo-controlled stage, which is expected to be initiated following the completion of the safety run-in stage and selection of the safe and tolerable dose. Up to 40 patients would be randomized in a 1:1 ratio for treatment with either AllocetraTM at the selected dose or placebo. The primary safety endpoint would measure the frequency and severity of adverse events and serious adverse events, and the efficacy endpoints would include assessments of change from baseline in pain and function for up to 12 months. Due to prioritization of the knee osteoarthritis program, the study was discontinued. Psoriatic Osteoarthritis In July 2024, we announced that the IMOH had authorized the initiation of a Company-sponsored Phase I clinical trial to evaluate the safety and tolerability of Allocetra™ following injection into an affected joint in patients with psoriatic arthritis. In November 2024, we announced the completion of dosing and initial follow-up period for the first patient in this Phase I clinical trial, and no safety concerns were recorded. The trial currently planned to recruit six patients who have insufficiently responded to conventional therapies for psoriatic arthritis. The primary safety endpoint would measure the frequency and severity of adverse events and serious adverse events, and secondary endpoints would include assessments of change from baseline in pain and other parameters of disease activity for up to 12 months following administration of Allocetra™. Due to prioritization of the knee osteoarthritis program, the study was discontinued. Temporomandibular Joint Osteoarthritis In December 2024, the IMOH authorized the initiation of an investigator-initiated Phase I trial to evaluate the safety, tolerability and initial efficacy of Allocetra™ for injection into the temporomandibular joint (“TMJ”) in patients suffering from TMJ osteoarthritis, which is being conducted by the Rheumatology Unit at Sheba Medical Center in collaboration with the Department of Oral and Maxillofacial Surgery. The Phase I trial aims to recruit six patients who have shown insufficient response to conventional treatments for TMJ osteoarthritis. The primary safety endpoint will measure the frequency and severity of adverse events and serious adverse events, and efficacy endpoints will assess changes from baseline in TMJ pain, joint functionality, and other disease parameters for up to 12 months following administration of Allocetra™. 55 In April 2025, we announced that dosing of the first patient was completed. The investigator-initiated trial continues to enroll patients and is assessing safety and efficacy. To date, four patients have received a single injection of Allocetra™. Patients are followed for 12 months to assess safety and efficacy. Sepsis Clinical Program In April 2024, we announced the 28-day topline data from the Phase II trial evaluating Allocetra™ in patients with sepsis. Stand-alone analysis of the Allocetra™-treated patients, of which 78% had septic shock and 58% had invasive ventilation at screening, demonstrated substantial reductions in SOFA scores and 65% reduction in overall mortality rate as compared with expected mortality based on real-world data and recent clinical sizeable studies in sepsis. By day 28, the analysis showed 90% reductions of SOFA scores for sepsis patients whose infection source was urinary tract, 68% for patients whose infection source was community-acquired pneumonia, and 36% for patients whose infection source was an internal abdominal infection. Relative analysis demonstrates a potential indication of effect of Allocetra™ as compared with placebo, in high-risk severe sepsis patient population, originating from UTIs. Up to an estimated 31% of sepsis cases start as UTIs, representing up to 9.8 million cases and up to 1.6 million deaths annually worldwide (G. Bonkat et. al. 2018), which represents a substantial potential market opportunity for Allocetra™. The 12-month follow-up data analysis demonstrated a long-term favorable safety profile of Allocetra™, with no additional insights from an efficacy perspective. The 12-month follow-up analysis demonstrated a continued favorable safety profile, as observed in the topline data, with no additional findings in the high-risk UTI-related sepsis group, as previously demonstrated in the 28-day topline data. We have completed all required operational activities in connection with the trial’s close-out. In light of market conditions, the Company’s limited cash availability and the substantial budget required for advancing to a follow-up clinical trial in patients with sepsis, the Company plans to seek potential external collaborations or out-licensing opportunities for the continued clinical development of Allocetra™ for use in patients with sepsis, instead of pursuing internal development. Competition The pharmaceutical and biotechnology industries are characterized by rapidly evolving technology, intense competition and a highly uncertain, costly and lengthy research and development process. Adequate protection of intellectual property, successful product development, adequate funding and retention of skilled, experienced and professional personnel are among the many factors critical to success in these industries. We believe that our product candidate offers key potential advantages over other drugs and therapies currently in use or in development that could enable our product candidate, if approved for the intended indications, to capture meaningful market share. See “Risk Factors—Risks Related to Our Business, Industry and Regulatory Requirements—It is possible that none of our product candidates will achieve commercial success in a timely and cost-effective manner, or ever” and “Risk Factors—Risks Related to Our Business, Industry and Regulatory Requirements—Our market is subject to intense competition. If we are unable to compete effectively, Allocetra™ or any other product candidate that we may develop may be rendered uncompetitive or obsolete.” 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. 56 Approximately 97% of the issued and outstanding share capital of Toleran is held by Hadasit Bio-Holdings Ltd., which was formerly a major shareholder. Hadasit Medical Research Services and Development Ltd. and Yissum Research and Development Company Ltd. In March 2006, Hadasit Medical Research Services and Development Ltd. and Yissum Research and Development Company Ltd. 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. 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, our former Chief Science & Medical Officer and currently a scientific advisor and consultant to the Company, is currently the Director of the Rheumatology Research Centre. Intellectual Property and Patents and Proprietary Rights The proprietary nature of, and protection for, our product candidates and our discovery programs, processes and know-how are important to our business. As of March 1, 2026, we owned or in-licensed issued patents and pending patent applications in various jurisdictions worldwide, including 15 issued patents (with terms ranging from 2025 to 2038) and four pending patent applications in the United States; seven issued patents (with terms ranging from 2026 to 2040) and one pending application in Israel; and five issued patents (with terms ranging from 2026 to 2040) and one pending patent applications with the European Patent Office (EPO). Additionally, patents have been issued and/or patent applications are pending in Australia, Canada, China, Hong Kong, and Korea. We have sought patent protection for certain methods of producing, freezing, and using autologous and allogeneic Allocetra™. We also intend to seek patent protection for our discovery programs, and any other inventions to which we have rights, where available and when appropriate. Our 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 our business. We also rely on trade secrets that may be important to the development of our business. 57 Our commercial success will substantially depend on obtaining and maintaining patent protection and trade secret protection for our current and future product candidates and the methods used to develop and manufacture them, as well as successfully defending these patents against third-party challenges. Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We believe that our patents do, and filed patent applications will, provide broad and comprehensive coverage for the use of Allocetra™ as a treatment for our key target clinical indications. However, the patent positions of biotechnology companies, such as ourselves, are generally uncertain and involve complex legal and factual questions. Our ability to maintain and solidify our proprietary position, if any, for the technology will depend on our success in obtaining effective claims and enforcing those claims once granted. There is no certainty that any of our pending patent applications will result in the issuance of any patents. Our issued patents and those that may be issued in the future, could be challenged, narrowed, circumvented or found to be invalid or unenforceable, which could limit our ability to stop competitors from marketing related products or the length of term of patent protection that we may have for our products. In addition, our competitors may independently develop similar technologies or duplicate any technology developed by us, and the rights granted under any issued or future patents may not provide us with any meaningful competitive advantages against these competitors. Furthermore, because of the extensive time required for development, testing and regulatory review of a potential product, before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of such patent. For further discussion of risks and uncertainties related to our intellectual property, see “Risk Factors—Risks Related to Our Intellectual Property” above. Trade Secrets In addition to owned and licensed patents, we rely on trade secrets and know-how to develop and maintain our competitive position. Trade secrets and know-how can be difficult to protect. We seek to protect our proprietary processes, in part, by confidentiality and intellectual property ownership and assignment agreements or provisions with certain of our employees, consultants, scientific advisors, contractors and commercial partners involved in research and development activities or who may otherwise have access to our confidential or proprietary information. These agreements are designed to protect our proprietary information. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know-how by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, such agreements or security measures may be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors or others, which would significantly affect our competitive advantage and have a material adverse effect on our business, results of operation and financial condition. See also “Risk Factors—Risks Related to Our Intellectual Property—Under applicable U.S. and Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.” Raw Materials, Suppliers and Manufacturing In order to produce Allocetra™, blood donations are collected from healthy donors through apheresis and then shipped to a manufacturing site for cryopreservation by trained personnel pursuant to cGMP requirements and otherwise in accordance with applicable FDA guidelines and our CMC protocols. The cells sourced for AllocetraTM then undergo quality control testing and are thawed and manipulated ex vivo by inducing apoptosis to retrieve and harvest stable early apoptotic cells. The agents used in the ex vivo manipulation for Allocetra™ are then washed and removed before the apoptotic cells are combined with a saline solution for delivery and injection in patients. We use standard collection equipment and procedures to collect blood for Allocetra™ production. Other than the blood collections, we believe that the raw materials required to manufacture our product candidates are readily available commodities commonly used in the pharmaceutical and biotechnology industries and are generally widely available from numerous suppliers at market prices. However, biologically sourced raw materials are subject to unique contamination risks and their use may be restricted in certain countries. See also “Risk Factors—Risks Related to our Business, Industry and Regulatory Requirements—Our manufacturing processes are complex, delicate and susceptible to contamination, and involve biological intermediates that are subject to stringent regulations,” and “Risk Factors—Risks Related to our Business, Industry and Regulatory Requirements—Our ability to produce safe and effective products depends on the safety of our blood supply against transmittable diseases.” 58 There can be no assurance that any of our product candidates, if approved, including Allocetra™, can be manufactured in sufficient commercial quantities, in compliance with regulatory requirements and at an acceptable cost. We and our any potential future contract manufacturers are, and will be, subject to extensive governmental regulation in connection with the manufacture of any pharmaceutical products. We and our future contract manufacturers must ensure that all of the processes, methods and equipment are compliant with our CMC and cGMP for drugs and biologics on an ongoing basis, as mandated by EMA and other applicable regulatory authorities, and conduct extensive audits of vendors, contract laboratories and suppliers. Clinical and Commercial Manufacturing We manufacture AllocetraTM at our existing cGMP facility in our Ness Ziona site to accommodate our current clinical supply demand. We produce AllocetraTM as a frozen formulation, providing long-term storage stability at -80oC using liquid nitrogen, which has resulted in substantial efficiencies in our manufacturing operations compared to our prior non-frozen formulation. Our frozen formulation allows us to stockpile AllocetraTM for both short- and long-term storage and effectively manage our clinical supply and reduce potential waste. Moreover, local administration of AllocetraTM directly into a target joint is given at lower doses compared to systemic administration. In connection with the ongoing osteoarthritis clinical trials, in which AllocetraTM is administered directly into a target joint, we can manufacture a significant amount of AllocetraTM from a single doner for local administration and can better accommodate the clinical manufacturing demand utilizing a lower manufacturing capacity. Therefore, we expect to have sufficient manufacturing capacity to support our clinical trials for osteoarthritis. Contract Research Organizations We intend to outsource certain future clinical trial activities, including the administration of treatments, to CROs. Such clinical CROs must comply with guidelines from the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, which attempt to harmonize the FDA and the EMA regulations and guidelines. We intend to create and implement the development plans and manage the CROs according to the specific requirements of the product candidate under development. To the extent clinical research is conducted by the CROs (or us in the future), compliance with certain federal regulations, including but not limited to 21 C.F.R. parts 50, 54, 56, 58 and 312, which pertain to, among other things, informed consent, financial conflicts of interest by investigators, IRBs, good laboratory practices, GCP and submitting IND applications, may be required. Marketing, Sales and Commercialization Given our stage of development, we do not have any internal sales, marketing or distribution infrastructure or capabilities. If we receive regulatory approval for any of our product candidates, we intend, as appropriate, to pursue commercialization relationships, including strategic alliances and licensing, with biotechnology companies and other strategic partners that are equipped to market and sell our products. In addition, we may out-license some or all of our worldwide patent rights to more than one party to achieve the fullest development, marketing and distribution of any products we develop. Over the longer term, we may consider building an internal marketing, sales and commercial infrastructure. Environmental Matters We, our agents and our service providers, including our manufacturers, are subject to various environmental, health and safety laws and regulations, including those governing air emissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous and biological materials and wastes and the cleanup of contaminated sites. We believe that our business, operations and facilities, including, to our knowledge, those of our agents and service providers, are currently operated in compliance in all material respects with applicable environmental and health and safety laws and regulations. Based on information currently available to us, we do not expect environmental costs and contingencies to have a material adverse effect on us However, significant expenditures could be required in the future if we, our agents or our service providers are required to comply with new or more stringent environmental or health and safety laws, regulations or requirements. 59 Regulation of our Clinical Operations Clinical trials, the drug approval process and the marketing of drugs are extensively regulated in the United States and in all other major foreign countries. Governmental authorities in the United States (including federal, state and local authorities) and in other countries, extensively regulate, among other things, the manufacturing, research and clinical development, marketing, labeling and packaging, storage, distribution, post-approval monitoring and reporting, advertising and promotion, pricing and export and import of pharmaceutical products, such as those we are developing. The process for obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. European Union/Rest of World Government Regulation In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials. In the European Union, for example, a clinical trial application (“CTA”), must be submitted for each clinical protocol to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is accepted in accordance with a country’s requirements, the clinical trial may proceed. The requirements and process governing the conduct of clinical trials vary from country to country. In all cases, the clinical trials are conducted in accordance with GCP, the applicable regulatory requirements, and the ethical principles that have their origin in the Declaration of Helsinki. To obtain regulatory approval of an investigational medicinal product under European Union regulatory systems, we must submit a marketing authorization application. The content of the NDA or BLA filed in the United States is similar to that required in the European Union, with the exception of, among other things, country and EU-specific document requirements. For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing product licensing, pricing, and reimbursement vary from country to country. Countries that are part of the European Union, as well as countries outside of the European Union, have their own governing bodies, requirements, and processes with respect to the approval of pharmaceutical products. If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Authorization Procedures in the European Union Medicines can be authorized in the European Union by using either the centralized authorization procedure or national authorization procedures. Centralized procedure. The European Commission implemented the centralized procedure for the approval of human medicines to facilitate marketing authorizations that are valid throughout the EEA which is comprised of the 27 member states of the European Union plus Norway, Iceland, and Lichtenstein. This procedure results in a single marketing authorization issued by the European Commission that is valid across the EEA. The centralized procedure is compulsory for human medicines that are: derived from biotechnology processes, such as genetic engineering; contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions; and officially designated orphan medicines. 60 For medicines that do not fall within these categories, an applicant has the option of submitting an application for a centralized marketing authorization to the EMA following a favorable eligibility request by the EMA, as long as the medicine concerned is a significant therapeutic, scientific or technical innovation, or if its authorization would be in the interest of public health. National authorization procedures. There are also two other possible routes to authorize medicinal products in several European Union countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure: Decentralized procedure. Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one European Union country of medicinal products that have not yet been authorized in any European Union country and that do not fall within the mandatory scope of the centralized procedure. Mutual recognition procedure. In the mutual recognition procedure, a medicine is first authorized in one European Union Member State, in accordance with the procedure laid down in the EU directive 2001/83 as amended and implemented into national legislation. Following this, further marketing authorizations can be sought from other European Union countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization. In some cases, a Pediatric Investigation Plan, or PIP, and/or a request for waiver or deferral, is required for submission prior to submitting a marketing authorization application. A PIP describes, among other things, proposed pediatric trials and their timing relative to clinical trials in adults. New Chemical Entity Exclusivity In the European Union, new chemical entities, sometimes referred to as new active substances or new molecular entities, as well as submissions following Article 8.3 of Directive 2001/83 as amended, qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity. This data exclusivity, if granted, prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic (abbreviated) application for eight years, after which generic marketing authorization can be submitted, and the innovator’s data may be referenced, the product may be approved but must not be launched prior to the end of the 10 years data exclusivity period. The overall ten-year period will be extended by one year if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, is held to bring a significant clinical benefit, in comparison with existing therapies, or by six months if there is a pediatric development in accordance with a PIP has been performed. Orphan Drug Designation and Exclusivity In the European Union, the EMA’s COMP grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union and for which no satisfactory method of diagnosis, prevention, or treatment has been authorized (or the product would be a significant benefit to those affected, i.e. where a prior approval was granted). Additionally, designation is granted for products intended for the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the medicinal product. In the European Union, orphan drug designation entitles a party to financial incentives such as reduction of fees or fee waivers and 10 years of market exclusivity is granted following medicinal product approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. This period can be prolonged to 12 years in case a pediatric development has been performed following an agreed PIP. 61 Orphan drug designation must be requested and granted before submitting an application for marketing approval. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. Exceptional Circumstances/Conditional Approval Orphan drugs or drugs with unmet medical needs may be eligible for European Union approval under exceptional circumstances or with conditional approval. Approval under exceptional circumstances is applicable to all applications including orphan products and is used when an applicant is unable to provide comprehensive data on the efficacy and safety under normal conditions of use because the indication for which the product is intended is encountered so rarely that the applicant cannot reasonably be expected to provide comprehensive evidence, when the present state of scientific knowledge does not allow comprehensive information to be provided, or when it is medically unethical to collect such information. Conditional marketing authorization is applicable to orphan medicinal products, medicinal products for seriously debilitating or life-threatening diseases, or medicinal products to be used in emergency situations in response to recognized public threats. Conditional marketing authorization can be granted on the basis of less complete data than is normally required in order to meet unmet medical needs and in the interest of public health, provided the risk-benefit balance is positive, it is likely that the applicant will be able to provide the comprehensive clinical data after approval, and unmet medical needs will be fulfilled. Conditional marketing authorization is subject to certain specific obligations to be reviewed annually. The initial approval needs to be renewed annually. This renewal is controlled by the CHMP and, if not granted, may lead to cessation of the marketing authorization at the end of this particular year. Accelerated Review Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of a marketing authorization application is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the EMA’s Committee for Medicinal Products for Human Use, or CHMP). Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation. In this circumstance, EMA ensures that the opinion of the CHMP is given within 150 days, excluding clock stops. U.S. Government Regulation In the United States, the FDA regulates drugs and biologics under the Federal Food, Drug, and Cosmetic Act (the “FDCA”), and related regulations, and the Public Health Service Act (the “PHSA”) and its implementing regulations. In addition, drug innovation, prescribing and reimbursement are influenced by Titles XVIII and XIX of the Social Security Act (commonly referred to as Medicare and Medicaid, respectively) and the Patient Protection and Affordable Care Act, 42 U.S.C. § 18001, as amended, and their implementing regulations. FDA approval is required before any new drug or biologic candidate or dosage form, including a new use of a previously approved drug, can be marketed in the United States. We intend to submit a BLA in the United States. Failure to comply with the applicable United States regulatory requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an IRB of a clinical hold on trials, the FDA’s refusal to approve pending applications or supplements, license suspension or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, other corrective action, injunctions, fines, civil penalties or criminal prosecution. Any agency or judicial enforcement action could have a material adverse effect on us. The FDA and foreign regulatory authorities impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, distribution, record keeping, approval, advertising and promotion of our products. The FDA’s policies may change and additional government regulations may be enacted that could prevent or delay regulatory approval of our platforms and candidate products or any future product candidates or approval of new disease indications or label changes. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad. 62 Marketing Approval The process required by the FDA before a product candidate may be marketed in the United States generally involves the following: ● completion of extensive nonclinical laboratory tests and nonclinical animal studies, all performed in accordance with cGMP and current good laboratory practices, guidance and regulations; ● submission to the FDA of an investigational new drug (“IND”), application which must become effective before human clinical trials may begin and must be updated annually; ● approval by an IRB or ethics committee representing each clinical site before each clinical trial may be initiated; ● performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each proposed indication; ● preparation of, and submission to the FDA, an NDA or BLA after completion of all clinical trials; ● potential review of the product application by an FDA Advisory Committee, where appropriate and if applicable; ● a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review; ● satisfactory completion of FDA pre-approval inspection of the manufacturing facilities where the proposed product is produced to assess compliance with cGMP; and ● FDA review and approval of an NDA or BLA prior to any commercial marketing or sale of the drug in the United States. The testing and approval processes require substantial time and financial resources, and we cannot be certain that any approvals for our candidate products will be granted on a timely basis, if at all. An IND is a request for authorization from the FDA to administer an investigational new drug or biologic product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for human studies. The IND also includes results of in vitro and in vivo studies and animal testing results assessing the toxicology, pharmacokinetics and pharmacodynamic characteristics of the product; chemistry, manufacturing and controls information; and any available human data or literature to support the use of the investigational new drug. An IND must become effective before human clinical trials may begin. An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to the proposed clinical trials. In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before clinical trials can begin. Accordingly, submission of an IND may or may not result in the FDA allowing clinical trials to commence. We will need to successfully complete clinical trials in order to be in a position to submit a BLA to the FDA. Our planned future clinical trials for our candidate products may not begin or be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including: ● not obtaining regulatory approval to commence a trial; ● not reaching agreement with third-party clinical trial sites and their subsequent performance in conducting accurate and reliable studies on a timely basis; 63 ● not obtaining IRB approval to conduct a trial at a prospective site; ● recruiting an insufficient number of patients to participate in a trial; ● inadequate supply of the drug; and ● clinical adverse finding(s) during the trial itself. We must reach an agreement with the FDA on the proposed protocols for our future clinical trials in the United States. A separate submission apart from an IND application must be made for each clinical trial to be conducted during product development. Further, an independent IRB for each site proposed to conduct the clinical trial must review and approve the plan for any clinical trial before it commences at that site. Informed consent must also be obtained from each trial subject. Regulatory authorities, an IRB or the sponsor, may suspend or terminate a clinical trial at any time on various grounds, including a finding that the participants are being exposed to an unacceptable health risk. Clinical trials Clinical trials involve the administration of the product candidate to human subjects under the supervision of qualified investigators in accordance with current clinical practices (“GCP”), which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the efficacy criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. Additionally, approval must also be obtained from each clinical trial site’s IRB before the studies may be initiated and the IRB must monitor the trial until completed. There are also requirements governing the reporting of ongoing clinical trials and clinical trial results to public registries. Our objective is to conduct clinical trials for our candidate products and, if those trials are successful, seek marketing approval from the FDA and other worldwide regulatory bodies. For purposes of NDA approval, human clinical trials are typically conducted in phases that may overlap. ● Phase 1. The drug or biologic is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients; ● Phase 2. This phase involves trials in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage; ● Phase 3. This phase involves trials undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population, often at geographically dispersed clinical trial sites. These trials are intended to establish the overall benefit/risk profile of the product and provide an adequate basis for product labeling; and ● Phase 4. In some cases, the FDA may condition approval of an NDA or BLA for a product candidate on the sponsor’s agreement to conduct additional clinical trials after approval. In other cases, a sponsor may voluntarily conduct additional clinical trials after approval to gain more information about the drug. Such post-approval studies are typically referred to as Phase 4 clinical trials. A pivotal trial is a clinical trial that adequately meets regulatory agency requirements for the evaluation of a drug candidate’s efficacy and safety such that it can be used to justify the approval of the product. Generally, pivotal trials are Phase 3 trials, but the FDA may accept results from Phase 2 trials if the trial design provides a well-controlled and reliable assessment of clinical benefit, particularly in situations where there is an unmet medical need and the results are sufficiently robust. 64 The FDA, the IRB, or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a DSMB or Committee. This group provides oversight and assessment of designated milestones based on access to certain data during the conduct of the trial. We may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate. All of these trials must be conducted in accordance with GCP requirements in order for the data to be considered reliable for regulatory purposes. The clinical trial process can take three to ten years or more to complete and there can be no assurance that the data collected will support FDA approval or licensure of the product. Government regulation may delay or prevent marketing of a product candidate or new drugs for a considerable period of time and impose costly procedures upon our activities. We cannot be certain that the FDA or any other regulatory agency will grant approvals for a product candidate on a timely basis, if at all. Success in early stage clinical trials does not ensure success in later stage clinical trials. Data obtained from clinical activities is not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The NDA and BLA Approval Process Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational new drug product information is submitted to the FDA in the form of an NDA, and a BLA for new biologics, requesting approval to market the product for one or more indications. Under federal law, the submission of most NDAs and BLAs is subject to an application user fee. For the FDA’s fiscal year 2024, the application user fee with clinical data was $4,048,695 and for 2025 the fee is $4,310,002. Additionally, the sponsor of an approved NDA or BLA is also subject to annual product and program user fees. For the FDA’s fiscal year 2024, these program fees were $416,734 per product and for 2025, they are $403,889 per product. These fees are typically increased annually. Applications for orphan drug products are exempted from these user fees and may be exempted from product and establishment user fees, unless the application includes an indication for other than a rare disease or condition. An NDA and BLA must include all relevant data available from pertinent nonclinical and clinical trials, regardless of the results or findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling, among other things. Data is generated from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or in certain instances, from other sources, including trials initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational new drug product to the satisfaction of the FDA. The FDA will initially review the NDA or BLA for completeness before it accepts it for filing. The FDA has 60 days from receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review. After the NDA or BLA submission is accepted for filing, the FDA reviews the NDA or BLA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. The FDA may refer applications for novel drug products or drug products that present difficult questions of safety or efficacy to an Advisory Committee, typically a panel that includes independent clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and, if so, under what conditions. The FDA is not bound by the recommendations of an Advisory Committee, but it considers such recommendations carefully when making decisions. 65 Upon the request of an applicant, the FDA may grant a Priority Review designation to a product, which sets the target date for FDA action on the application at six months, rather than the standard ten months. Priority review is given where preliminary assessments indicates that a product, if approved, has the potential to provide a significant improvement compared to marketed products or offers a therapy where no satisfactory alternative therapy exists. Priority Review designation does not alter the scientific/medical standard for approval or the quality of evidence necessary to support approval. The FDA is required to complete its review in a certain amount of time, for which the user fees are paid to help with the costs of the evaluation. However, FDA and the sponsor can agree to extend this review time. After the FDA completes its review of an NDA or BLA, it will communicate to the sponsor that the drug or biologic will either be approved, or it will issue a Complete Response Letter to communicate that the NDA or BLA will not be approved in its current form and inform the sponsor of changes that must be made or additional clinical, nonclinical or manufacturing data that must be received before the application can be approved, with no implication regarding the ultimate approvability of the application. Before approving an NDA or BLA, the FDA will typically inspect the facilities at which the drug substance or drug product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or BLA, the FDA may inspect one or more clinical sites to assure compliance with GCPs. If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, it typically will outline the deficiencies and often will request additional testing or information. This may significantly delay further review of the application. If the FDA finds that a clinical site did not conduct the clinical trial in accordance with GCP, the FDA may determine the data generated by the clinical site should be excluded from the primary efficacy analyses provided in the NDA or BLA. Additionally, notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. The testing and approval process for a drug requires substantial time, effort and financial resources and this process may take several years to complete. Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products. The FDA may require, or companies may pursue, additional clinical trials after a product is approved. These so-called Phase 4 trials may be made a condition to be satisfied for continuing drug approval. The results of Phase 4 trials can confirm the effectiveness of a product candidate and can provide important safety information. In addition, the FDA now has express statutory authority to require sponsors to conduct post-market trials to specifically address safety issues identified by the agency. Any approvals that we may ultimately receive could be withdrawn if required post-marketing trials or analyses do not meet the FDA requirements, which could materially harm the commercial prospects for our candidate products. The FDA also has authority to require a Risk Evaluation and Mitigation Strategy (“REMS”), from sponsors to ensure that the benefits of a drug or biological product outweigh its risks. A sponsor may also propose a REMS as part of the NDA or BLA submission. The need for a REMS is determined as part of the review of the NDA or BLA. Based on statutory standards, elements of a REMS may include “Dear Doctor” letters, a “Medication Guide”, more elaborate targeted educational programs and in some cases restrictions on distribution. These elements are negotiated as part of the NDA or BLA approval, and in some cases if consensus is not obtained until after the Prescription Drug User Fee Act review cycle, the approval date may be delayed. Once adopted, REMS are subject to periodic assessment and modification. 66 Even if a product candidate receives regulatory approval, the approval may be limited to specific disease states, patient populations and dosages, or might contain significant limitations on use in the form of warnings, precautions or contraindications, including Black Box Warnings, or in the form of risk management plans, restrictions on distribution, or post-marketing trial requirements. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or complete withdrawal of the product from the market. Delay in obtaining, or failure to obtain, regulatory approval for our candidate products, or obtaining approval but for significantly limited use, would harm our business. In addition, we cannot predict what adverse governmental regulations may arise from future U.S. or foreign governmental action. FDA Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, changes to the approved product or the addition of new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data. Drug sponsors and their manufacturers are subject to periodic unannounced inspections by the FDA and state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. We rely, and expect to continue to rely, on third parties for the production of clinical quantities of our current product candidate, and expect to rely in the future on third parties for the production of commercial quantities. Future FDA and state inspections may identify compliance issues at our facilities or at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. In addition, discovery of previously unknown problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved NDA or BLA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of a requirement to conduct post-market trials or clinical trials to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, but not limited to the following: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product license approvals; ● injunctions or the imposition of civil or criminal penalties; or ● product seizure or detention, or refusal to permit the import or export of products. 67 The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market. Drugs and biologics may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant enforcement and product liability exposure. Orphan Drug Designation and Exclusivity The FDA may grant orphan drug designation to drugs and biologics intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making the drug or biologic for this type of disease or condition will be recovered from sales in the United States. Orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and FDA user-fee waivers. In addition, if a product receives FDA approval for the indication for which it has orphan designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity. Orphan drug designation does not affect the regulatory review standards or shorten the review period. Designation does not imply FDA approval, and it is possible a company may, in certain cases, lose designation before a product’s approval and, thus, may not obtain orphan drug exclusivity. Pharmaceutical Coverage, Pricing and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any drug or biologic products for which we may obtain regulatory approval. In the United States and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payers. Third-party payers include government authorities, managed care providers, private health insurers and other organizations. If we obtain regulatory approval for our products, third-party payers may not provide coverage for our products, or may limit coverage to specific drug or biologic products on an approved list, or formulary, which might not include all of the FDA-approved drugs and biologics for a particular indication. Moreover, a payer’s decision to provide coverage for a drug or biologic product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. Third-party payers are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. To obtain coverage and reimbursement for any product that receives regulatory approval for commercial sale, we may need to provide supporting scientific, clinical and cost-effectiveness data, which may be difficult and costly to obtain. Our current or any future product candidates may not be considered medically necessary or cost-effective. If third-party payers do not consider a product to be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products at a profit. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of health care costs, including price controls, reporting requirements, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. By way of example, the ACA contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Adoption of additional government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals. 68 In the U.S., judicial challenges as well as legislative initiatives to modify, limit, or repeal the ACA have been initiated and continue. The extent to which any repeal or replacement of elements of the ACA, or other legislation, would affect our ability to obtain regulatory approval for the sale of Allocetra™, or the prices and net revenues from its sale is unknown at the time of this filing and represent an additional uncertainty. In the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules, legislation and control of national health care systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed to by the government. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country. In Canada, the federal government, provinces and territories provide coverage to about one third of residents through publicly financed programs. Both the federal and provincial governments play a role in regulating drug prices and reimbursement. The prices of patented drugs are regulated at the federal level by the Patented Medicine Prices Review Board, which ensures that prices are not excessive. Also, drugs must be approved at the provincial level in order to be covered under provincial health insurance systems. Once Health Canada has approved a drug for use, the country’s public drug plans must decide if the drug will be eligible for public reimbursement. The Canadian Agency for Drugs and Technologies in Health (“CADTH”), an independent non-profit agency has a mandate to provide advice and evidence-based information about the effectiveness of drugs and other health technologies to Canadian health care decision makers. CADTH implements a Common Drug Review (“CDR”) process to provide formulary recommendations for all provinces except Quebec. Through the CDR process, CADTH conducts evaluations of the clinical, economic, and patient evidence on drugs, and uses this evaluation to provide reimbursement recommendations and advice to Canada’s federal, provincial, and territorial public drug plans, with the exception of Quebec. About two-thirds of Canada’s residents are covered for prescription drugs by private insurance. Private plans establish their own lists of covered drugs. The marketability of any products for which we receive regulatory approval for commercial sale may suffer if governmental and other third-party payers fail to provide adequate coverage and reimbursement. In addition, there is an increasing emphasis on cost containment measures in the United States and other countries, which we expect will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Other Healthcare Laws and Compliance Requirements If we obtain regulatory approval for our current or any future product candidates, we may be subject to various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce or reward, or in return for, the referral of an individual, or the purchase, order or recommendation of any good, item or service reimbursable under a federal healthcare program, such as Medicare and Medicaid; ● the federal physician self-referral prohibition law, or Stark Law, which prohibits, among other things, a physician (defined to include a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor) from referring Medicare and Medicaid patients to certain types of entities with which the physician or any of the physician’s immediate family members have a financial relationship; 69 ● federal civil and criminal false claims laws and civil monetary penalty laws, including the False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from the federal government, including Medicare, Medicaid, or other third-party payers, that are false or fraudulent; ● federal health care fraud, which imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, and for knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services; ● the federal transparency laws, including the physician sunshine provisions of the Affordable Care Act, that requires certain pharmaceutical manufacturers to disclose certain payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and their family members; ● the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, which imposes certain requirements relating to the privacy and security of individually identifiable health information; ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and ● the FCPA, which prohibits companies from making improper payments to foreign government officials and other persons for the purpose of obtaining or retaining business. In the United States, the research, manufacturing, distribution, sale and promotion of drug and biologic products and medical devices are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare& Medicaid Services, other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice, state Attorneys General, and other federal, state and local government agencies. For example, sales, marketing and scientific/educational grant programs must comply with, among others, the federal Anti-Kickback Statute, the Stark Law, the federal False Claims Act, privacy and security regulations promulgated under HIPAA, and similar state laws, as applicable. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws. The ACA broadened the reach of the fraud and abuse laws by, among other things, amending the intent requirement of the federal Anti-Kickback Statute and the applicable criminal healthcare fraud statutes contained within 42 U.S.C. §1320a-7b. Pursuant to the statutory amendment, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. In addition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act (discussed below) or the civil monetary penalties statute. Many states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only federal healthcare programs such as the Medicare and Medicaid programs. Safeguards we implement to prohibit improper payments or offers of payments by our employees, consultants, and others may be ineffective, and violations of the fraud and abuse laws, the FCPA and similar laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, any of which would likely harm our reputation, business, financial condition and result of operations. 70 If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, damages, fines, disgorgement, contractual remedies, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. Labeling, Marketing and Promotion The FDA closely regulates the labeling, marketing and promotion of drugs and biologics. While doctors are free to prescribe any drug or biologic approved by the FDA for any use, a company can only make claims relating to safety and efficacy of a drug that are consistent with FDA approval, and the company is allowed to actively market a drug or biologic only for the particular use and treatment approved by the FDA. In addition, any claims we make for our products in advertising or promotion must be appropriately balanced with important safety information and otherwise be adequately substantiated. Failure to comply with these requirements can result in adverse publicity, enforcement letters, such as publicly-posted warning letters, corrective advertising, injunctions and potential civil and criminal penalties. Government regulators recently have increased their scrutiny of the promotion and marketing of drugs and biologics. These federal enforcement actions can also potentially lead to state actions and product liability claims, as well as competitor challenges of deceptive advertising. Other Regulations We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with such laws and regulations now or in the future. Israel Clinical Testing in Israel In order to conduct clinical testing on humans in the State of Israel, special authorization must first be obtained from the ethics committee and general manager of the institution in which the clinical trials are scheduled to be conducted, as required under the Guidelines for Clinical Trials in Human Subjects implemented pursuant to the Israeli Public Health Regulations (Clinical Trials in Human Subjects), as amended from time to time, and other applicable legislation. These regulations require authorization by the institutional ethics committee and general manager as well as from the IMOH, except in certain circumstances, and in the case of genetic trials, special fertility trials and complex clinical trials, an additional authorization of the IMOH’s overseeing ethics committee. The institutional ethics committee must, among other things, evaluate the anticipated benefits that are likely to be derived from the project to determine if it justifies the risks and inconvenience to be inflicted on the human subjects, and the committee must ensure that adequate protection exists for the rights and safety of the participants as well as the accuracy of the information gathered in the course of the clinical testing. Since we perform a portion of the clinical trials on certain of our therapeutic candidates in Israel, we are required to obtain authorization from the ethics committee and general manager of each institution in which we intend to conduct our clinical trials, and in most cases, from the IMOH. 4.C. Organizational Structure We have the following wholly owned subsidiaries: (i) Enlivex Therapeutics R&D Ltd., a company organized under the laws of the State of Israel; (ii) Enlivex Therapeutics Inc., a Delaware corporation; (iii) Enlivex Therapeutics RDO Ltd., a company organized under the laws of the State of Israel; and (iv) Enlivex Poland Limited Liability Company, a company organized under the laws of Poland. 71 4.D. Property, Plants and Equipment Our corporate headquarters are located at 14 Einstein Street, Ness Ziona, Israel 7403618, where we lease approximately 420 square meters of space under an agreement with a current term through August 2028. The facility includes office space, laboratories and cGMP clean rooms, in which we manufacture clinical batches to support our clinical trials in Israel and the EU. In October 2020, we entered into a lease agreement for additional office space and a laboratory at our Ness Ziona, Israel facility, of approximately 421 square meters of space. The lease for this space expired on September 30, 2025, and we extended the lease for an additional 36-month period, provided that we have the right to terminate the lease on September 30, 2026 upon at least 60 days prior written notice. We believe that these facilities are suitable and adequate for our current needs. In July 2021, we entered into an additional lease agreement for approximately 455 square meters of office space in an adjacent building in Ness Ziona, Israel. The lease for this office space expires on October 31, 2026, and we have the option to extend the lease for an additional 22-month period. As part of our strategic reprioritization plan announced in September 2023, we decided in 2024 to sell the lease rights under such lease agreement, along with the leasehold improvements installed by us in the leased property. On January 29, 2025, we completed the sale of this group of assets, which included the right-of-use asset for this leased property, the leasehold improvements installed in the property, and certain laboratory equipment, for a total amount of NIS 100,000 (approximately $27,000). In September 2021, we entered into a lease agreement (the “Lease Agreement”) for a 2,500 square meter property in Yavne, Israel to construct a new 1,600 square meter facility for the manufacture of Allocetra™, which was completed in the fourth quarter of 2022. As part of our strategic reprioritization plan adopted in September 2023, we determined to sell such leased manufacturing facility, together with equipment installed by us in the Yavne facility (the “Equipment”), and assign the Lease Agreement. On March 31, 2024, we entered into an agreement (the “Yavne Facility Sale Agreement”) with BioHarvest Ltd., an Israeli company (the “purchaser”), pursuant to which the purchaser agreed to acquire the Equipment and assume all of our obligations under the Lease Agreement, effective as of April 1, 2024, for an aggregate purchase price of NIS 13.0 million (approximately $3.5 million). The purchase price was paid in installments, consisting of an initial payment of NIS 4.0 million (approximately $1.08 million), which was paid on April 2, 2024, and 24 equal monthly installment payments of NIS 375,000 (approximately $102,000, which commenced on April 1, 2024, with the final installment paid on March 1, 2026. As of December 31, 2025, the Company had received a total of NIS 12,250,000 million (approximately $3.4 million) under the Yavne Facility Sale Agreement, and the entire NIS 13.0 million has been paid as of the date hereof. Pursuant to the Yavne Facility Sale Agreement, title to the Equipment transferred to the purchaser upon full payment of the total purchase price, but risk of loss to the Equipment passed to the purchaser on April 1, 2024. Geographical Location of Non-Current Assets The following table presents the geographical location of our non-current assets: Geographical Location For the Year Ended December 31, 2025 Percent (%) Assets (U.S.$) Non-Current Assets* Held in United States via U.S custodians 99.97 % 582,508 Israel 0.03 % 1,312 Total Assets 100.00 % 583,820 * Non-current assets consist of property and equipment, intangible assets, and other non-current assets.