Research and development expenses for the year ended December 31, 2011 were NIS 42.6 million ($11.2 million), a decrease of NIS 12.4 million ($3.2 million), or 22%, compared to NIS 55.0 million ($14.4 million) for the year ended December 31, 2010. Research and development expenses for the 2010 period included non-recurring payments to the OCS of NIS 17.4 million ($4.6 million) which were a repayment of funds previously received from the OCS in respect of BL-1020. Those funds had been previously reflected in prior periods as a reduction in research and development expenses. Without regard to these non-recurring payments, research and development expenses for the year ended December 31, 2011 increased by NIS 5.1 million ($1.4 million), or 14%, over the year ended December 31, 2010. The increase resulted primarily from the commencement of the CLARITY clinical trial in respect of BL-1020 at the end of June 2011.

Sales and marketing expenses for the year ended December 31, 2011 were NIS 3.3 million ($0.9 million), a decrease of NIS 1.3 million ($0.3 million), or 28%, compared to NIS 4.6 million ($1.2 million) for the year ended December 31, 2010. The decrease resulted primarily from a shorter period of time devoted to strategic partnering efforts in connection with BL-1020 during 2011 as compared to 2010, as well as from a reduction in expenses due to the transfer of our business development activities from the U.S. to Israel during the first half of 2011 and the resulting closure of the Company’s U.S. office. Sales and marketing expenses are expected to increase in the foreseeable future, as the Company continues to increase its business development efforts in respect of BL-1020, as well as some of its other clinical stage assets.

General and administrative expenses for the year ended December 31, 2011 were NIS 12.7 million ($3.3 million), a decrease of NIS 2.2 million ($0.6 million) or 15%, compared to NIS 14.9 million ($3.9 million) for the year ended December 31, 2010. The decrease resulted primarily from expenses associated with the Company’s proposed initial public offering in 2010.

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