S-1

As filed with the Securities and Exchange Commission on July 29, 2011

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

ARGOS THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	2834	56-2110007
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

4233 Technology Drive

Durham, North Carolina 27704

(919) 287-6300

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

Jeffrey Abbey

Chief Executive Officer

4233 Technology Drive

Durham, North Carolina 27704

(919) 287-6300

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

Copies to:

David E. Redlick Stuart M. Falber Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 (617) 526-6000 Mitchell S. Bloom Edward A. King Goodwin Procter LLP 53 State Street Boston, Massachusetts 02109 (617) 570-1000

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

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

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨             

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of  Securities To Be Registered	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee(2)
Common Stock, $0.001 par value per share	$86,250,000	$10,014

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

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

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

SUBJECT TO COMPLETION, DATED JULY 29, 2011

PROSPECTUS

             Shares

Common Stock

Argos Therapeutics, Inc. is offering              shares of its common stock. This is our initial public offering, and no public market currently exists for our common stock. We anticipate that the initial public offering price will be between $             and $             per share.

We have applied to have our common stock approved for listing on The NASDAQ Global Market under the symbol “ARGS.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 10.

	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to us	$	$

We have granted the underwriters an option for 30 days from the date of this prospectus to purchase up to                 additional shares of our common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock on or about                .

Lazard Capital Markets Canaccord Genuity

Needham & Company, LLC BMO Capital Markets

The date of this prospectus is             , 2011.

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		10
Special Note Regarding Forward-Looking Statements		41
Use of Proceeds		43
Dividend Policy		43
Capitalization		44
Dilution		46
Selected Consolidated Financial Data		49
Management’s Discussion and Analysis of Financial Condition and Results of Operations		51
Business		76
Management		113
Executive Compensation		119
Transactions with Related Persons		140
Principal Stockholders		146
Description of Capital Stock		152
Shares Eligible for Future Sale		157
Underwriting		160
Legal Matters		165
Experts		165
Where You Can Find More Information		165
Index to Consolidated Financial Statements		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus that we may authorize to be delivered to you. We have not authorized anyone to provide you with different information. We are offering to sell shares of our common stock, and seeking offers to buy shares of our common stock, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

Until             , 2011 (25 days after the commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside the United States: Neither we nor any of the underwriters have taken any action to permit a public offering of the shares of our common stock or the possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the “Risk Factors” section beginning on page 10 and our consolidated financial statements and the related notes appearing at the end of this prospectus, before making an investment decision.

Our Business

We are a biopharmaceutical company focused on the development and commercialization of fully personalized immunotherapies for the treatment of cancer and infectious diseases based on our proprietary technology platform called Arcelis^™. Using biological components obtained from each patient, our Arcelis-based immunotherapies employ a specialized white blood cell, called a dendritic cell, to activate an immune response that is specific to the patient’s disease. Our most advanced product candidate is AGS-003 for the treatment of metastatic renal cell carcinoma, or mRCC. We plan to initiate patient enrollment in a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib, an oral small molecule drug marketed under the trade name Sutent^® that is the current standard of care for mRCC, in the fourth quarter of 2011.

Renal cell carcinoma, or RCC, is the most common type of kidney cancer. According to the National Cancer Institute, there are approximately 61,000 new cases of kidney cancer each year in the United States. The National Comprehensive Cancer Network and the National Cancer Data Base, or NCDB, estimate that 90% of these new cases are RCC. According to the NCDB, 15% to 20% of these newly diagnosed RCC cases are mRCC. Additionally, patients initially diagnosed with early stage RCC may later present with mRCC.

We are also developing a second Arcelis-based product candidate, AGS-004 for the treatment of HIV. We are studying AGS-004 in a phase 2b clinical trial that is funded entirely by the National Institutes of Health, or NIH. In addition to our Arcelis-based product candidates, we are developing two other product candidates based on our expertise in dendritic cell biology: AGS-009, a monoclonal antibody for the treatment of lupus, which we are studying in a phase 1a clinical trial, and AGS-010, a preclinical biologic compound, which we are developing for the treatment of psoriasis and for organ transplantation.

Arcelis Technology Platform

We use our Arcelis platform to generate RNA-loaded dendritic cell immunotherapies using biological components derived from the individual patient to be treated. Specifically, we manufacture these personalized therapies using that patient’s disease sample, either tumor cells in the case of cancer or a blood sample containing virus in the case of infectious disease, and dendritic cells derived from the patient’s white blood cells. By using messenger RNA, or mRNA, from the patient’s own cancer cells or virus, our Arcelis platform yields a fully personalized immunotherapy that is designed to contain all of the patient’s disease-specific antigens and to elicit a rapid, broad and potent immune response that is specific to the patient’s own disease. Our Arcelis-based immunotherapies have been well tolerated in clinical trials in more than 100 patients with no serious adverse events attributed to our immunotherapies. We believe that our Arcelis platform can be used for a wide range of oncology and infectious disease indications.

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Our Development Programs

The following table summarizes our four development programs and their status. We currently hold all commercial rights to all four of these programs in all geographies.

Product Candidate	Description	Primary Indication(s)	Status
AGS-003	Arcelis-based fully personalized immunotherapy	mRCC	Planned pivotal phase 3 trial with initiation of enrollment expected in the fourth quarter of 2011
AGS-004	Arcelis-based fully personalized immunotherapy	HIV	Ongoing phase 2b trial with completion of enrollment expected in the fourth quarter of 2011
AGS-009	Anti-interferon-a monoclonal antibody	Lupus	Ongoing phase 1a trial with results expected in the fourth quarter of 2011
AGS-010	CD83 recombinant protein	Psoriasis; Organ transplantation	Preclinical

AGS-003.    We have tested AGS-003 in clinical trials in combination with sunitinib and as a monotherapy for the treatment of mRCC. In our phase 2 clinical trial of AGS-003 in combination with sunitinib, the combination therapy showed median progression free survival of 11.9 months in intermediate and poor risk patients that had a time from diagnosis to initiation of systemic therapeutic treatment of less than one year. This represented an approximately 50% extension over the eight month median progression free survival achieved by sunitinib alone in similar intermediate and poor risk patients in the pivotal phase 3 clinical trial of sunitinib as a monotherapy. Progression free survival is the length of time that passes after treatment begins and before the patient’s disease worsens or the patient dies, and has served as the primary endpoint in the pivotal phase 3 trials for five of the six products most recently approved by the FDA for the treatment of mRCC. We have submitted to the FDA for review a protocol for our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib compared to sunitinib plus placebo. Under this protocol, in order to achieve the primary endpoint of the trial, the data must demonstrate an increase of at least 30% in median progression free survival for the AGS-003 plus sunitinib arm compared to the sunitinib plus placebo control arm. We expect to initiate enrollment in this trial in the fourth quarter of 2011, complete enrollment in late 2013 and have data on the primary endpoint in mid-2014. In addition, under the protocol, the independent data monitoring committee will conduct two interim analyses of data from the trial to assess both safety and futility.

AGS-004.    We have completed two early stage clinical trials of AGS-004, and are currently conducting a phase 2b clinical trial that is funded entirely by the NIH. We expect to complete enrollment in this trial in the fourth quarter of 2011 and to complete primary endpoint analysis of the data from this trial in mid-2012. According to the World Health Organization, the number of people living with HIV in the world was approximately 33.3 million in 2009. The Henry J. Kaiser Family Foundation estimates that more than 1.1 million people are currently living with HIV in the United States. According to the Centers for Disease Control and Prevention, the number of new cases of HIV infection in the United States is expected to remain steady at about 55,000 cases per year for the next decade.

AGS-009 and AGS-010.    We are developing our other two product candidates based on our expertise in dendritic cell biology. We have completed enrollment in a phase 1a clinical trial of AGS-009, a monoclonal antibody for the treatment of lupus, and are planning to commence enrollment in a phase 1b clinical trial of this product candidate in the fourth quarter of 2011. We are continuing preclinical testing on AGS-010, a recombinant human soluble CD83 protein, for the treatment of psoriasis and for organ transplantation.

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Manufacturing

We currently manufacture our Arcelis-based product candidates at our single, centralized manufacturing facility located in Durham, North Carolina. To prepare for the commercial launch of AGS-003 and any other Arcelis-based products we develop, we plan to establish automated manufacturing processes based on existing functioning prototypes of automated devices and disposables and to identify, lease, build out and equip a new U.S. commercial manufacturing facility for this purpose. We have developed proprietary processes to generate Arcelis-based products that we believe will allow us to manufacture the drug product for all of North America at this one centralized facility. Our plan is to file our biologics license application, or BLA, for AGS-003 with the FDA using the automated manufacturing processes that we have developed. We rely on contract manufacturers for the production of AGS-009 and AGS-010 and do not plan to build our own manufacturing capacity for these product candidates.

Investment Highlights

We believe that the following are the key attributes of our Arcelis platform and our pipeline of product candidates:

• Regulatory pathway for FDA approval of an active immunotherapy.    We believe that the FDA’s approval of Dendreon Corporation’s Provenge^® for the treatment of prostate cancer, which represents the first U.S. approval of an active immunotherapy, establishes a regulatory pathway for FDA approval of additional active immunotherapies.

• Proprietary technology platform designed for fully personalized immunotherapies.    Using our Arcelis platform, we believe that we have the ability to develop fully personalized active immunotherapies for treating a wide range of cancers and infectious diseases. We also believe that our Arcelis platform provides us with competitive advantages over other immunotherapies in terms of product potency, manufacturing scalability and cost of goods.

• Near-term initiation of pivotal phase 3 trial of AGS-003 combination therapy.    Based on encouraging phase 2 progression free survival data in mRCC patients, we plan to commence enrollment in the fourth quarter of 2011 for our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib for the treatment of mRCC.

• Planned commercial scale manufacturing of our Arcelis-based product candidates using automated manufacturing processes.    We have developed detailed plans for a single, centralized U.S. commercial manufacturing facility and automated processes to enable manufacturing with a cost of goods for our fully personalized Arcelis-based products that we expect will be comparable to other biologics.

• Pipeline of additional product candidates that have the potential to be advanced using limited internal funding.    We believe that we can advance the development of our three product candidates other than AGS-003, each of which addresses a large market with significant unmet medical needs, through government or other third-party funding, including collaboration or license arrangements. Our current development work on our Arcelis-based HIV product candidate, AGS-004, is being funded entirely under a contract with the NIH.

• Experienced management team.    Our four most senior executives have a combined experience of over 70 years in the biopharmaceutical industry, and each has worked at our company for at least seven years.

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Our Strategy

Our goal is to build a commercial biopharmaceutical company, founded on our extensive expertise in dendritic cell biology and immunology, primarily through the use of our Arcelis platform. Key elements of our strategy are to:

• Complete development of AGS-003 for mRCC, and manufacture and commercialize AGS-003 on our own in North America and collaborate with third parties for the manufacture and commercialization of AGS-003 outside North America, or, if we determine that it is in our best interest, with third parties on a worldwide basis.

• Continue development of AGS-004 for HIV through government or other third-party funding and collaborate with third parties for commercialization on a worldwide basis.

• Continue to build on our Arcelis platform by developing fully personalized immunotherapies for other cancers and infectious diseases.

• Establish automated manufacturing processes based on existing functioning prototypes of automated devices and disposables and, prior to the filing of our BLA for AGS-003, identify, lease, build out and equip a new U.S. facility for the commercial manufacture of products based on our Arcelis platform.

• Seek partners for further development and commercialization of AGS-009 for lupus and AGS-010 for the treatment of psoriasis and for organ transplantation.

• Pursue broad intellectual property protection for our Arcelis technology platform, product candidates and proprietary manufacturing processes through U.S. and international patent filings and maintenance of trade secret confidentiality.

Risks Associated with Our Business

Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. These risks include the following:

• We currently have no commercial products and have not received regulatory approval for any of our products.

• We plan to use substantially all of the proceeds of this offering to fund our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib. If the trial fails to demonstrate safety and efficacy to the satisfaction of the FDA, we would incur additional costs and experience delays in completing, or ultimately be unable to complete, the development and commercialization of AGS-003.

• Only one active immunotherapy has been approved by the FDA to date. Our use of our novel Arcelis technology with our active immunotherapies may raise development issues that we may not be able to resolve and may raise regulatory issues that could delay or prevent approval of our active immunotherapies.

• We will need to obtain additional financing prior to the commercialization of AGS-003 or any of our other product candidates, including for the planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility, which we expect will cost approximately $25 million, and for conducting any future clinical trials of our product candidates.

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• We do not have experience in manufacturing Arcelis-based products on a commercial scale or using automated processes. If we are unable to successfully manufacture these products on a commercial scale, our business may be materially harmed.

• We plan to fund the clinical development of AGS-004 through government or other third-party funding, to collaborate with a third party for commercialization of AGS-004 on a worldwide basis and to seek partners for further development and commercialization of AGS-009 and AGS-010. If we are unable to obtain such funding or establish such collaborations, we may not be able to commercialize or develop these product candidates.

• We have incurred significant losses since our inception and, as of March 31, 2011, we had an accumulated deficit of $111.2 million. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

Our Corporate Information

We were incorporated under the laws of the State of Delaware in 1997 under the name Dendritix, Inc. We changed our name to Merix Bioscience, Inc. in 1999, and to Argos Therapeutics, Inc. in 2004. Our executive offices are located at 4233 Technology Drive, Durham, North Carolina 27704, and our telephone number is (919) 287-6300. Our website address is www.argostherapeutics.com. The information contained in, or accessible through, our website does not constitute part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

In this prospectus, unless otherwise stated or the context otherwise requires, references to “Argos,” “we,” “us,” “our” and similar references refer to Argos Therapeutics, Inc. and its subsidiaries. Argos Therapeutics^®, Argos^® and Arcelis^™, the Argos Therapeutics logo and other trademarks or service marks of Argos appearing in this prospectus are the property of Argos. The other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

5

The Offering

Common stock offered by us             shares

Common stock to be outstanding after this offering             shares

Over-allotment option The underwriters have an option for a period of 30 days to purchase up to             additional shares of our common stock to cover over-allotments.

Use of proceeds We intend to devote approximately $         million of the net proceeds from this offering to fund the direct costs of our planned pivotal phase 3 combination therapy clinical trial of AGS-003 and to use the balance for other general corporate purposes. See “Use of Proceeds” for more information.

Proposed NASDAQ Global Market symbol “ARGS”

Risk factors You should read the “Risk Factors” section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.

The number of shares of our common stock to be outstanding after this offering is based on 12,849,491 actual shares of our common stock outstanding as of June 30, 2011 and also includes:

• 157,871,415 shares of our common stock issuable upon the automatic conversion of all outstanding shares of our preferred stock upon the closing of this offering;

•             shares of our common stock issuable upon the automatic conversion of all principal and accrued interest on our outstanding convertible notes that we issued and sold in 2010, or the 2010 convertible notes, and our outstanding convertible notes that we issued and sold in July 2011, or the July 2011 convertible notes, upon the closing of this offering, at the initial public offering price, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                     , 2011;

•             shares of our common stock issuable upon the automatic exercise of outstanding warrants to purchase shares of our series C redeemable convertible preferred stock, or series C preferred stock, by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

• 4,609,457 shares of our common stock issuable to specified holders of the capital stock of our 49.95% owned subsidiary, DC Bio Corp., or DC Bio, in exchange for their shares of DC Bio upon the closing of this offering, which would result in DC Bio becoming our wholly-owned subsidiary.

The number of shares of common stock to be outstanding after this offering excludes:

• 24,190,022 shares of our common stock issuable upon the exercise of stock options outstanding as of June 30, 2011 at a weighted average exercise price of $0.09 per share;

6

• 13,205,160 additional shares of our common stock available for future issuance as of June 30, 2011 under our 2008 stock incentive plan, or our 2008 plan;

• additional shares of our common stock that will be available for future issuance upon the closing of this offering under our 2011 stock incentive plan, or our 2011 plan; and

• 21,617 shares of common stock issuable upon exercise of warrants outstanding as of June 30, 2011, other than the warrants to purchase shares of our series C preferred stock described above, at a weighted average exercise price of $21.49 per share.

Unless otherwise indicated, all information in this prospectus reflects and assumes:

• no exercise of the outstanding options or warrants described above, other than the automatic exercise of the warrants to purchase shares of our series C preferred stock described above;

• the automatic conversion of all outstanding shares of our preferred stock into 157,871,415 shares of our common stock upon the closing of this offering;

• the automatic conversion of all principal and accrued interest on our outstanding convertible notes, including the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, into an aggregate of             shares of our common stock, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                     , 2011;

• the issuance of an aggregate of             shares of our common stock issuable upon the automatic exercise of warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus;

• the issuance of an aggregate of 4,609,457 shares of our common stock to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering;

• the restatement of our certificate of incorporation and the amendment and restatement of our by-laws upon the closing of this offering; and

• no exercise by the underwriters of their over-allotment option.

7

Summary Consolidated Financial Data

You should read the following summary consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this prospectus. We have derived the consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010 from our audited consolidated financial statements included in this prospectus. We have derived the consolidated statements of operations data for the three months ended March 31, 2010 and 2011 and the consolidated balance sheet data as of March 31, 2011 from our unaudited consolidated financial statements included in this prospectus. The unaudited consolidated financial data include, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair presentation of our financial position and results of operations for these periods. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our results for any interim period are not necessarily indicative of results to be expected for a full fiscal year.

The unaudited pro forma balance sheet data set forth below give effect to:

• the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 157,871,415 shares of our common stock upon the closing of this offering;

• the receipt in July 2011 of gross proceeds of $3.5 million upon the issuance and sale of the July 2011 convertible notes;

• the automatic conversion of all principal and accrued interest on our outstanding convertible notes, including the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, into an aggregate of             shares of our common stock, at the initial public offering price, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                     , 2011; and

• the issuance of an aggregate of             shares of our common stock upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

The unaudited pro forma as adjusted balance sheet data set forth below give further effect to:

• our issuance and sale of             shares of our common stock in this offering at an assumed initial public offering price of $             per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us; and

• the expected issuance of an aggregate of 4,609,457 shares of our common stock to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering.

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	Year Ended December 31,									Quarter Ended March 31, 2010			Quarter Ended March 31, 2011			Cumulative Period from Inception (May 8, 1997)  to March 31, 2011
	2008			2009			2010
										(unaudited)			(unaudited)			(unaudited)
Statements of Operations Data:
Revenue	$	4,449,735		$	5,367,989		$	7,272,783		$	1,116,716		$	2,232,225		$	69,955,359
Operating expenses
Research and development		22,042,597			19,543,966			13,927,662			3,843,577			3,054,488			166,035,698
Net reimbursement under collaboration agreement		(8,127,428	)		(6,626,989	)		—			—			—			(47,179,130	)
Net research and development		13,915,169			12,916,977			13,927,662			3,843,577			3,054,488			118,856,568
General and administrative		2,852,375			2,931,599			2,704,231			961,431			710,018			33,415,488
Total operating expenses		16,767,544			15,848,576			16,631,893			4,805,008			3,764,506			152,272,056
Operating income (loss)		(12,317,809	)		(10,480,587	)		(9,359,110	)		(3,688,292	)		(1,532,281	)		(82,316,697	)
Other income (expense), net		(471,835	)		(106,122	)		191,758			(19,777	)		(909,458	)		(11,535,931	)
Net income (loss)		(12,789,644	)		(10,586,709	)		(9,167,352	)		(3,708,069	)		(2,441,739	)		(93,852,628	)
Net income (loss) attributable to noncontrolling interest		136,643			(654,760	)		(172,598	)		(79,366	)		(13,421	)		(710,481	)
Net income (loss) attributable to Argos Therapeutics, Inc.		(12,926,287	)		(9,931,949	)		(8,994,754	)		(3,628,703	)		(2,428,318	)		(93,142,147	)
Less: Accretion of redeemable convertible preferred stock		(395,666	)		(101,206	)		(101,206	)		(25,302	)		(25,302	)		(29,147,080	)
Net income (loss) attributable to common stockholders	$	(13,321,953	)	$	(10,033,155	)	$	(9,095,960	)	$	(3,654,005	)	$	(2,453,620	)	$	(122,289,227	)
Basic and diluted net loss attributable to common stockholders per share	$	(153.81	)	$	(62.78	)	$	(2.23	)	$	(18.55	)	$	(0.19	)
Basic and diluted weighted average shares outstanding		86,615			159,825			4,081,649			196,976			12,849,491
										As of March 31, 2011
										Actual			Pro Forma			Pro Forma as Adjusted
Balance Sheet Data:
Cash, cash equivalents and short-term investments										$	3,045,585		$			$
Working capital											(2,490,073	)
Total assets											8,577,842
Convertible term note including accrued interest											4,579,655
Long-term portion of notes payable											—
Redeemable convertible preferred stock											79,985,714
Total stockholders’ deficit											(81,319,991	)

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RISK FACTORS

Investing in our common stock involves a high degree of risk. Before you decide to invest in our common stock, you should consider carefully the risks described below, together with the other information contained in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus. We believe the risks described below are the risks that are material to us as of the date of this prospectus. If any of the following risks occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

Since inception, we have incurred significant operating losses. Our net loss, after attribution to the noncontrolling interest, was $2.4 million for the three months ended March 31, 2011, $9.0 million for the year ended December 31, 2010 and $9.9 million for the year ended December 31, 2009. As of March 31, 2011, we had an accumulated deficit of $111.2 million. As a result of our operating losses and negative cash flows from operations since inception, the report of our independent accountants on our December 31, 2010 financial statements included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. To date, we have financed our operations primarily through private placements of our preferred stock, convertible debt financings, bank debt, government contracts, grants and license and collaboration agreements. We have devoted substantially all of our efforts to research and development, including clinical trials. We have not completed development of any product candidates. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We anticipate that our expenses will increase substantially if and as we:

• initiate or continue our clinical trials of AGS-003 and our other product candidates;

• seek regulatory approvals for our product candidates that successfully complete clinical trials;

• lease, build out and equip a new U.S. commercial facility for the manufacture of AGS-003 and our other Arcelis-based products;

• establish a sales, marketing and distribution infrastructure to commercialize products for which we may obtain regulatory approval;

• maintain, expand and protect our intellectual property portfolio;

• continue our other research and development efforts;

• hire additional clinical, quality control, scientific and management personnel; and

• add operational, financial and management information systems and personnel, including personnel to support our product development and planned commercialization efforts.

To become and remain profitable, we must develop and eventually commercialize a product or products with significant market potential. This development and commercialization will require us to be successful in a range of challenging activities, including successfully completing preclinical testing and clinical trials of our product candidates, obtaining regulatory approval for these product candidates, leasing, building out and equipping a new U.S. commercial manufacturing facility and manufacturing, marketing and selling those products for which we may obtain regulatory approval. We are only in the preliminary stages of some of these activities. We may never succeed in these activities and may never generate revenues that are significant or large

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enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, expand our business, maintain our research and development efforts or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs, our plans to lease, build out and equip a new U.S. commercial manufacturing facility or our commercialization efforts.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates and lease, build out and equip a new U.S. commercial manufacturing facility. In addition, if we obtain regulatory approval of any of our product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. Furthermore, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our product development programs, our plans for a new U.S. commercial manufacturing facility or our commercialization efforts.

We expect that the net proceeds from this offering, together with our existing cash, cash equivalents, short-term investments and anticipated funding under our NIH contract, as well as the proceeds from our issuance and sale of the July 2011 convertible notes, will enable us to fund our operating expenses and capital expenditure requirements, other than for the planned build-out and equipping of a new U.S. commercial manufacturing facility, through at least             . We intend to devote approximately $             million of the net proceeds from this offering to fund the direct costs of our planned pivotal phase 3 combination therapy clinical trial of AGS-003 and to use the balance for general corporate purposes. We will need to obtain additional financing prior to the commercialization of AGS-003 or any of our other product candidates, including for the planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility, which we expect will cost approximately $25 million, and for conducting any future clinical trials of our product candidates.

Our future capital requirements will depend on many factors, including:

• the progress and results of the planned pivotal phase 3 clinical trial of AGS-003;

• the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates;

• the costs and timing of our planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility;

• the costs, timing and outcome of regulatory review of our product candidates;

• the costs of commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive regulatory approval;

• revenue, if any, received from commercial sales of our product candidates, should any of our product candidates be approved by the FDA or a similar regulatory authority outside the United States;

• the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

• the extent to which we acquire or invest in other businesses, products and technologies;

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• our ability to obtain government or other third-party funding; and

• our ability to establish collaborations on favorable terms, if at all, particularly arrangements to market and distribute oncology product candidates outside North America and arrangements for the development and commercialization of our non-oncology product candidates on a worldwide basis.

Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Additional financing may not be available to us on acceptable terms, or at all.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. Except for the NIH’s remaining funding commitment with respect to AGS-004, we do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

We currently intend to collaborate with third parties for the commercialization of AGS-003 outside of North America and of AGS-004 worldwide and to seek partners for the further development and commercialization of AGS-009 and AGS-010. We plan to seek government or other third-party funding for the continued development of AGS-004 following completion of the phase 2b clinical trial of AGS-004 and to seek partners or other sources of third-party funding for the further development of AGS-009 and AGS-010. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

Risks Related to the Development and Commercialization of Our Product Candidates

We depend heavily on the success of AGS-003 and our other product candidates. All of our product candidates are still in preclinical or clinical development. Clinical trials of our product candidates may not be successful. If we are unable to commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.

We have invested a significant portion of our efforts and financial resources in the development of AGS-003, AGS-004, AGS-009 and AGS-010. Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, will depend heavily on the successful development and eventual commercialization of these product candidates, especially AGS-003, our most advanced product candidate. The success of these product candidates will depend on several factors, including the following:

• successful completion of preclinical studies and clinical trials;

• receipt of marketing approvals from the FDA and similar regulatory authorities outside the United States;

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• establishing commercial manufacturing capabilities by identifying, leasing, building out and equipping a commercial manufacturing facility for our Arcelis-based product candidates and making arrangements with third-party manufacturers for our other product candidates;

• maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

• launching commercial sales of the products, if and when approved, whether alone or in collaboration with others;

• acceptance of the products, if and when approved, by patients, the medical community and third-party payors;

• effectively competing with other therapies; and

• a continued acceptable safety profile of the products following approval.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business.

If clinical trials of our product candidates, such as our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib, fail to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Before obtaining regulatory approval for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety, purity and potency, or efficacy, of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more of our clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.

In particular, to date, we have not conducted a clinical trial of AGS-003 against a placebo or a comparator therapy. While comparisons to results from other reported clinical trials can assist in evaluating the potential efficacy of our AGS-003 product candidate, there are many factors that affect the outcome for patients in clinical trials, some of which are not apparent in published reports, and results from two different trials often cannot be reliably compared. Our planned pivotal phase 3 clinical trial of AGS-003 is intended to compare directly the combination of AGS-003 and sunitinib to treatment with the combination of sunitinib plus placebo. Based on the design of the trial, the data from the trial will need to demonstrate an increase of at least 30% in median progression free survival for the AGS-003 plus sunitinib arm as compared to the sunitinib plus placebo arm in order to show statistical significance and achieve the primary endpoint of the trial. We will need to show this statistically significant benefit of the combined therapy as compared to treatment with the combination of sunitinib plus placebo as part of a submission for approval of AGS-003. However, demonstration of statistical significance and achievement of the primary endpoint of the trial does not assure approval by the FDA or similar regulatory authorities outside the United States.

Patients in our planned pivotal phase 3 clinical trial who receive treatment with sunitinib plus placebo may not have results similar to patients studied in other clinical trials of sunitinib. If the patients in our planned

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pivotal phase 3 clinical trial who receive sunitinib plus placebo have results which are better than the results that occurred in those other clinical trials, we may not demonstrate a sufficient benefit from AGS-003 in combination with sunitinib to allow the FDA to approve AGS-003 for marketing. In addition, only 21 patients received the combination of AGS-003 and sunitinib in our phase 2 clinical trial. If the patients in our planned pivotal phase 3 clinical trial who receive the combination of AGS-003 and sunitinib have results which are worse than the results that occurred in our phase 2 clinical trial, we may not demonstrate a sufficient benefit from the combination therapy to allow the FDA to approve AGS-003 for marketing.

For drug and biological products, the FDA typically requires the successful completion of two adequate and well-controlled clinical trials to support marketing approval. In the case of AGS-003, which is intended for a life-threatening disease, we intend to seek approval based upon the results of a single pivotal phase 3 trial. As a result, the trial may receive enhanced scrutiny from the FDA. If the FDA disagrees with our choice of a primary endpoint or the results for the primary endpoint are not robust, are subject to confounding factors, or are not adequately supported by other study endpoints, including overall survival, the FDA may refuse to approve our BLA based upon a single clinical trial. For example, although we are including a control arm crossover in the trial design for our pivotal phase 3 clinical trial for ethical reasons, this may well contribute to the confounding of the overall survival results, thereby reducing the chance that the overall survival results would support approval of AGS-003. In addition, because only 21 patients received the combination of AGS-003 and sunitinib in our phase 2 clinical trial, and as a result, we did not have enough evaluable patients to perform the statistical analysis to determine whether the primary endpoint of complete response rate was achieved in that trial, we expect that the data from our phase 2 trial will have only a limited impact on the FDA’s ultimate assessment of efficacy of AGS-003. Thus, there can be no guarantee that the FDA will not require additional pivotal clinical trials as a condition for approving AGS-003.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including:

• regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

• we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

• clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

• the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• we might have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

• regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

• the cost of clinical trials of our product candidates may be greater than we anticipate;

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• the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; and

• our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials.

In addition, the patients recruited for clinical trials of our product candidates may have a disease profile or other characteristics that are different than we expect and different than the clinical trials were designed for, which could adversely impact the results of the clinical trials. For instance, our phase 2 combination therapy clinical trial of AGS-003 in combination with sunitinib was originally designed to enroll subjects with favorable disease risk profiles and intermediate disease risk profiles and with a primary endpoint of complete response rate. However, the actual trial population consisted entirely of patients with intermediate disease risk profiles and poor disease risk profiles. This is a population for which published research has shown that sunitinib alone, as well as other new therapies for mRCC, rarely if ever produce complete responses in mRCC, and in our phase 2 clinical trial in this population the combination therapy of AGS-003 and sunitinib did not show a complete response rate that met the endpoint of the trial.

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

• be delayed in obtaining marketing approval for our product candidates;

• not obtain marketing approval at all;

• obtain approval for indications or patient populations that are not as broad as intended or desired;

• obtain approval with labeling that includes significant use restrictions or safety warnings, including boxed warnings;

• have the product removed from the market after obtaining marketing approval;

• be subject to additional post-marketing testing requirements; or

• be subject to restrictions on how the product is distributed or used.

Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether any clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. For example, in response to our submission of an IND for AGS-004, the FDA raised safety concerns regarding the analytical treatment interruption contemplated by our protocol for our phase 2a clinical trial of AGS-004, and required a one year safety follow-up after the final dose for each patient. This resulted in the need for an amendment to the trial protocol and a four month delay prior to initiating the phase 2a clinical trial in the United States. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to commercialize our product candidates and may harm our business and results of operations.

If we experience delays or difficulties in the enrollment of patients in our clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for our product candidates, including our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib, if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory

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authorities outside the United States. In addition, many of our competitors have ongoing clinical trials for product candidates that could be competitive with our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. For example, during the phase 1/2 monotherapy clinical trial of AGS-003 that we conducted, our ability to enroll patients in the trial was adversely affected by the FDA’s approval of sorafenib and sunitinib during our phase 1/2 trial, because patients did not want to receive, and physicians were reluctant to administer, AGS-003 as a monotherapy once new therapies that showed efficacy in clinical trials were introduced to the market and became widely available.

Patient enrollment is affected by other factors including:

• severity of the disease under investigation;

• eligibility criteria for the study in question;

• perceived risks and benefits of the product candidate under study;

• efforts to facilitate timely enrollment in clinical trials;

• patient referral practices of physicians;

• the ability to monitor patients adequately during and after treatment; and

• proximity and availability of clinical trial sites for prospective patients.

We estimate that we will require approximately two years to fully enroll patients in our planned pivotal phase 3 combination therapy clinical trial of AGS-003. However, the actual amount of time for full enrollment could be longer than planned. Enrollment delays in this planned pivotal phase 3 trial or any of our other clinical trials may result in increased development costs for our product candidates, which would cause the value of the company to decline and limit our ability to obtain additional financing. Our inability to enroll a sufficient number of patients for this planned pivotal phase 3 clinical trial or any of our other clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

If serious adverse or inappropriate side effects are identified during the development of our product candidates, we may need to abandon or limit our development of some of our product candidates.

All of our product candidates are still in preclinical or clinical development and their risk of failure is high. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive regulatory approval. If our product candidates are associated with undesirable side effects or have characteristics that are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

Our Arcelis-based product candidates are active immunotherapies that are based on a novel technology utilizing patient material. This may raise development issues that we may not be able to resolve, regulatory issues that could delay or prevent approval or personnel issues that may prevent us from further developing and commercializing our product candidates.

Our Arcelis-based product candidates, AGS-003 and AGS-004, are based on our novel Arcelis technology platform. In the course of developing this platform and these product candidates, we have encountered difficulties in the development process. For example, we terminated the development of MB-002, the predecessor to AGS-003, when the results from the initial clinical trial of MB-002 indicated that the product candidate only corrected defects in the production of one of the two critical cytokines required for effective immune response. There can be no assurance that additional development problems will not arise in the future which we may not be able to resolve or which may cause significant delays in development.

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In addition, regulatory approval of novel product candidates such as our Arcelis-based product candidates manufactured using novel manufacturing processes such as ours can be more expensive and take longer than for other, more well-known or extensively studied pharmaceutical or biopharmaceutical products, due to our and regulatory agencies’ lack of experience with them. The FDA has only approved one active cellular immunotherapy product to date. This lack of experience may lengthen the regulatory review process, require us to conduct additional studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these product candidates or lead to significant post-approval limitations or restrictions.

The novel nature of our product candidates also means that fewer people are trained in or experienced with product candidates of this type, which may make it difficult to find, hire and retain capable personnel for research, development and manufacturing positions.

Development of our Arcelis-based product candidates is subject to significant uncertainty because each product candidate is derived from source material that is inherently variable. This variability could reduce the effectiveness of our Arcelis-based product candidates, delay any FDA approval of our Arcelis-based product candidates, cause us to change our manufacturing methods and adversely affect the commercial success of any approved Arcelis-based products.

The disease samples from the patients to be treated with our Arcelis-based products vary from patient to patient. This inherent variability may adversely affect our ability to manufacture our products because each tumor or virus sample that we receive and process will yield a different drug. As a result, we may not be able to consistently produce a product for every patient and we may not be able to treat all patients effectively. Such inconsistency could delay FDA or other regulatory approval of our Arcelis-based product candidates or if approved, adversely affect market acceptance and use of our Arcelis-based products. If we have to change our manufacturing methods to address any inconsistency, we may have to perform additional clinical trials, which would delay FDA or other regulatory approval of our Arcelis-based product candidates and increase the costs of development of our Arcelis-based product candidates.

The inherent variability of the disease samples from the patients to be treated with our Arcelis-based products may further adversely affect our ability to manufacture our products because variability in the source material for our product candidates, such as tumor cells or viruses, may cause variability in the composition of other cells in our product candidates. Such variability in composition or purity could adversely affect our ability to establish acceptable release specifications and the development and regulatory approval processes for our product candidates may be delayed, which would increase the costs of development of our Arcelis-based product candidates.

Even if any of our product candidates, including AGS-003 and our other product candidates, receive regulatory approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

If AGS-003 or any of our other product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. Gaining market acceptance for our Arcelis-based products may be particularly difficult as, to date, the FDA has only approved one active immunotherapy and our Arcelis-based products are based on a novel technology. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

• efficacy and potential advantages compared to alternative treatments;

• the ability to offer our product candidates for sale at competitive prices;

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• convenience and ease of administration compared to alternative treatments;

• the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

• the strength of marketing and distribution support;

• sufficient third-party coverage or reimbursement; and

• the prevalence and severity of any side effects.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if and when they are approved.

We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsource these functions to third parties. We plan to market and sell AGS-003 and any future oncology product candidates for which we receive marketing approval in North America ourselves and to establish distribution or other marketing arrangements with third parties for such products in the rest of the world. We plan to establish worldwide collaborations, distribution or other marketing arrangements with third parties for AGS-004 and any of our other product candidates should such candidates receive marketing approval.

There are risks involved with both establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

• our inability to recruit and retain adequate numbers of effective sales and marketing personnel;

• the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products;

• the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

• unforeseen costs and expenses associated with creating an independent sales and marketing organization.

If we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenues or the profitability of these product revenues to us are likely to be lower than if we were to market and sell any products that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates or doing so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

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We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of new drug products is highly competitive. We face competition with respect to our current product candidates, and will face competition with respect to any products that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches. Many marketed therapies for the indications that we are currently pursuing, or indications that we may in the future seek to address using our Arcelis platform, are widely accepted by physicians, patients and payors, which may make it difficult for us to replace them with any products that we successfully develop and are permitted to market.

There are several FDA-approved therapies for mRCC marketed and sold by large pharmaceutical companies. There are also monotherapies in clinical development for mRCC. In addition, we estimate that there are numerous cancer immunotherapy products in clinical development by many public and private biotechnology and pharmaceutical companies targeting numerous different cancer types. A number of these are in late stage development. One biotechnology company is developing a therapeutic cancer vaccine, which is a mixture of defined tumor-associated peptides, for the treatment of RCC. This company is conducting a pivotal phase 3 clinical trial comparing its vaccine in combination with sunitinib against treatment with sunitinib alone. If this clinical trial is successful, this combination therapy would be in direct competition with our AGS-003 and sunitinib combination therapy. In addition, if a standalone therapy for mRCC were developed that demonstrated improved efficacy over currently marketed therapies with a favorable safety profile and without the need for combination therapy, such a therapy might pose a significant competitive threat to AGS-003.

In addition, we are planning to conduct a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib. We elected to study AGS-003 in clinical trials in combination with sunitinib due in part to sunitinib being the current standard of care for first-line treatment of mRCC. Although we do not expect to seek FDA approval of AGS-003 solely in combination with sunitinib, if we obtain approval by the FDA, such FDA approval may be limited to the combination of AGS-003 and sunitinib. In such event, the commercial success of AGS-003 would be linked to the commercial success of sunitinib. As a result, if sunitinib ceases to be the standard of care for first-line treatment of mRCC or another event occurs that adversely affects sales of sunitinib, the commercial success of AGS-003 may be adversely affected.

There are also numerous FDA-approved treatments for HIV, primarily antiretroviral therapies marketed by large pharmaceutical companies. Generic competition has recently developed in this market as patent exclusivity periods for older drugs have expired, with more than 15 generic bioequivalents currently on the market. The presence of these generic drugs is resulting in price pressure in the HIV therapeutics market and could affect the pricing of AGS-004.

Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing or that would render our product candidates obsolete or non-competitive. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and

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marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and device industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Even if we are able to commercialize any product candidates, the products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.

The regulations that govern marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. In the United States, recently passed legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain regulatory approval.

Our ability to commercialize any products successfully also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that reimbursement will be available for any product that we commercialize and, if reimbursement is available, the level of reimbursement. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.

There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs, and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from

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both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

Our reliance on government funding adds uncertainty to our research and commercialization efforts and may impose requirements that increase the costs of commercialization and production of our government-funded product candidates.

Our phase 2b clinical trial for AGS-004 for HIV is currently being funded entirely by the NIH. We plan to seek further government funding for continued development of AGS-004. Contracts and grants from the U.S. government and its agencies include provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts, including provisions that allow the government to:

• terminate agreements, in whole or in part, for any reason or no reason;

• reduce or modify the government’s obligations under such agreements without the consent of the other party;

• claim rights, including intellectual property rights, in products and data developed under such agreements;

• impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements;

• suspend or debar the contractor or grantee from doing future business with the government or a specific government agency;

• pursue criminal or civil remedies under the False Claims Act, False Statements Act and similar remedy provisions specific to government agreements; and

• limit the government’s financial liability to amounts appropriated by the U.S. Congress on a fiscal-year basis, thereby leaving some uncertainty about the future availability of funding for a program even after it has been funded for an initial period.

Government agreements normally contain additional terms and conditions that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These include, for example:

• specialized accounting systems unique to government contracts and grants;

• mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent;

• public disclosures of certain contract and grant information, which may enable competitors to gain insights into our research program; and

• mandatory socioeconomic compliance requirements, including labor standards, non-discrimination and affirmative action programs and environmental compliance requirements.

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Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially sell any products that we may develop. These risks may be even greater with respect to our Arcelis-based products which are manufactured using a novel technology. None of our product candidates has been widely used over an extended period of time, and therefore our safety data are limited. We derive the raw materials for manufacturing of our Arcelis-based product candidates from human cell sources, and therefore the manufacturing process and handling requirements are extensive and stringent, which increases the risk of quality failures and subsequent product liability claims.

If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

• decreased demand for any product candidates or products that we may develop;

• injury to our reputation and significant negative media attention;

• withdrawal of clinical trial participants;

• significant costs to defend the related litigation;

• substantial monetary awards to trial participants or patients;

• loss of revenue; and

• the inability to commercialize any products that we may develop.

We currently hold $5.0 million in product liability insurance coverage, which may not be adequate to cover all liabilities that we may incur. We will need to increase our insurance coverage when we begin commercializing our product candidates, if ever. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and radioactive and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

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In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs and product candidates for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products.

We have based our research and development efforts on our Arcelis platform. Notwithstanding our large investment to date and anticipated future expenditures in our Arcelis platform, we have not yet developed, and may never successfully develop, any marketed drugs using this approach. As a result of pursuing the development of product candidates using our Arcelis platform, we may fail to develop product candidates or address indications based on other scientific approaches that may offer greater commercial potential or for which there is a greater likelihood of success.

Our long-term business plan is to develop Arcelis-based products for the treatment of various cancers and infectious diseases. We may not be successful in our efforts to identify or discover additional product candidates that may be manufactured using our Arcelis platform. Research programs to identify new product candidates require substantial technical, financial and human resources. These research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development.

If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

Risks Related to Our Dependence on Third Parties

We expect to depend on collaborations with third parties for the development and commercialization of our product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

Although we currently intend to commercialize AGS-003 ourselves in North America, we intend to seek to collaborate with third parties to commercialize AGS-003 and any future oncology product candidates outside North America or, if we decide that it is in our best interest, we may seek to collaborate with third parties to commercialize AGS-003 or any future oncology product candidate on a worldwide basis. We also plan to seek government or other third-party funding for continued development of AGS-004 and to collaborate with third parties to commercialize AGS-004 worldwide. In addition, we plan to seek partners for further development and commercialization of AGS-009 and AGS-010.

Our likely collaborators for any development, distribution, marketing, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. If we do enter into any such arrangements with any third parties, we

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will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Collaborations involving our product candidates would pose the following risks to us:

• collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;

• collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;

• collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

• collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

• a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

• collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;

• disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and

• collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates. For example, our collaborations with Kyowa Hakko Kirin Co., Ltd., or Kirin, with respect to AGS-003 and AGS-004 and with Novo Nordisk A/S, or Novo, with respect to AGS-009 were each terminated by our collaborator for convenience.

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

If we are not able to establish collaborations, we may have to alter our development and commercialization plans.

Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses. For some of our product candidates, we plan to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those

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product candidates. For example, we currently intend to seek to collaborate with third parties to commercialize AGS-003 and any future oncology product candidates in Europe and other parts of the world and to collaborate with third parties to commercialize AGS-004 worldwide. In addition, we plan to seek partners for the further development and commercialization of AGS-009 and AGS-010.

We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under existing license agreements from entering into agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.

We do not currently plan to develop AGS-004 beyond the ongoing phase 2b clinical trial, AGS-009 beyond the planned phase 1b clinical trial or AGS-010 unless we obtain government or other third-party funding to support such development, including through collaboration agreements. If we are not able to obtain such funding or enter into collaborations for any such product candidate, we may have to curtail the development of such product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop these product candidates or bring these product candidates to market and generate product revenue.

We rely on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.

We do not independently conduct clinical trials of our product candidates. We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators, to perform this function. Our reliance on these third parties for clinical development activities reduces our control over these activities but does not relieve us of our responsibilities. We remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates.

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We also rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our existing or future distributors could delay clinical development or regulatory approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.

Risks Related to the Manufacturing of Our Product Candidates

We plan to identify, lease, build out and equip a new U.S. facility to manufacture our Arcelis-based drug products on a commercial scale using automated processes. We do not have experience in manufacturing Arcelis-based drug products on a commercial scale or using automated processes. If, due to our lack of manufacturing experience, we cannot manufacture our Arcelis-based drug products on a commercial scale successfully or manufacture sufficient drug product to meet our expected commercial requirements, our business may be materially harmed.

We currently have manufacturing suites in our facility located at our corporate headquarters in Durham, North Carolina. We manufacture our Arcelis-based product candidates for research and development purposes and for clinical trials at this facility. We plan to identify, lease, build out and equip a new U.S. facility to manufacture our Arcelis-based drug products on a commercial scale using automated processes. We may be unable to find a suitable space to lease for our new commercial manufacturing facility. Even if we are able to find such a space, in light of our limited financial resources, a landlord may not be willing to lease the space to us on terms acceptable to us, or at all.

We do not have experience in manufacturing products on a commercial scale or using automated processes. In addition, because we are aware of only one company that has manufactured an active immunotherapy product for commercial sale, there are limited precedents from which we can learn. We may encounter difficulties in the manufacture of our Arcelis-based drug products due to our limited manufacturing experience. These difficulties could delay the build-out and equipping of the new facility and regulatory approval of the manufacture of our Arcelis-based drug products using the new facility and the automated processes, increase our costs or cause production delays or result in us not manufacturing sufficient drug product to meet our expected commercial requirements, any of which could damage our reputation and hurt our profitability. If we are unable to successfully increase our manufacturing capacity to commercial scale, our business may be materially adversely affected.

We plan to build out and equip a new U.S. commercial manufacturing facility based on automated manufacturing processes and augment our manufacturing personnel in advance of any regulatory submission for approval of AGS-003. If we fail to build out and equip a new U.S. commercial manufacturing facility in compliance with regulatory requirements, implement our automated processes or augment our manufacturing personnel, we may not be able to initiate commercial operations or produce sufficient drug product to meet our expected commercial requirements.

In order to meet our business plan, which contemplates our manufacturing drug product internally using automated processes for the commercial requirements of AGS-003 and any other Arcelis-based product candidates that might be approved, we will need to lease, build out and equip a new U.S. commercial manufacturing facility and add manufacturing personnel in advance of any regulatory submission for approval of AGS-003. The leasing, build-out and equipping of our facilities will require substantial capital expenditures and additional regulatory approvals. In addition, it will be costly and time consuming to recruit necessary additional personnel.

Prior to implementing the automated manufacturing processes for Arcelis-based products and filing a BLA for approval of AGS-003, we will be required to:

• demonstrate that the disposable components and sterilization and packaging methods used in the manufacturing process are suitable for use in manufacturing in accordance with current good manufacturing practice, or cGMP, and current Good Tissue Practices, or cGTP;

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• build and validate processing equipment that complies with cGMP and cGTP;

• identify, lease, build out and equip a suitable manufacturing facility to accommodate the automated manufacturing process;

• perform process testing with final equipment, disposable components and reagents to demonstrate that the methods are suitable for use in cGMP and cGTP manufacturing;

• demonstrate consistency and repeatability of the automated manufacturing processes in the production of AGS-003 in our new facility to fully validate the manufacturing and control process using the actual automated cGMP processing equipment; and

• demonstrate comparability between AGS-003 that we produce using existing processes in our current facility and AGS-003 produced using the automated processes in our new facility.

We expect that this implementation will require approximately two years to complete, but such implementation could take longer, particularly if we are unable to achieve any of the required tasks on a timely basis, or at all.

If we are unable to successfully build out and equip our commercial manufacturing facility in compliance with regulatory requirements, implement the automated processes required, demonstrate comparability between the AGS-003 used in our pivotal trial and the AGS-003 produced using the automated processes in the new facility, or hire additional necessary manufacturing personnel appropriately, our filing for regulatory approval of AGS-003 may be delayed or denied and we may not be able to initiate commercial operations even if any of our product candidates are approved for marketing.

Lack of coordination internally among our employees and externally with physicians, hospitals and third-party suppliers and carriers, could cause manufacturing difficulties, disruptions or delays and cause us to not have sufficient drug product to meet our expected clinical trial requirements or potential commercial requirements.

Manufacturing our Arcelis-based product candidates requires coordination internally among our employees and externally with physicians, hospitals and third-party suppliers and carriers. For example, a patient’s physician or clinical site will need to coordinate with us for the shipping of a patient’s disease sample and leukapheresis product to our manufacturing facility, and we will need to coordinate with them for the shipping of the manufactured drug product to them. Such coordination involves a number of risks that may lead to failures or delays in manufacturing our Arcelis-based product candidates, including:

• failure to obtain a sufficient supply of key raw materials of suitable quality;

• difficulties in manufacturing our product candidates for multiple patients simultaneously;

• difficulties in obtaining adequate patient-specific material, such as tumor samples, virus samples or leukapheresis product, from physicians;

• difficulties in completing the development and validation of the specialized assays required to ensure the consistency of our product candidates;

• failure to ensure adequate quality control and assurances in the manufacturing process as we increase production quantities;

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• difficulties in the timely shipping of patient-specific materials to us or in the shipping of our product candidates to the treating physicians due to errors by third-party carriers, transportation restrictions or other reasons;

• destruction of, or damage to, patient-specific materials or our product candidates during the shipping process due to improper handling by third-party carriers, hospitals, physicians or us;

• destruction of, or damage to, patient-specific materials or our product candidates during storage at our facilities; and

• destruction of, or damage to, patient-specific materials or our product candidates stored at clinical and future commercial sites due to improper handling or holding by clinicians, hospitals or physicians.

If we are unable to coordinate appropriately, we may encounter delays or additional costs in achieving our clinical and commercialization objectives, including in obtaining regulatory approvals of our product candidates and supplying product, which could materially damage our business and financial position.

If our existing manufacturing facility or the new U.S. commercial manufacturing facility that we plan to lease, build out and equip are damaged or destroyed, or production at one of these facilities is otherwise interrupted, our business and prospects would be negatively affected.

If our existing manufacturing facility or the new U.S. commercial manufacturing facility that we plan to lease, build out and equip, or the equipment in either of these facilities, is damaged or destroyed, we likely would not be able to quickly or inexpensively replace our manufacturing capacity and possibly would not be able to replace it at all. Any new facility needed to replace either our existing manufacturing facility or the planned new U.S. commercial manufacturing facility would need to comply with the necessary regulatory requirements, need to be tailored to our specialized automated manufacturing requirements and require specialized equipment. We would need FDA approval before selling any products manufactured at a new facility. Such an event could delay our clinical trials or, if any of our product candidates are approved by the FDA, reduce or eliminate our product sales.

We maintain insurance coverage to cover damage to our property and equipment and to cover business interruption and research and development restoration expenses. If we have underestimated our insurance needs with respect to an interruption in our clinical manufacturing of our product candidates, we may not be able to adequately cover our losses.

We expect to contract with third parties for the manufacture of our non-Arcelis-based product candidates for clinical trials and for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

We currently rely on third-party manufacturers for the production of our non-Arcelis-based product candidates for preclinical testing and clinical trials and expect to rely on third-party manufacturers or third-party collaborators for the manufacture of these product candidates for later stage clinical trials and for commercial supply of any of these product candidates for which we or our collaborators obtain marketing approval.

We do not have any agreements with third-party manufacturers for the clinical or commercial supply of any of our product candidates, and purchase our required drug supply on a purchase order basis. We may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

• reliance on the third party for regulatory compliance and quality assurance;

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• the possible breach of the manufacturing agreement by the third party; and

• the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

Third-party manufacturers may not be able to comply with cGMP, cGTP or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.

Any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.

We currently rely on a single manufacturer for the production of AGS-009 and AGS-010. We do not have agreements in place for redundant supply or a second source for the production of these product candidates. Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. If our current contract manufacturer cannot perform as agreed, we may be required to replace that manufacturer. Although we believe that there are a number of potential alternative manufacturers who could manufacture AGS-009 and AGS-010, we may incur added costs and delays in identifying and qualifying any such replacement.

Our potential future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive regulatory approval on a timely and competitive basis.

Risks Related to Our Intellectual Property

If we fail to comply with our obligations under our intellectual property licenses with third parties, we could lose license rights that are important to our business.

We are a party to a number of intellectual property license agreements with third parties, including with respect to each of AGS-003, AGS-004, AGS-009 and AGS-010, and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty, insurance and other obligations on us. For example, under our license agreement with Duke University which relates to patents and patent applications directed towards the composition of matter of Arcelis-based products, dendritic cells loaded with RNA from tumors or pathogens, methods of manufacture of these products and methods of using these products to treat tumors and pathogen infections, we are required to use commercially reasonable efforts to research, develop and market license products and to satisfy other specified obligations. If we fail to comply with our obligations under these licenses, our licensors may have the right to terminate these license agreements, in which event we might not be able to market any product that is covered by these agreements, or to convert the license to a non-exclusive license, which could materially adversely affect the value of the product candidate being developed under the license agreement. Termination of these license agreements or reduction or elimination of our licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms.

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If we are unable to obtain and maintain patent protection for our technology and products, or if our licensors are unable to obtain and maintain patent protection for the technology or products that we license from them, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be adversely affected.

Our success depends in large part on our and our licensors’ ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology and products. We and our licensors have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and products that are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology or products that we license from third parties and are reliant on our licensors. Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business. If such licensors fail to maintain such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our and our licensors’ patent rights are highly uncertain. Our and our licensors’ pending and future patent applications may not result in patents being issued which protect our technology or products or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore we cannot be certain that we or our licensors were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.

Assuming the other requirements for patentability are met, in the United States, the first to make the claimed invention is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. We may become involved in opposition or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner. The issuance of a patent is not conclusive as to its scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to or stop or prevent us from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or

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shortly after such candidates are commercialized. For example, certain of the patents we exclusively license from Duke University expire in 2016. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, our licensors may have rights to file and prosecute such claims and we are reliant on them.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference proceedings before the U.S. Patent and Trademark Office. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We have research licenses to certain reagents and their use in the development of our product candidates. However, if our product candidates are approved for sale in the United States, we believe that commercial licenses to these reagents will be available. If we are unable to obtain any such commercial licenses, we may be unable to commercialize our product candidates until the patents in question have expired.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these

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claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. The types of protections available for trade secrets are particularly important with respect to our Arcelis platform’s manufacturing capabilities, which involve significant unpatented know-how. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, sponsored researchers, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

Our product candidates, including AGS-003, AGS-004, AGS-009 and AGS-010, and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries. Failure to obtain regulatory approval for a product candidate will prevent us from commercializing the product candidate. We have not received regulatory approval to market any of our product candidates in any jurisdiction. We have only limited experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party contract research organizations to assist

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us in this process. Securing FDA approval requires the submission of extensive preclinical and clinical data and supporting information to the FDA for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing FDA approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the FDA. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining regulatory approval or prevent or limit commercial use.

The process of obtaining regulatory approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. To date, the FDA has only approved one active cellular immunotherapy product. Changes in regulatory approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA has substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent regulatory approval of a product candidate. Any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.

Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.

We intend to enter into arrangements with third parties under which they would market our products outside the United States. In order to market and sell our products in the European Union and many other jurisdictions, we or such third parties must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or these third parties may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market.

Any product candidate for which we obtain marketing approval could be subject to restrictions or withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.

Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to quality control, quality assurance and corresponding maintenance of records and documents, cGTP requirements, requirements regarding the distribution of samples to physicians and recordkeeping. Even if regulatory approval of a product candidate is granted, the approval may be subject to

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limitations on the indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved label. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing.

In addition, later discovery of previously unknown problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

• restrictions on such products, manufacturers or manufacturing processes;

• restrictions on the marketing of a product;

• restrictions on product distribution;

• requirements to conduct post-marketing clinical trials;

• warning or untitled letters;

• withdrawal of the products from the market;

• refusal to approve pending applications or supplements to approved applications that we submit;

• recall of products;

• fines, restitution or disgorgement of profits or revenue;

• suspension or withdrawal of regulatory approvals;

• refusal to permit the import or export of our products;

• product seizure; or

• injunctions or the imposition of civil or criminal penalties.

Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations, include the following:

• the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;

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• the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

• the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

• the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

• the federal transparency requirements under the Health Care Reform Law requires manufacturers of drugs, devices, biologics and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests; and

• analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act, changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for physician administered drugs. In addition, this legislation provided authority for limiting the number of drugs that will be covered in any therapeutic class. Cost reduction

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initiatives and other provisions of this legislation could decrease the coverage and price that we receive for any approved products. While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in payments from private payors.

More recently, in March 2010, President Obama signed into law the Health Care Reform Law, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Effective October 1, 2010, the Health Care Reform Law revises the definition of “average manufacturer price” for reporting purposes, which could increase the amount of Medicaid drug rebates to states. Further, the new law imposes a significant annual fee on companies that manufacture or import branded prescription drug products. Substantial new provisions affecting compliance have also been enacted, which may affect our business practices with health care practitioners. We will not know the full effects of the Health Care Reform Law until applicable federal and state agencies issue regulations or guidance under the new law. Although it is too early to determine the effect of the Health Care Reform Law, the new law appears likely to continue the pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

With the enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCIA, as part of the Health Care Reform Law, an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The new abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be submitted to the FDA until four years, or approved by the FDA until 12 years, after the original brand product identified as the reference product was approved under a BLA. The new law is complex and is only beginning to be interpreted and implemented by the FDA. As a result, its ultimate impact, implementation and meaning is subject to uncertainty. While it is uncertain when any such processes may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

We believe that if any of our product candidates were to be approved as biological products under a BLA, such approved products should qualify for the four-year and 12-year periods of exclusivity. However, there is a risk that the U.S. Congress could amend the BPCIA to significantly shorten these exclusivity periods as proposed by President Obama, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

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Risks Related to Employee Matters and Managing Growth

Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.

We are highly dependent on Jeffrey Abbey, our President and Chief Executive Officer, Charles Nicolette, our Vice President of Research and Development and Chief Scientific Officer, and Fred Miesowicz, our Vice President of Manufacturing and Chief Operating Officer, as well as the other principal members of our management and scientific teams. Although we have formal employment agreements with each of our executive officers, these agreements do not prevent our executives from terminating their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives.

Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

We expect to expand our development, regulatory, manufacturing and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of drug development, regulatory affairs, manufacturing and sales and marketing. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Risks Related to Our Common Stock and This Offering

After this offering, our executive officers, directors and principal stockholders will maintain the ability to control all matters submitted to stockholders for approval.

Upon the closing of this offering, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock before this offering will, in the aggregate, beneficially own shares representing approximately    % of our capital stock. As a result, if these stockholders were to choose to act together, they would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.

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Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our corporate charter and our bylaws that will become effective upon the closing of this offering may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

• establish a classified board of directors such that not all members of the board are elected at one time;

• allow the authorized number of our directors to be changed only by resolution of our board of directors;

• limit the manner in which stockholders can remove directors from the board;

• establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;

• require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

• limit who may call stockholder meetings;

• authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and

• require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

If you purchase shares of common stock in this offering, you will suffer immediate dilution of your investment.

The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible book value per share after this offering. To the extent outstanding options or warrants are exercised, you will incur further dilution. Based on an assumed initial public offering price of $            per share, which is the midpoint of the price range listed on the cover page of this prospectus, you will experience immediate dilution of $            per share, representing the difference between our pro forma net tangible book value per share after giving effect to this offering and the assumed initial public offering price. In addition, purchasers of common stock in this offering will have contributed approximately    % of the aggregate price paid by all purchasers of our stock but will own only approximately    % of our common stock outstanding after this offering.

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An active trading market for our common stock may not develop.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through negotiations with the underwriters. Although we have applied to have our common stock listed on The NASDAQ Global Market, an active trading market for our shares may never develop or be sustained following this offering. If an active market for our common stock does not develop, it may be difficult for you to sell shares you purchase in this offering without depressing the market price for the shares or at all.

If our stock price is volatile, purchasers of our common stock could incur substantial losses.

Our stock price is likely to be volatile. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above the initial public offering price. The market price for our common stock may be influenced by many factors, including:

• the success of competitive products or technologies;

• results of clinical trials of our product candidates or those of our competitors;

• regulatory or legal developments in the United States and other countries;

• developments or disputes concerning patents or other proprietary rights;

• the recruitment or departure of key personnel;

• the level of expenses related to any of our product candidates or clinical development programs;

• the results of our efforts to discover, develop, acquire or in-license additional product candidates or products;

• actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

• variations in our financial results or those of companies that are perceived to be similar to us;

• changes in the structure of healthcare payment systems;

• market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;

• general economic, industry and market conditions; and

• the other factors described in this “Risk Factors” section.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline and delay the development of our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

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Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of existing or any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have outstanding              shares of common stock based on the number of shares outstanding as of June 30, 2011. This includes the shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates. Of the remaining shares,              shares are currently restricted as a result of securities laws or lock-up agreements but will be able to be sold after the offering as described in the “Shares Eligible for Future Sale” section of this prospectus. Moreover, after this offering, holders of an aggregate of              shares of our common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Underwriting” section of this prospectus.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this prospectus, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this prospectus include, among other things, statements about:

• our expectations related to the use of proceeds from this offering;

• the progress and timing of our development and commercialization activities;

• the timing and conduct of our planned pivotal phase 3 combination therapy clinical trial of AGS-003 and sunitinib and of our clinical trials of our other product candidates, including statements regarding the timing of commencement and completion of enrollment in our pivotal phase 3 combination therapy clinical trial of AGS-003 and sunitinib, our phase 2b clinical trial of AGS-004 for the treatment of HIV and our potential phase 1b clinical trial of AGS-009, the timing of completion of our pivotal phase 3 clinical trial of AGS-003 and the clinical trials of our other product candidates and the period during which the results of such trials will become available;

• our ability to obtain U.S. and foreign marketing approval for AGS-003 and our other product candidates and the ability of these product candidates to meet existing or future regulatory standards;

• the potential benefits of our Arcelis platform, our Arcelis-based product candidates and our other product candidates;

• our ability to identify, lease, build out and equip a new U.S. commercial manufacturing facility and supply on a commercial scale our Arcelis-based products;

• our intellectual property position;

• the accuracy of our estimates of the size and characteristics of the markets that may be addressed by our product candidates;

• our ability to establish and maintain partnerships for development and commercialization of our product candidates; and

• our estimates regarding expenses, future revenues, capital requirements and needs for additional financing, including the costs of our planned pivotal phase 3 combination therapy clinical trial of AGS-003 and sunitinib, the costs of leasing, building out and equipping a new U.S. commercial manufacturing facility and the costs of producing Arcelis-based products at such facility.

We have based these forward-looking statements largely on our current plans, intentions, expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included

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in this prospectus, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements.

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. This prospectus also includes data based on our own internal estimates. While we believe that our internal company research is reliable and that our internal estimates are reasonable, no independent source has verified such research or estimates.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of             shares of our common stock in this offering will be approximately $             million, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds from this offering will be approximately $             million.

A $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) the net proceeds from this offering by approximately $             million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to devote approximately $             of the net proceeds from this offering to fund the direct costs of our planned pivotal phase 3 combination therapy clinical trial of AGS-003 and to use the balance for other general corporate purposes. We will also plan to use $200,000 of the net proceeds to pay a success fee to a former lender under a loan agreement that we have previously repaid in full.

This expected use of the net proceeds from this offering and our existing cash and cash equivalents represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development and commercialization efforts, the status of and results from clinical trials, as well as any collaborations that we may enter into with third parties for our product candidates, and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. We have no current understandings, agreements or commitments for any material acquisitions or licenses of any products, businesses or technologies.

We expect that the net proceeds from this offering will be sufficient to enable us to substantially complete the planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib. However, it is possible that we will not achieve the progress that we expect because the actual costs and timing of development, particularly clinical trials, are difficult to predict and subject to substantial risks and delays. We do not expect that the net proceeds from this offering will be sufficient to enable us to fund our planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility, which we will need to have completed in order to submit to the FDA a BLA for AGS-003 and to manufacture AGS-003 or any of our Arcelis-based products on a commercial scale. Although we do not expect the net proceeds from this offering to be sufficient to enable us to fund any clinical trials of any of our other product candidates, we are planning to commence enrollment in a phase 1b clinical trial of AGS-009 in the fourth quarter of 2011 if the results of our phase 1a clinical trial justify proceeding with the trial. We plan to seek a partner for funding the trial and for the further development and commercialization of AGS-009, but would initiate this trial even if we have not secured a partner at the time this trial is scheduled to begin.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.

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CAPITALIZATION

The following table sets forth our cash, cash equivalents and short-term investments and capitalization as of March 31, 2011, as follows:

• on an actual basis;

• on a pro forma basis to reflect:

• the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 157,871,415 shares of our common stock upon the closing of this offering;

• the receipt in July 2011 of gross proceeds of $3.5 million upon the issuance and sale of the July 2011 convertible notes;

• the automatic conversion of all principal and accrued interest on our outstanding convertible notes, including the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, into an aggregate of             shares of our common stock, at the initial public offering price, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                     , 2011;

• the issuance of an aggregate of             shares of our common stock upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus;

• the restatement of our certificate of incorporation upon the closing of this offering; and

• on a pro forma as adjusted basis to give further effect to:

• our issuance and sale of             shares of common stock in this offering at an assumed initial public offering price of $             per share, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us; and

• the expected issuance of an aggregate of 4,609,457 shares of our common stock to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering.

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Our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this prospectus.

	March 31, 2011
	Actual			Pro Forma	Pro Forma As Adjusted
				(Unaudited)
	(In thousands, except share data)
Cash, cash equivalents and short-term investments	$	3,046		$	$
Convertible term note including accrued interest		4,580
Warrant liability		3,198
Redeemable convertible preferred stock		79,986
Stockholders’ deficit
Common stock, $0.001 par value, 250,760,000 shares authorized; and 12,849,491 shares issued and outstanding, actual;          shares authorized and          shares issued and outstanding, pro forma;          shares issued and outstanding, pro forma as adjusted		13
Equity attributable to noncontrolling interest		3,017
Additional paid-in capital		26,739
Accumulated other comprehensive income		91
Deficit accumulated during the development stage		(111,180	)
Total stockholders’ deficit		(81,320	)
Total capitalization	$	6,444		$	$

A $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization on a pro forma as adjusted basis by approximately $             million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The table above does not include:

• 24,444,612 shares of our common stock issuable upon the exercise of stock options outstanding as of March 31, 2011 at a weighted average exercise price of $0.09 per share;

• 12,952,490 additional shares of our common stock available for future issuance as of March 31, 2011 under our 2008 plan;

• additional shares of our common stock that will be available for future issuance, upon the closing of this offering, under our 2011 plan; and

• 42,117 shares of common stock issuable upon exercise of warrants outstanding as of March 31, 2011, other than the warrants to purchase shares of our series C preferred stock described above, at a weighted average exercise price of $19.60 per share.

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DILUTION

If you invest in our common stock in this offering, your ownership interest will be diluted immediately to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock after this offering.

Our historical net tangible book value as of March 31, 2011 was $            million, or $            per share of our common stock. Historical net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of our common stock outstanding.

Our pro forma net tangible book value as of March 31, 2011 was $             million, or $             per share of our common stock. Pro forma net tangible book value per share represents the amount of our total tangible assets less our total liabilities, divided by the pro forma number of shares of our common stock outstanding after giving effect to:

• the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 157,871,415 shares of our common stock upon the closing of this offering;

• the automatic conversion of all principal and accrued interest on our outstanding convertible notes, including the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, into an aggregate of            shares of our common stock, at the initial public offering price, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011; and

• the issuance of an aggregate of            shares of our common stock upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

After giving effect to our issuance and sale of            shares of our common stock in this offering at an assumed initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and to the expected issuance of an aggregate of 4,609,457 shares of our common stock to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering, our pro forma as adjusted net tangible book value as of March 31, 2011 would have been $            million, or $            per share. This represents an immediate increase in pro forma as adjusted net tangible book value per share of $            to existing stockholders and immediate dilution of $            per share in pro forma as adjusted net tangible book value to new investors purchasing shares of common stock in this offering. Dilution per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the initial public offering price per share paid by new investors. The following table illustrates this dilution:

Assumed initial public offering price per share		$
Historical net tangible book value per share as of March 31, 2011	$
Increase per share attributable to the assumed conversion of outstanding preferred stock and convertible notes and exercise of warrants to purchase our series C preferred stock
Pro forma net tangible book value per share as of March 31, 2011
Increase in net tangible book value per share attributable to new investors
Pro forma as adjusted net tangible book value per share after giving effect to this offering and the expected issuance of shares of our common stock to shareholders of DC Bio		$
Dilution per share to new investors		$

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

If the underwriters exercise their over-allotment option or if any additional shares are issued in connection with outstanding options or warrants, you will experience further dilution.

The following table summarizes, on a pro forma as adjusted basis as of March 31, 2011, the total number of shares purchased from us, the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by existing stockholders and by new investors in this offering at an assumed initial public offering price of $            per share, which is the midpoint of the price range listed on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing stockholders paid.

	Shares Purchased				Total Consideration				Average Price Per Share
	Number	Percentage			Amount	Percentage
Existing stockholders				%	$			%	$
New investors
Total			100	%	$		100	%

A $1.00 increase (decrease) in the assumed initial public offering price of $            per share would increase (decrease) the total consideration paid by new investors by $            million and increase (decrease) the percentage of total consideration paid by new investors by approximately            %, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The table and calculations set forth above are based on actual shares outstanding as of March 31, 2011 and include:

• 157,871,415 shares of our common stock issuable upon the automatic conversion of all outstanding shares of our preferred stock upon the closing of this offering;

•             shares of our common stock issuable upon the automatic conversion of all principal and accrued interest on our outstanding convertible notes, including the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, at the initial public offering price, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                      , 2011;

•             shares of our common stock upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

• 4,609,457 shares of our common stock issuable to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering.

The table above excludes:

• 24,444,612 shares of our common stock issuable upon the exercise of stock options outstanding as of March 31, 2011 at a weighted average exercise price of $0.09 per share;

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• 12,952,490 additional shares of our common stock available for future issuance as of March 31, 2011 under our 2008 plan;

• additional shares of our common stock that will be available for future issuance, upon the closing of this offering, under our 2011 plan; and

• 42,117 shares of common stock issuable upon exercise of warrants outstanding as of March 31, 2011, other than the warrants to purchase shares of our series C preferred stock described above, at a weighted average exercise price of $19.60 per share.

If the underwriters exercise their over-allotment option in full, the following will occur:

• the percentage of shares of our common stock held by existing stockholders will decrease to approximately    % of the total number of shares of our common stock outstanding after this offering; and

• the number of shares of our common stock held by new investors will increase to            , or approximately     % of the total number of shares of our common stock outstanding after this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this prospectus. We have derived the consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010 and the consolidated balance sheet data as of December 31, 2009 and 2010 from our audited consolidated financial statements included in this prospectus. We have derived the consolidated statements of operations data for the years ended December 31, 2006 and 2007 and the consolidated balance sheet data as of December 31, 2006, 2007 and 2008 from our audited consolidated financial statements not included in this prospectus. We have derived the consolidated statements of operations data for the three months ended March 31, 2010 and 2011 and the consolidated balance sheet data as of March 31, 2011 from our unaudited consolidated financial statements included in this prospectus. The unaudited consolidated financial data include, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair presentation of our financial position and results of operations for these periods. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our results for any interim period are not necessarily indicative of results to be expected for a full fiscal year.

	Year Ended December 31,															Quarter Ended March 31, 2010			Quarter Ended March 31, 2011			Cumulative Period from Inception (May 8, 1997) to March 31, 2011
	2006			2007			2008			2009			2010
																(unaudited)			(unaudited)			(unaudited)
Statements of Operations Data:
Revenue	$	19,281,301		$	5,158,789		$	4,449,735		$	5,367,989		$	7,272,783		$	1,116,716		$	2,232,225		$	69,955,359
Operating expenses
Research and development		18,659,920			18,378,771			22,042,597			19,543,966			13,927,662			3,843,577			3,054,488			166,035,698
Net reimbursement under collaboration agreement		(8,254,848	)		(7,615,181	)		(8,127,428	)		(6,626,989	)		—			—			—			(47,179,130	)
Net research and development		10,405,072			10,763,590			13,915,169			12,916,977			13,927,662			3,843,577			3,054,488			118,856,568
General and administrative		2,118,071			3,001,774			2,852,375			2,931,599			2,704,231			961,431			710,018			33,415,488
Total operating expenses		12,523,143			13,765,364			16,767,544			15,848,576			16,631,893			4,805,008			3,764,506			152,272,056
Operating income (loss)		6,758,158			(8,606,575	)		(12,317,809	)		(10,480,587	)		(9,359,110	)		(3,688,292	)		(1,532,281	)		(82,316,697	)
Other income (expense)
Interest income		826,747			586,829			250,698			73,746			4,976			2,861			443			4,092,534
Interest expense		(419,680	)		(920,265	)		(632,677	)		(283,417	)		(904,233	)		(22,638	)		(909,901	)		(6,472,253	)
Derivative financing expense		46,919			2,489,108			(756,789	)		—			298,009			—			—			(981,185	)
Investment tax credits		—			503,737			666,933			103,549			793,006			—			—			2,067,225
Loss on sale of marketable securities		—			—			—			—			—			—			—			(10,242,252	)
Other income (expense), net		453,986			2,659,409			(471,835	)		(106,122	)		191,758			(19,777	)		(909,458	)		(11,535,931	)
Net income (loss)		7,212,144			(5,947,166	)		(12,789,644	)		(10,586,709	)		(9,167,352	)		(3,708,069	)		(2,441,739	)		(93,852,628	)
Net income (loss) attributable to noncontrolling interest		628,188			333,744			136,643			(654,760	)		(172,598	)		(79,366	)		(13,421	)		(710,481	)
Net income (loss) attributable to Argos Therapeutics, Inc.		6,583,956			(5,613,422	)		(12,926,287	)		(9,931,949	)		(8,994,754	)		(3,628,703	)		(2,428,318	)		(93,142,147	)
Less: Accretion of redeemable convertible preferred stock		36,865			(141,768	)		(395,666	)		(101,206	)		(101,206	)		(25,302	)		(25,302	)		(29,147,080	)
Net income (loss) attributable to common stockholders	$	6,620,821		$	(5,760,190	)	$	(13,321,953	)	$	(10,033,155	)	$	(9,095,960	)	$	(3,654,005	)	$	(2,453,620	)	$	(122,289,227	)
Basic and diluted net loss attributable to common stockholders per share	$	176.00		$	(1,433.60	)	$	(153.81	)	$	(62.78	)	$	(2.23	)	$	(18.55	)	$	(0.19	)
Basic and diluted weighted average shares outstanding		4,013			4,018			86,615			159,825			4,081,649			196,976			12,849,491

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	December 31,															March 31, 2011
	2006			2007			2008			2009			2010
																(unaudited)
Balance Sheet Data:
Cash, cash equivalents, and short-term investments	$	15,611,833		$	7,623,969		$	23,654,667		$	10,585,433		$	5,141,965		$	3,045,585
Total assets		20,105,425			13,216,426			28,631,528			14,262,994			10,641,781			8,577,842
Convertible term note including accrued interest		4,145,115			4,387,101			—			—			3,669,858			4,579,655
Warrant liability		—			—			—			—			3,197,626			3,197,626
Long-term portion of notes payable		1,996,716			3,938,697			1,214,780			4,317			—			—
Redeemable convertible preferred stock		71,023,862			71,223,218			88,779,980			88,881,186			79,640,412			79,985,714
Deficit accumulated during the development stage		(70,119,487	)		(76,564,573	)		(89,824,604	)		(99,756,553	)		(108,751,307	)		(111,179,625	)
Total stockholders’ deficit	$	(70,489,214	)	$	(73,797,553	)	$	(69,040,663	)	$	(79,034,936	)	$	(78,936,784	)	$	(81,319,991	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing at the end of this prospectus. In addition to historical information, some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, future financial performance, expense levels and liquidity sources, includes forward-looking statements that involve risks and uncertainties. You should read the “Risk Factors” section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company focused on the development and commercialization of fully personalized immunotherapies for the treatment of cancer and infectious diseases based on our proprietary technology platform called Arcelis. Using biological components obtained from each patient, our Arcelis-based immunotherapies employ a specialized white blood cell, called a dendritic cell, to activate an immune response that is specific to the patient’s disease. Our most advanced product candidate is AGS-003 for the treatment of mRCC. We plan to initiate patient enrollment in a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib, an oral small molecule drug marketed under the trade name Sutent that is the current standard of care for mRCC, in the fourth quarter of 2011. We are also developing a second Arcelis-based product candidate, AGS-004 for the treatment of HIV. We are studying AGS-004 in a phase 2b clinical trial that is funded entirely by the NIH. In addition to our Arcelis-based product candidates, we are also developing two other product candidates based on our expertise in dendritic cell biology: AGS-009, a monoclonal antibody for the treatment of lupus, which we are studying in a phase 1a clinical trial, and AGS-010, a preclinical biologic compound, which we are developing for the treatment of psoriasis and for organ transplantation.

We have tested AGS-003 in clinical trials as a monotherapy and in combination with sunitinib for the treatment of mRCC. We have submitted to the FDA for review a protocol for our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib compared to sunitinib plus placebo. We expect to complete enrollment of this trial in late 2013 and have data on the primary endpoint in mid-2014. To prepare for the commercial launch of AGS-003 and any other Arcelis-based products we develop, we plan to establish automated manufacturing processes based on existing functioning prototypes of automated devices and disposables and to identify, lease, build out and equip a new U.S. commercial manufacturing facility for this purpose. Our plan is to file our BLA for AGS-003 with the FDA using the automated manufacturing processes that we have developed.

We have devoted substantially all of our resources to our drug development efforts, including advancing our Arcelis platform, conducting clinical trials of our product candidates, protecting our intellectual property and providing general and administrative support for these operations. We have not generated any revenue from product sales and, to date, have funded our operations primarily through the private placement of convertible preferred stock and convertible debt, bank debt, government contracts, grants and license and collaboration agreements. From inception in May 1997 through March 31, 2011, we raised a total of $193.3 million, including:

• $88.9 million from the sale of common stock, convertible debt, warrants and convertible preferred stock, including the convertible preferred stock sold by our 49.95% owned subsidiary, DC Bio. A description of DC Bio and the put right held by shareholders of DC Bio is set forth under “— Financial Overview-Derivative Financing Income (Expense);”

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• $32.9 million from the licensing of our technology; and

• $71.5 million from government contracts, grants and license and collaboration agreements.

We have incurred losses in each year since our inception in May 1997. Our net losses, after attribution to the noncontrolling interest in DC Bio, were approximately $12.9 million, $9.9 million and $9.0 million for the years ended December 31, 2008, 2009 and 2010, respectively, and $3.6 million and $2.4 million for the three months ended March 31, 2010 and 2011, respectively. As of March 31, 2011, we had an accumulated deficit of approximately $111.2 million. Substantially all of our operating losses resulted from costs incurred in connection with our development programs and from general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We anticipate that our expenses will increase substantially as we:

• initiate or continue our clinical trials of AGS-003 and our other product candidates;

• seek regulatory approvals for our product candidates that successfully complete clinical trials;

• lease, build out and equip a new U.S. commercial facility for the manufacture of AGS-003 and our other Arcelis-based products;

• establish a sales, marketing and distribution infrastructure to commercialize products for which we may obtain regulatory approval;

• maintain, expand and protect our intellectual property portfolio;

• continue our other research and development efforts;

• hire additional clinical, quality control, scientific and management personnel; and

• add operational, financial and management information systems and personnel, including personnel to support our product development and planned commercialization efforts.

We do not expect to generate significant funds or product revenue, other than under our contract with the NIH as described below, unless and until we successfully complete development and obtain marketing approval for our product candidates, either alone or in collaboration with third parties, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the commercialization of any of AGS-003 or any of our other product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our operating activities through a combination of equity offerings, debt financings, government funding, grant funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. However, we may be unable to raise additional funds through equity offerings, debt financings, government funding, grant funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements when needed, on favorable terms or at all.

In September 2006, we entered into a multi-year research contract with the NIH and the National Institute of Allergy and Infectious Diseases, or NIAID, to design, develop and clinically test an autologous HIV immunotherapy capable of eliciting therapeutic immune responses. We are developing AGS-004 under this contract. Under this contract, as amended, the NIH and NIAID have committed to fund up to a total of $29.9 million, including reimbursement of direct expenses and allocated overhead and general and administrative expenses of up to $28.5 million and payment of other specified amounts totaling up to $1.4 million upon our achievement of specified development milestones. This commitment extends until May 2013. In September 2010, the NIH agreed to make a $2.0 million one-time payment to us as a true-up in connection with an

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agreement as to our indirect cost rates for allocated overhead and general and administrative expenses. The true-up reflects the difference between the provisional indirect cost rates originally provided for in the NIH contract and the negotiated indirect cost rates agreed upon in September 2010 for the years 2006 through 2009 and the eight-month period ended August 31, 2010. The $2.0 million true-up is included in the $29.9 million commitment. We have recorded revenue of $18.0 million through March 31, 2011 under the NIH contract. This contract is the only arrangement under which we currently generate revenue. As of March 31, 2011, there was up to approximately $11.9 million of potential revenue remaining to be earned under the agreement with the NIH.

In July 2011, we issued and sold convertible notes in the aggregate original principal amount of $3.5 million. We refer to these notes as the July 2011 convertible notes. As of March 31, 2011, we had $6.3 million of principal and interest outstanding under convertible notes that we issued in 2010 and that we refer to as the 2010 convertible notes. We expect that the principal and accrued interest under both issues of these convertible notes will convert into common stock upon the closing of this offering.

Financial Overview

Revenue

To date, we have not generated revenue from the sale of any products. All of our revenue has been derived from government contracts, grants and payments from license and collaboration agreements. These government contract payments, grants and payments from license and collaboration agreements have provided us $70.0 million in revenue from inception to March 31, 2011. We may generate revenue in the future from government contracts, grants, payments from future license or collaboration agreements and product sales. We expect that any revenue we generate will fluctuate from quarter to quarter.

Research and Development Expenses

Since our inception, we have focused our resources on our research and development activities, including conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our product candidates. We recognize our research and development expenses as they are incurred. Our research and development expenses consist primarily of:

• salaries and related expenses for personnel in research and development functions;

• fees paid to consultants and clinical research organizations, or CROs, including in connection with our clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work and statistical compilation and analysis;

• allocation of facility lease and maintenance costs;

• depreciation of leasehold improvements, laboratory equipment and computers;

• costs related to production of product candidates for clinical trials;

• costs related to compliance with regulatory requirements;

• consulting fees paid to third parties related to non-clinical research and development;

• costs related to stock options or other stock-based compensation granted to personnel in research and development functions; and

• acquisition fees, license fees and milestone payments related to acquired and in-licensed technologies.

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From inception through March 31, 2011, we have incurred $166.0 million in research and development expenses. We plan to increase our research and development expenses for the foreseeable future as we seek to complete development of AGS-003 and to further advance our other product candidates.

The table below summarizes our direct research and development expenses by program for the periods indicated. Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs, including in connection with our clinical trials, and related clinical trial fees. We have been developing AGS-003, AGS-004, AGS-009 and AGS-010 in parallel, and typically use our employee and infrastructure resources across multiple research and development programs. We do not allocate salaries, stock-based compensation, employee benefit or other indirect costs related to our research and development function to specific product candidates. Those expenses are included in “Indirect research and development expense” in the table.

	Years Ended December 31,						Three Months Ended March 31, 2010		Three Months Ended March 31, 2011
	2008		2009		2010
	(in thousands)
Direct research and development expense by program:
AGS-003	$	2,531	$	1,890	$	908	$	241	$	232
AGS-004		4,060		3,624		3,117		194		636
AGS-009		—		—		516		3		191
AGS-010		1,785		3,309		1,117		631		36
Total direct research and development expense		8,376		8,823		5,658		1,069		1,095
Indirect research and development expense		13,667		10,721		8,270		2,775		1,959
Total research and development expense	$	22,043	$	19,544	$	13,928	$	3,844	$	3,054

The successful development of our clinical and preclinical product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of any of our clinical or preclinical product candidates or the period, if any, in which material net cash inflows from these product candidates may commence. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

• the scope, rate of progress and expense of our ongoing, as well as any additional clinical trials and other research and development activities;

• future clinical trial results; and

• the timing of regulatory approvals.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those which we currently anticipate will be required for the completion of clinical development of a product candidate or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

AGS-003.    We plan to initiate patient enrollment in a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib in the fourth quarter of 2011. We estimate that the direct costs that we will incur in connection with conducting the planned pivotal phase 3 clinical trial will total approximately $             million.

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AGS-004.    We are currently conducting a phase 2b clinical trial of AGS-004 that is funded entirely by the NIH. We initiated enrollment in this trial in July 2010. We expect to complete enrollment in this trial in the fourth quarter of 2011 and to complete primary endpoint analysis of the data from this trial in mid-2012. We plan to proceed with further clinical development of AGS-004 following completion of the phase 2b clinical trial if the results of our ongoing phase 2b clinical trial justify proceeding and we are able to obtain government or other third-party funding for such efforts.

AGS-009.    In July 2011, we completed enrollment in a phase 1a trial of AGS-009, a monoclonal antibody for the treatment of lupus. We initiated enrollment in this trial in the fourth quarter of 2009. We are planning to commence enrollment in a phase 1b clinical trial of this product candidate in the fourth quarter of 2011 if the results of our phase 1a clinical trial justify proceeding with the trial. We plan to seek a partner for funding this trial and for the further development and commercialization of AGS-009, but would initiate this trial even if we have not secured a partner at the time this trial is scheduled to begin.

AGS-010.    We are continuing preclinical testing on AGS-010, a recombinant human soluble CD83 protein. We plan to seek a partner for the continued development and commercialization of AGS-010.

Net Reimbursement Under Collaboration Agreement

We have recorded reimbursements of certain research and development costs as a reduction of expense in a separate line item within the statement of operations. We record these reimbursements when received. We received these reimbursements under a collaboration and licensing agreement with Kirin. Under our agreement with Kirin, which we entered into in 2004 and was terminated effective December 31, 2009, we and Kirin had agreed to share all related worldwide research and development costs and profits relating to the development of AGS-003 and AGS-004. Under the Kirin agreement, Kirin had agreed to reimburse us on a quarterly basis for our direct costs and services related to specified development and manufacturing activities and for allocated internal time at a designated full time equivalent rate.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive, operational and finance, information technology and human resources functions. Other significant general and administrative expenses include allocation of facilities costs, professional fees for accounting and legal services and expenses associated with obtaining and maintaining patents.

We expect that our general and administrative expenses will increase with the continued development and potential commercialization of our product candidates and as we operate as a public company. We believe that these increases will likely include increased costs for director and officer liability insurance, costs related to the hiring of additional personnel and increased fees for outside consultants, lawyers and accountants. We also expect to incur significant costs to comply with corporate governance, internal controls and similar requirements applicable to public companies.

Interest Income and Interest Expense

Interest income consists of interest earned on our cash and cash equivalents. We expect our interest income to increase following this offering as we invest the net proceeds from this offering pending their use in our operations.

Interest expense consists primarily of cash and non-cash interest costs related to our debt.

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As of March 31, 2011, we had $6.3 million in principal and accrued interest outstanding under the 2010 convertible notes that we issued in the original aggregate principal amount of $6.0 million in September and December 2010. These notes bear interest at a rate of 10.0% per annum. These notes had an original maturity date of September 15, 2011. The maturity date was extended to December 31, 2011 in connection with the issuance of the July 2011 convertible notes. We issued warrants to purchase a total of 20,759,953 shares of series C preferred stock at an exercise price of $0.01 per share in connection with the issuance of the 2010 convertible notes. We allocated $3.2 million of the proceeds from the issuance and sale of the convertible notes to the warrants based on the warrants’ fair value and recorded this amount on the balance sheet as warrant liability. We recorded the remaining $2.8 million in proceeds on the balance sheet as the convertible note liability. At March 31, 2011, the 2010 convertible notes are valued at $4.6 million, and the remaining $1.4 million in principal and $0.6 million in interest will be recorded as interest expense such that the value will equal $6.6 million at maturity. We expect that the principal and accrued interest on the 2010 convertible notes and the July 2011 convertible notes will convert to common stock upon the closing of this offering. At such time, the convertible note liability will be converted to additional paid in capital and common stock.

We entered into a loan agreement with a lending institution in December 2000, which we subsequently amended in November 2002, November 2004 and November 2005. We borrowed an aggregate of $5.1 million under the loan agreement at interest rates between 9.76% and 11.00%. We repaid all amounts outstanding under this agreement in April 2011.

We entered into a loan agreement in April 2007 with two lending institutions under which we borrowed $5.0 million at an interest rate of 11.25%. We repaid all amounts outstanding under this agreement in full in April 2010.

Accretion of Preferred Stock

Our convertible preferred stock is reflected on our balance sheet at its cost, less associated issuance costs. The convertible preferred stock is redeemable at the option of the holders beginning in March 2013 for an aggregate price equal to $33.1 million. The amount reflected on the balance sheet for our convertible preferred stock is increased by periodic accretions of the issuance costs so that the original amount reflected on the balance sheet will equal the aggregate redemption price.

Derivative Financing Income (Expense)

We own 49.95% of the capital of DC Bio. We consolidate the results of DC Bio in our financial statements. The other shareholders’ ownership in DC Bio is reflected in our financial statements by reference to the equity attributable to noncontrolling interest.

Under an amended and restated put agreement with the other shareholders of DC Bio, holders of Common, Class A preferred and Class B preferred shares of DC Bio have the right to put those shares to us in exchange for shares of our common stock, series B preferred stock and series C preferred stock at any time on or after March 31, 2011. We recorded a liability of $0.9 million on our balance sheet at March 31, 2011 reflecting the fair value of the put, which we calculated based on the estimated fair market value of the shares of our common stock, series B preferred stock and series C preferred stock issuable in exchange for shares of DC Bio.

We expect that the shares of DC Bio will be exchanged for shares of our common stock upon the closing of this offering. Upon such conversion, DC Bio would become a wholly-owned subsidiary of our company.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of these consolidated financial statements

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requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing at the end of this prospectus, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations.

Revenue Recognition

We recognize revenue in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification 605, Revenue Recognition, or ASC 605. We recognize revenue when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable and collectability is reasonably assured.

We have previously entered into license agreements with collaborators. The terms of these agreements have included nonrefundable signing and licensing fees, as well as milestone payments and royalties on any future product sales developed by the collaborators under our licenses. We assess these multiple elements in accordance with ASC 605, in order to determine whether particular components of the arrangement represent separate units of accounting.

We recognize upfront license payments as revenue upon delivery of the license only if the license has stand-alone value and the fair value of the undelivered performance obligations can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations are accounted for separately as the obligations are fulfilled. If the license is considered to either not have stand-alone value or have stand-alone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement is accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we must determine the period over which the performance obligations will be performed and revenue will be recognized. If we cannot reasonably estimate the timing and the level of effort to complete our performance obligations under the arrangement, then we recognize revenue under the arrangement on a straight-line basis over the period that we expect to complete our performance obligations.

Our collaboration agreements may also contain milestone payments. Revenues from milestones, if they are non-refundable and considered substantive, are recognized upon successful accomplishment of the milestones. If not considered substantive, milestones are initially deferred and recognized over the remaining performance obligation.

To date, we have not received any royalty payments and accordingly have not recognized any related revenue. We will recognize royalty revenue upon the sale of the related products, provided we have no remaining performance obligations under the arrangement.

We record deferred revenue when payments are received in advance of the culmination of the earnings process. This revenue is recognized in future periods when the applicable revenue recognition criteria have been met.

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Under our NIH contract, we receive reimbursement of our direct expenses and allocated overhead and general and administrative expenses and payment of other specified amounts totaling up to $1.4 million upon our achievement of specified development milestones. We recognize revenue from reimbursements earned in connection with the NIH contract as reimbursable costs are incurred. We recognize revenues from the achievement of milestones under the NIH contract upon the accomplishment of any such milestone.

Accrued Expenses

As part of the process of preparing financial statements, we are required to estimate accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with applicable vendor personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. Examples of estimated accrued expenses include:

• fees paid to CROs in connection with clinical trials;

• fees paid to investigative sites in connection with clinical trials;

• professional service fees; and

• unpaid salaries, wages and benefits.

We accrue our expenses related to clinical trials based on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we will adjust the accrual accordingly. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. We do not anticipate the future settlement of existing accruals to differ materially from our estimates.

Valuation of Financial Instruments

Preferred Stock Warrant Liability

We account for our preferred stock warrants in accordance with ASC Topic 480-10, Distinguishing Liabilities from Equity, which requires that a financial instrument, other than an outstanding share, that, at inception, includes an obligation to repurchase the issuer’s equity shares regardless of the timing or likelihood of the redemption, shall be classified as a liability. We measure the fair value of the warrant liability using an option-pricing model. We record changes in fair value of the warrants as interest income or expense.

The significant assumptions we use in estimating the fair value of the warrant liability include the strike price, estimate for volatility, risk free interest rate, estimated fair value of the preferred stock, and the estimated life of the warrant. Changes to these assumptions will impact the value of the warrant liability and earnings.

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Upon the closing of this offering, our warrants to purchase preferred stock will automatically be exercised for shares of our common stock. At such time, the warrant liability will be converted to additional paid in capital and common stock.

Stock-Based Compensation

In accordance with ASC 718, Stock Compensation, we record the fair value of stock options, restricted stock awards and other stock-based compensation issued to employees as of the grant date as compensation expense. We typically recognize compensation expense over the requisite service period, which is the vesting period. For non-employees, we also record stock options, restricted stock awards and other stock-based compensation issued to these non-employees at their fair value as of the grant date. We then periodically remeasure the awards to reflect the current fair value at each reporting period and recognize expense over the related service period.

Stock-based compensation expense includes stock options granted to employees and non-employees and has been reported in our statements of operations as follows:

	Years Ended December 31,						Three Months Ended March 31, 2010		Three Months Ended March 31, 2011
	2008		2009		2010
	(in thousands)
Research and development	$	409	$	286	$	109	$	70	$	27
General and administrative		265		207		215		60		55
Total	$	674	$	493	$	324	$	130	$	82

We calculate the fair value of stock-based compensation awards using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the use of subjective assumptions, including stock price volatility, the expected life of stock options, risk free interest rate and the fair value of the underlying common stock on the date of grant.

• We do not have sufficient history to estimate the volatility of our common stock price. We calculate expected volatility based on reported data for selected reasonably similar publicly traded companies for which the historical information is available. For the purpose of identifying peer companies, we consider characteristics such as industry, length of trading history, similar vesting terms and in-the-money option status. We plan to continue to use the guideline peer group volatility information until the historical volatility of our common stock is relevant to measure expected volatility for future option grants.

• The assumed dividend yield is based on our expectation of not paying dividends in the foreseeable future.

• We determine the average expected life of stock options based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future behavior.

• We determine the risk-free interest rate by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant.

• We estimate forfeitures based on our historical analysis of actual stock option forfeitures.

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The assumptions used in the Black-Scholes option-pricing model for the years ended December 31, 2008, 2009, and 2010, and for the three months ended March 31, 2011, are set forth below:

	Years Ended December 31,									Three Months Ended March 31, 2011
	2008			2009			2010
Volatility		70.00	%		81.00	%		82.00	%		82.00	%
Expected term (in years)		7			7			7			7
Risk-free interest rate		3.32	%		3.21	%		2.64	%		2.92	%
Dividend yield		0.00	%		0.00	%		0.00	%		0.00	%

The following table presents the grant dates, number of underlying shares and related exercise prices of stock options granted to employees from January 1, 2010 through March 31, 2011, as well as the estimated fair value of the stock options and the underlying common stock on the grant date.

Date of Grant	Number of Shares Subject To Options Granted		Exercise Price Per Share		Estimated Fair Value of Common Stock at Grant Date
July 1, 2010		188,326	$	0.07	$	0.07
December 10, 2010		9,808,681	$	0.08	$	0.15	(1)
February 28, 2011		1,670,399	$	0.08	$	0.15	(2)
March 30, 2011		53,547	$	0.08	$	0.15	(2)

(1) Fair value of common stock at grant date was adjusted in connection with our reassessment of fair value for financial reporting purposes. See “— Stock Option Grants on December 10, 2010.”

(2) Fair value of common stock at grant date was adjusted in connection with our reassessment of fair value for financial reporting purposes. See “—Stock Option Grants on February 28, 2011 and March 30, 2011.”

The intrinsic value of all outstanding vested and unvested options as of March 31, 2011 is $             based on a per share price of $             for our common stock, which is the midpoint of the price range set forth on the cover page of this prospectus, based on 24,444,612 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2011 and a weighted average exercise price of $0.09 per share.

The estimated fair value of common stock per share in the table above represents the determination by our board of directors of the fair value of our common stock as of the date of grant, taking into consideration various objective and subjective factors, including the conclusions of valuations of our common stock, as discussed below.

Due to the absence of an active market for our common stock, the fair value of our common stock for purposes of determining the exercise price for stock option grants was determined by our board of directors, with the assistance and upon the recommendation of management, in good faith based on a number of objective and subjective factors consistent with the methodologies outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the Practice Aid, including:

• the prices at which we most recently sold our convertible preferred stock and the rights, preferences and privileges of the convertible preferred stock as compared to those of our common stock, including the liquidation preferences of the convertible preferred stock;

• our results of operations, financial position and the status of our research and development efforts, including the status of clinical trials for our product candidates under development;

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• the composition of, and changes to, our management team and board of directors;

• the material risks related to our business;

• achievement of enterprise milestones, including the results of clinical trials and our entry into or termination of collaboration and license agreements;

• the market performance of publicly traded companies in the life sciences and biotechnology sectors, and recently completed mergers and acquisitions of companies comparable to us;

• external market conditions affecting the life sciences and biotechnology industry sectors;

• the likelihood of achieving a liquidity event for the holders of our common stock and stock options, such as an initial public offering, or IPO, given prevailing market conditions; and

• valuations prepared by independent third party consultants.

Stock Option Grants on July 1, 2010

Our board of directors granted stock options on July 1, 2010, with each option having an exercise price of $0.07 per share. In establishing this exercise price, in addition to the objective and subjective factors discussed above, our board of directors also considered input from management, as well as a valuation as of December 31, 2009 performed by an independent third-party consultant, which valued our common stock at $0.07 per share.

In the December 31, 2009 valuation, we used the probability-weighted expected return method, or PWERM, to value our common stock. Although we did not rely on the market approach to determine our enterprise value, we did review the performance of a set of guideline comparable companies. Under the PWERM approach, share value is derived from the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class. We calculated the implied enterprise value using the PWERM approach. The fair value of our common stock was estimated using a probability-weighted analysis of the present value of the returns afforded to common stockholders under several future stockholder exit or liquidity event scenarios:

• an IPO;

• a strategic merger or sale of our company at a high valuation;

• a strategic merger or sale of our company at a lower valuation; or

• the failure or dissolution of our company with no value to common stockholders.

In the December 31, 2009 valuation, probability weightings of 10.0% were used for the IPO scenario, 15.0% for a strategic merger or sale of our company at a high valuation, 15.0% for a strategic merger or sale of our company at a lower valuation and 60.0% for the failure or dissolution of our company with no value to common stockholders. The probability weightings assigned to the respective exit scenarios were primarily based on consideration of our various drug development programs, industry clinical success rates, our expected near-term and long-term funding requirements, and an assessment of the current financing and biotechnology industry environments at the time of the valuation. A discount for lack of marketability of 20.2% was applied.

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The board of directors then determined that the events and circumstances that occurred between December 31, 2009 and July 1, 2010 did not indicate a significant change in the fair value of our common stock during that period. The specific facts and circumstances considered by our board of directors for the July 1, 2010 valuation included the following:

• Jeffrey Abbey was named chief executive officer in February 2010.

• We completed dosing in our phase 2a trial of AGS-004 in the first half of 2010 and obtained trial results that justified proceeding with a phase 2b trial of this product candidate.

• We had ceased enrollment in our phase 2 clinical trial of AGS-003 in combination with sunitinib in October 2009 in anticipation of Kirin’s termination of our collaboration agreement in December 2009.

• We assumed sponsorship of the phase 1a clinical trial of AGS-009 from our then partner Novo following the termination of our agreement with Novo in June 2010.

• In April 2010, the FDA approved the first active immunotherapy for the treatment of cancer — Dendreon Corporation’s Provenge (sipuleucel-T) for metastatic castrate-resistant prostate cancer.

Based on all of these factors, the board determined that the fair value of our common stock at July 1, 2010 was $0.07 per share.

Stock Option Grants on December 10, 2010

Our board of directors granted stock options on December 10, 2010, with each option having an exercise price of $0.08 per share. In connection with the preparation of our consolidated financial statements included in this prospectus, we determined that the fair value of the common stock subject to the option awards granted on December 10, 2010, as determined by our board of directors at the time of grant, was less than the valuations that prospective underwriters in this offering estimated could be obtained in an initial public offering in the later half of 2011, based on market and other conditions at the time. As a result, we determined in July 2011, subsequent to the date of these option grants and prior to filing the registration statement of which this prospectus is a part, that the awards granted on December 10, 2010 had a compensatory element. Accordingly, we reassessed the fair value of our common stock at December 10, 2010 for financial reporting purposes. In reassessing the fair value of our common stock, the board of directors considered the factors used in determining the July 1, 2010 fair value of our common stock, as well as the following facts and circumstances:

• In July 2010, we commenced enrollment of patients in a phase 2b clinical trial of AGS-004.

• In July 2010, the NIH and NIAID extended our contract to May 2013, with a total contract value of up to $27.9 million.

• We re-started clinical testing of AGS-009 in a phase 1a trial in adult patients with mild to moderate lupus in the fourth quarter of 2010.

• We sold convertible notes in the aggregate original principal amount of $6.0 million in September and December 2010.

• We obtained final median progression free survival data from our phase 2 clinical trial of AGS-003 in combination with sunitinib.

Based on all of these factors, the board determined that the fair value of our common stock for financial reporting purposes at December 10, 2010 was $0.15 per share.

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Stock Option Grants on February 28, 2011 and March 30, 2011

Our board of directors granted stock options on February 28, 2011 and March 30, 2011, with each option having an exercise price of $0.08 per share. In connection with the preparation of our consolidated financial statements included in this prospectus, we determined that the fair value of the common stock subject to the option awards granted on February 28, 2011 and March 30, 2011, as determined by our board of directors at their respective times of grant, was less than the valuations that prospective underwriters in this offering estimated could be obtained in an initial public offering in the later half of 2011, based on market and other conditions at the time. As a result, we determined in July 2011, subsequent to the date of these option grants and prior to filing the registration statement of which this prospectus is a part, that the awards granted on these dates had a compensatory element. Accordingly, we reassessed the fair value of our common stock at February 28, 2011 and March 30, 2011 for financial reporting purposes. In reassessing the fair value of our common stock, the board of directors considered the factors used in determining the December 10, 2010 fair value of our common stock and determined that, overall, no significant events or other circumstances had occurred between December 10, 2010 and March 30, 2011 that would indicate that there was a significant change in the fair value of our common stock during that period.

Based on all of these factors, the board determined that the fair value of our common stock for financial reporting purposes at each of February 28, 2011 and March 30, 2011 was $0.15 per share.

The compensation charges reflected in our consolidated financial statements included in this prospectus reflect the reassessments of fair value that we conducted with respect to the December 10, 2010, February 28, 2011 and March 30, 2011 option grants.

There are significant judgments and estimates inherent in the determination of these valuations. These judgments and estimates include assumptions regarding our future performance; the time to completing an IPO, a strategic merger or sale, or other liquidity event; and the timing and probability of continuing to successfully progress our various product candidates toward commercialization, as well as determinations of the appropriate valuation methods. If different assumptions had been applied in the valuations, our stock-based compensation expense, net loss and net loss per share could have been significantly different. While the assumptions used to calculate and account for stock-based compensation awards represents management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if revisions are made to the underlying assumptions and estimates, our stock-based compensation expense could vary significantly from period to period.

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Results of Operations

Comparison of the Three Months Ended March 31, 2011 and the Three Months Ended March 31, 2010

The following table summarizes the results of our operations for each of the three months ended March 31, 2010 and 2011, together with the changes in those items in dollars and as a percentage:

	Three Months Ended March 31,						Increase/ (decrease)			% Change
	2010			2011
	(in thousands)
Revenue	$	1,117		$	2,232		$	1,115			99.8	%
Operating expenses:
Research and development		3,844			3,054			(790	)		(20.1	)%
General and administrative		961			710			(251	)		(26.1	)%
Total operating expenses		4,805			3,764			(1,041	)		(21.7	)%
Income (loss) from operations		(3,688	)		(1,532	)		2,156			(58.5	)%
Interest income		3			—			(3	)		(100.0	)%
Interest expense		(23	)		(910	)		(887	)		3,856.5	%
Net income (loss)	$	(3,708	)	$	(2,442	)	$	1,266			(34.1	)%

Revenue

Revenue was $2.2 million for the three months ended March 31, 2011, compared to $1.1 million for the three months ended March 31, 2010, an increase of approximately $1.1 million, or 99.8%. The $1.1 million increase for the three months ended March 31, 2011 reflects increased reimbursement under our NIH contract associated with increased activity with respect to our phase 2b clinical trial of AGS-004 as we commenced patient enrollment in the trial in the third quarter of 2010 and an increase in the rates paid to us for allocated overhead and general and administrative costs under the NIH contract that was agreed to in September 2010. The increase also reflected our recognition of milestone revenue under the NIH contract totaling $0.5 million in the three months ended March 31, 2011. We did not recognize any milestone revenue in the three months ended March 31, 2010.

Research and Development Expenses

Research and development expenses were $3.1 million for the three months ended March 31, 2011, compared to $3.8 million for the three months ended March 31, 2010, a decrease of 20.1%. This decrease in research and development expense reflects a $0.8 million decrease in indirect research and development expense. The decrease in indirect research and development expense was due to a reduction in force that we conducted in February 2010 involving seven of our employees, including three members of management. Direct research and development expense remained constant over the periods.

• Direct research and development expense for AGS-003 equaled $0.2 million in both the 2010 and 2011 periods. In the three months ended March 31, 2010, our research and development expense was related to the completion of our phase 2 combination therapy trial. In the three months ended March 31, 2011 we incurred clinical expenses in connection with the preparation and submission to the FDA of a protocol for our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib.

• Direct research and development expense with respect to AGS-004 increased from $0.2 million in the three months ended March 31, 2010 to $0.6 million in the three months ended March 31, 2011 due to the continued enrollment in our phase 2b clinical trial of AGS-004 that we commenced in the third quarter of 2010.

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• Direct research and development expense with respect to AGS-009 increased from $3,000 in the three months ended March 31, 2010 to $0.2 million in the three months ended March 31, 2011, reflecting the continued enrollment in our phase 1a clinical trial of AGS-009 that we commenced in the third quarter of 2010.

• Direct research and development expense with respect to AGS-010 decreased from $0.6 million in the three months ended March 31, 2010 to $36,000 in the three months ended March 31, 2011, reflecting our determination to seek a partner for the further development and commercialization of AGS-010.

General and Administrative Expenses

General and administrative expenses were $0.7 million for the three months ended March 31, 2011, compared to $1.0 million for the three months ended March 31, 2010, a decrease of 26.1%. This decrease reflects $0.3 million of severance expense in the three months ended March 31, 2010 related to our 2010 reduction in force. This decrease was partially offset by an increase in legal patent expense in the three months ended March 31, 2011.

Interest Expense

Interest expense was $0.9 million for the three months ended March 31, 2011, compared to $23,000 for the three months ended March 31, 2010. This increase was due to the amortization of a warrant liability recorded to represent the fair market value of warrants and accrual of interest on the 2010 convertible notes issued in September and December 2010. We expect to incur an additional $2.0 million in interest expense in respect of the 2010 convertible notes from March 31, 2011 through December 31, 2011, the maturity date of the 2010 convertible notes. We also expect to incur additional interest expense in 2011 in respect of the July 2011 notes and the associated warrants.

Comparison of the Year Ended December 31, 2010 and the Year Ended December 31, 2009

The following table summarizes the results of our operations for the years ended December 31, 2009 and 2010, together with the changes in those items in dollars and as a percentage:

	Year Ended December 31,						Increase/ (decrease)			% Change
	2009			2010
	(in thousands)
Revenue	$	5,368		$	7,273		$	1,905			35.5	%
Operating expenses:
Research and development		19,544			13,928			(5,616	)		(28.7	)%
Net reimbursement under collaboration		(6,627	)		—			6,627			(100.0	)%
General and administrative		2,932			2,704			(228	)		(7.8	)%
Total operating expenses		15,849			16,632			783			4.9	%
Income (loss) from operations		(10,481	)		(9,359	)		1,122			(10.7	)%
Interest income		74			5			(69	)		(93.2	)%
Interest expense		(283	)		(904	)		(621	)		219.4	%
Derivative financing income		—			298			298			100.0	%
Investment tax credits		103			793			690			669.9	%
Net income (loss)	$	(10,587	)	$	(9,167	)	$	1,420			(13.4	)%

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Revenue

Revenue was $7.3 million for the year ended December 31, 2010, compared to $5.4 million for the year ended December 31, 2009. The $1.9 million, or 35.5%, increase for 2010, as compared to 2009 reflects an increase in the revenue we received under our NIH contract from $3.3 million in 2009, to $7.2 million in 2010. This increased NIH revenue reflects the increased reimbursement associated with increased activity with respect to our phase 2b clinical trial of AGS-004 in 2010 and the $2.0 million true-up of our indirect cost rates for overhead and general and administrative costs that we recognized in 2010. The increase in revenue in 2010 as compared to 2009 was offset by a decrease in milestone revenue reflecting a 2009 milestone payment of $2.0 million that we received under the license agreement to which we were a party with Novo. Under this license agreement, which we and Novo entered into in February 2006 and terminated in June 2010, we licensed Novo rights to technologies for use in the development and commercialization of human antibodies against interferon-a, including AGS-009. We received no milestone revenue in 2010.

Research and Development Expenses

Research and development expenses were $13.9 million for the year ended December 31, 2010, compared to $19.5 million for the year ended December 31, 2009. Research and development expenses in 2009 were offset by reimbursements of $6.6 million that we received in 2009 under our collaboration and licensing agreement with Kirin.

Research and development expense for 2010 was $5.6 million, or 28.7%, lower than for 2009. The decrease in research and development expense was due primarily to less research and clinical trial activity in 2010 as compared to 2009.

• Direct research and development expense relating to AGS-003 decreased from $1.9 million in 2009 to $0.9 million in 2010, reflecting that we ceased enrollment in our phase 2 clinical trial of AGS-003 in combination with sunitinib in October 2009.

• Direct research and development expense relating to AGS-004 decreased from $3.6 million in 2009 to $3.1 million in 2010, reflecting the completion of the enrollment of the AGS-004 phase 2a clinical trial in June 2009 and that we did not begin enrolling patients in the AGS-004 phase 2b clinical trial until the third quarter of 2010.

• Direct research and development expense with respect to AGS-009 increased from $0 in 2009 to $0.5 million in 2010, reflecting the commencement of enrollment in our phase 1a clinical trial of AGS-009 late in the third quarter 2010. Prior to June 30, 2010, Novo was responsible for conducting research and development activities for AGS-009 under our agreement with Novo. During that period, we did not incur any direct costs for AGS-009.

• Direct research and development expense with respect to AGS-010 decreased from $3.3 million in 2009 to $1.1 million in 2010 due to a decrease in preclinical testing and our determination to seek a partner for further development and commercialization of AGS-010.

In addition, indirect research and development expense decreased by $2.4 million from 2009 to 2010. Lower personnel costs, including stock-based compensation expense, accounted for $1.4 million of the decrease as our average headcount during 2010 decreased from 67 to 57. The lower headcount was in part due to our 2010 reduction in force. The lower headcount also contributed to a $0.1 million decrease in miscellaneous other expenses. Costs related to the development of our automated manufacturing processes decreased by $0.2 million from 2009 to 2010 as we completed the final stages of development of our automated manufacturing devices and disposables in 2009. Costs for laboratory supplies that were not allocated to any of our product candidates decreased by $0.7 million from 2009 to 2010 due to lower levels of research activity in 2010.

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General and Administrative Expenses

General and administrative expenses were $2.7 million for the year ended December 31, 2010, compared to $2.9 million for the year ended December 31, 2009. General and administrative expenses were $0.2 million, or 7.8%, lower in 2010 as compared to 2009 due to a decrease in consulting costs.

Interest Income

Interest income was $5,000 for the year ended December 31, 2010, compared to $74,000 for the year ended December 31, 2009. The $69,000 decrease in interest income for 2010 as compared to 2009 reflected lower cash balances in 2010.

Interest Expense

Interest expense was $0.4 million for the year ended December 31, 2010, compared to $0.3 million for the year ended December 31, 2009. The $0.1 million increase in interest expense for 2010 as compared to 2009 was due to the amortization of warrant liability recorded to represent the fair market value of warrants and accrual of interest on the 2010 convertible notes issued in September and December 2010.

Derivative Financing Income

Derivative financing income was $0.3 million for the year ended December 31, 2010. We recorded no derivative financing income or expense in the year ended December 31, 2009. Derivative financing income in 2010 reflected the decrease in the fair market value of the shares of our stock issuable upon the put held by shareholders of DC Bio. This decrease reflected a decrease in the fair market value of our series B preferred stock and series C preferred stock in 2010 as compared to 2009. In addition, during 2010 certain shareholders of DC Bio elected not to purchase their pro rata share of the 2010 convertible notes. As a result, 50% of the shares of DC Bio held by such shareholders became exchangeable for shares of our common stock rather than our preferred stock.

Investment Tax Credits

Investment tax credits were $0.1 million for the year ended December 31, 2010 and for the year ended December 31, 2009. Under Canadian and Ontario law, DC Bio is entitled to refunds on scientific research and experimental development, or SR&ED investment tax credits. Because the investment tax credits are subject to a claim review and audit by the Canada Revenue Agency, we recognize these tax credits when they are received. In addition, we recorded $0.7 million in other income awarded under the Qualifying Therapeutic Discovery Project Program in 2010.

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Comparison of the Year Ended December 31, 2009 and the Year Ended December 31, 2008

The following table summarizes the results of our operations for each the years ended December 31, 2008 and 2009, together with the changes in those items in dollars and as a percentage:

	Year Ended December 31,						Increase/ (decrease)			% Change
	2008			2009
	(in thousands)
Revenue	$	4,450		$	5,368		$	918			20.6	%
Operating expenses:
Research and development		22,043			19,544			(2,499	)		(11.3	)%
Net reimbursement under collaboration		(8,128	)		(6,627	)		1,501			(18.5	)%
General and administrative		2,853			2,932			79			2.8	%
Total operating expenses		16,768			15,849			(919	)		(5.5	)%
Income (loss) from operations		(12,318	)		(10,481	)		1,837			(14.9	)%
Interest income		251			74			(177	)		(70.5	)%
Interest expense		(633	)		(283	)		350			(55.3	)%
Derivative financing expense		(756	)		—			(756	)		(100.0	)%
Investment tax credits		667			103			(564	)		(84.6	)%
Net income (loss)	$	(12,789	)	$	(10,587	)	$	2,202			(17.2	)%

Revenue

Revenue was $5.4 million for the year ended December 31, 2009, compared to $4.4 million for the year ended December 31, 2008. The $1.0 million, or 20.6%, increase in revenue for 2009, as compared to 2008 primarily results from an increase in milestone revenue, reflecting a milestone payment of $2.0 million under our agreement with Novo in 2009 as compared to a milestone payment under our agreement with Novo of $1.0 million in 2008. The increase in revenue in 2009, as compared to 2008, was partially offset by a slight decrease in revenue under our NIH contract from $3.4 million in 2008 to $3.3 million in 2009.

Research and Development Expense

Research and development expenses were $19.5 million for the year ended December 31, 2009, compared to $22.0 million for the year ended December 31, 2008. Research and development expenses were offset by reimbursements under the Kirin agreement of $6.6 million in 2009 and $8.1 million in 2008.

Research and development expense for 2009 was $2.5 million, or 11.3%, lower than for 2008. The decrease in research and development expense in 2009 reflects a $2.9 million decrease in indirect research and development expense partially offset by a $0.4 million increase in direct research and development costs.

The decrease in indirect research and development expense in 2009, as compared to 2008, was due to a $1.3 million decrease in costs for laboratory supplies that were not allocated to any of our product candidates, reflecting lower levels of research activity in 2009. Also, personnel expense, including stock-based compensation expense, in 2009 decreased by $0.9 million reflecting severance pay in 2008 in connection with a small reduction of our workforce at the beginning of 2008. The decrease in personnel also contributed to lower miscellaneous other expenses of $0.3 million in 2009. Costs related to the development of our automated processes decreased $0.4 million in connection with the anticipated termination of the Kirin agreement.

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The increase in direct research and development expense was due primarily to a higher level of research and clinical trial activity in 2009 as compared to 2008.

• Direct research and development expense relating to AGS-003 decreased from $2.5 million in 2008 to $1.9 million in 2009, reflecting that in September 2009 we ceased enrollment in our phase 2 combination therapy trial of AGS-003 after accruing six patients. In comparison, during 2008, we completed the phase 1/2 clinical trial of AGS-003 and initiated and enrolled 15 patients in the phase 2 combination therapy trial of AGS-003.

• Direct research and development expense relating to AGS-004 decreased from $4.0 million in 2008 to $3.6 million in 2009 due to the completion of the phase 2a trial in 2009.

• Direct research and development expense with respect to AGS-010 increased from $1.8 million in 2008 to $3.3 million in 2009, reflecting costs of preclinical animal testing of AGS-010 in 2009.

General and Administrative Expenses

General and administrative expenses were $2.9 million for the year ended December 31, 2009 and for the year ended December 31, 2008. There was no change in general and administrative expenses between 2008 and 2009, although consulting expense was $0.3 million higher in 2009 and personnel and patent expenses were $0.1 million and $0.2 million higher, respectively, in 2008.

Interest Income

Interest income was $74,000 for the year ended December 31, 2009, compared to $0.3 million for the year ended December 31, 2008. The $0.2 million decrease in interest income for 2009 as compared to 2008 reflected lower cash balances in 2009.

Interest Expense

Interest expense was $0.3 million for the year ended December 31, 2009, compared to $0.6 million for the year ended December 31, 2008. The $0.3 million decrease in interest expense for 2009 as compared to 2008 was due to the repayment of loans in 2008 under loan agreements we had with lending institutions.

Derivative Financing Expense

Derivative financing expense was $0.8 million for the year ended December 31, 2008. There was no derivative financing income or expense in the year ended December 31, 2009. No derivative financing expense was recognized in 2009 as the fair market value of the shares of our series B preferred stock and series C preferred stock did not change from 2008 to 2009. Derivative financing expense in 2008 reflected the increase in the fair market value of the shares of our stock issuable upon the put held by shareholders of DC Bio. This increase reflected an increase in the fair market value of our series B preferred stock and series C preferred stock in 2008.

Investment Tax Credits

SR&ED investment tax credits were $0.1 million for the year ended December 31, 2009, compared to $0.7 million for the year ended December 31, 2008.

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Liquidity and Capital Resources

Sources of Liquidity

Since our inception in May 1997 through March 31, 2011, we have funded our operations principally with $88.9 million from the sale of common stock, convertible debt, warrants and convertible preferred stock, including the convertible preferred stock sold by DC Bio, $32.9 million from the licensing of our technology, and $71.5 million from government contracts, grants and license and collaboration agreements.

The gross proceeds we have received from the issuance and sale of our convertible preferred stock are as follows:

Issue	Year		Number of Shares		Gross Proceeds
					(in thousands)
Series A		2000		2,408,749	$	1,594
Series B		2001		22,511,556		39,382
Series B-1		2004		2,840,909		5,000
Series C		2008		123,099,041		33,362

As of March 31, 2011, we had cash and cash equivalents of approximately $3.0 million. In July 2011, we raised an additional $3.5 million through the issuance of the July 2011 convertible notes. The July 2011 convertible notes bear interest at the rate of 10.00% per annum and mature on December 31, 2011.

Cash Flows

The following table sets forth the major sources and uses of cash for the periods set forth below:

	Years Ended December 31,									Three Months Ended March 31, 2010			Three Months Ended March 31, 2011
	2008			2009			2010
	(in thousands)
Net cash provided by (used in):
Operating activities	$	(10,920	)	$	(10,407	)	$	(10,147	)	$	(3,131	)	$	(2,071	)
Investing activities		3,788			(1,956	)		3,154			2,724			—
Financing activities		27,442			(2,718	)		4,802			(692	)		(27	)
Effect of exchange rate changes		(254	)		141			18			11			2
Net increase (decrease) in cash and cash equivalents	$	20,056		$	(14,940	)	$	(2,173	)	$	(1,088	)	$	(2,096	)

Operating Activities.    Cash used in operating activities of $10.9 million during the year ended December 31, 2008 was primarily a result of our $12.8 million net loss coupled with changes in operating assets and liabilities of $0.5 million, partially offset by non-cash items of $2.4 million. Cash used in operating activities of $10.4 million during the year ended December 31, 2009 was primarily a result of our $10.6 million net loss, coupled with changes in operating assets and liabilities of $1.2 million, partially offset by non-cash items of $1.4 million. Cash used in operating activities of $10.1 million during the year ended December 31, 2010 was primarily a result of our $9.2 million net loss, coupled with changes in operating assets and liabilities of $1.8 million, partially offset by non-cash items of $0.9 million. Cash used in operating activities of $3.1 million during the three month period ended March 31, 2010 was primarily a result of our net loss of $3.7 million, partially offset by changes in operating assets and liabilities of $0.2 million and by non-cash items of

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$0.3 million. Cash used in operating activities of $2.1 million during the three month period ended March 31, 2011 was primarily a result of our $2.4 million net loss, coupled with changes in operating assets and liabilities of $0.1 million, partially offset by non-cash items of $0.2 million.

Investing Activities.    Net cash provided by (used in) investing activities amounted to $3.8 million for the year ended December 31, 2008, $(2.0) million for the year ended December 31, 2009 and $3.2 million for the year ended December 31, 2010. Investing activities provided cash of $2.7 million for the three month period ended March 31, 2010 and $0 for the three month period ended March 31, 2011. Cash used in investing activities during all of these periods primarily reflected our purchases of equipment or our purchases of short-term investments. Cash provided by investment activities during each of these periods, if applicable, was primarily due to sales of short-term investments.

Financing Activities.    Net cash provided by (used in) financing activities amounted to $27.4 million for the year ended December 31, 2008, $(2.7) million for the year ended December 31, 2009, $4.8 million for the year ended December 31, 2010, $(0.7) million for the three months ended March 31, 2010 and $(27,000) for the three months ended March 31, 2011. The cash provided by financing activities in 2008 consisted primarily of $30.7 million of net proceeds associated with the issuance of series C preferred stock, including the sale of Class B preferred shares of DC Bio which may be put to us in exchange for shares of our common stock, series B preferred stock and series C preferred stock, partially offset by payments of $2.8 million on certain of our notes payable. The cash used in financing activities in 2009 consisted primarily of payments on certain of our notes payable of $2.7 million. Cash provided by financing activities for the year ended December 31, 2010 consisted primarily of $6.0 million of proceeds from the issuance and sale of the 2010 convertible notes, partially offset by payments on certain of our notes payable of $1.2 million. The cash used in financing activities for the three months ended March 31, 2010 and 2011 consisted primarily of payments on certain of our notes payable.

Funding Requirements

To date, we have not generated any product revenue from our development stage product candidates. We do not know when, or if, we will generate any product revenue. We do not expect to generate significant product revenue unless or until we obtain marketing approval of, and commercialize, AGS-003 or any of our other product candidates. At the same time, we expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates and lease, build out and equip our new U.S. commercial manufacturing facility. Furthermore, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company. In addition, subject to obtaining regulatory approval of any of our product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We will need substantial additional funding in connection with our continuing operations.

We expect that the net proceeds from this offering, together with our existing cash, cash equivalents, short-term investments and anticipated funding under our NIH contract, as well as the proceeds from our issuance and sale of the July 2011 convertible notes, will enable us to fund our operating expenses and capital expenditure requirements, other than for the planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility, through at least             . We intend to devote approximately $             million of the net proceeds from this offering to fund the direct costs of our planned pivotal phase 3 combination therapy clinical trial of AGS-003 and to use the balance for general corporate purposes. We will need to obtain additional financing prior to the commercialization of AGS-003 or any of our other product candidates, including for the planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility, which we expect will cost approximately $25 million, and for conducting any future clinical trials of our product candidates. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the

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development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of our product candidates.

Our future capital requirements will depend on many factors, including:

• the progress and results of the planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib;

• the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates;

• the costs and timing of our planned leasing, build-out and equipping of a new U.S. commercial manufacturing facility;

• the costs, timing and outcome of regulatory review of our product candidates;

• the costs of commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive regulatory approval;

• revenue received from sales of our product candidates, if approved by the FDA;

• the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;

• the extent to which we acquire or invest in businesses, products and technologies;

• our ability to obtain government or other third-party funding; and

• our ability to establish collaborations on favorable terms, particularly marketing and distribution arrangements for oncology product candidates outside North America and for the development and commercialization of our non-oncology product candidates on a worldwide basis.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. Except for the NIH’s remaining funding commitment with respect to AGS-004, we do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

We plan to seek government or other third-party funding for the continued development of AGS-004 following completion of the phase 2b clinical trial of AGS-004 and to seek partners or other sources of third- party funding for the further development of AGS-009 and AGS-010. We will also need to raise funds to pay for the proposed leasing, build-out and equipping of a new U.S. commercial manufacturing facility. If we are unable to raise additional funds through equity or debt financings, government or other third-party funding when needed,

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we may be required to delay, limit, reduce or terminate our development of our product candidates, our planned leasing, build-out and equipping of our new U.S. commercial manufacturing facility or our commercialization efforts, or to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Our recurring operating losses raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2010 with respect to this uncertainty. We have no current source of revenue to sustain our present activities, and we do not expect to generate product revenue until, and unless, the FDA or other regulatory authorities approve AGS-003 or another one of our product candidates and we successfully commercialize such product candidate. Accordingly, our ability to continue as a going concern will require us to obtain additional financing to fund our operations.

Contractual Obligations and Commitments

The following table summarizes our significant contractual obligations and commercial commitments at December 31, 2010 and the effects such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Operating lease	$	214	$	211	$	3		—		—
Convertible notes		6,100		6,100
Total	$	6,314	$	6,311	$	3		—		—

In July 2011, we renewed our operating lease agreement for office space in Durham, North Carolina to extend the term of the lease to November 2016. As part of the lease renewal, we retained an option to terminate the lease in December 2014. Under this lease renewal, we are obligated to pay $1.7 million in total over the remaining term of the lease, $0.3 million in 2011, a total of $0.9 million in 2012, 2013 and 2014 and a total of $0.5 million in 2015 and 2016.

In September and December 2010 we issued and sold our 2010 convertible notes in the original aggregate principal amount of $6.0 million. These notes bear interest at a rate of 10.00% per year, and have an original maturity date of December 31, 2011. At December 31, 2010, our accrued interest on the 2010 convertible notes totaled approximately $0.1 million. In July 2011, we issued and sold our July 2011 convertible notes in the aggregate original principal amount of $3.5 million. The July 2011 convertible notes accrue interest at a rate equal to 10.00% per year, and have a maturity date of December 31, 2011. The July 2011 convertible notes are not reflected in the table. We expect that the principal and accrued interest on the 2010 convertible notes and the July 2011 convertible notes will convert to common stock upon the closing of this offering.

In addition, we plan to lease a new U.S. commercial manufacturing facility for the manufacture of our Arcelis-based products. We expect that we will incur a significant long term financial commitment in connection with the lease of such facility.

We are a party to license agreements with universities and other third parties, as well as patent assignment agreements, under which we have obtained rights to patents, patent applications and know-how. Under these agreements, we have agreed to pay the other parties milestone payments upon the achievement of specified clinical, regulatory and commercialization events and royalties based on future sales of products. We have not included these payments in the table as we cannot estimate if, when or in what amounts such payments will become due under these agreements.

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Net Operating Losses

As of December 31, 2010, we had U.S. Federal and state, and Canadian federal and provincial net operating loss carryforwards of approximately $63.7 million, $83.6 million, $4.2 million, and $4.2 million, respectively. These net operating loss carryforwards begin to expire in 2012, 2017, 2014 and 2014, respectively. As of December 31, 2010, we had U.S. Federal and state tax credit carryforwards of approximately $2.8 million and $340,000, respectively. These credit carryforwards begin to expire in 2020 and 2019, respectively. The Tax Reform Act of 1986 provides for a limitation on the annual use of net operating loss and research and development tax credit carryforwards following certain ownership changes that could limit our ability to utilize these carryforwards. We have not completed a study to assess whether an ownership change has occurred, or whether there have been multiple ownership changes since our inception, due to the significant costs and complexities associated with such study. Accordingly, our ability to utilize the aforementioned carryforwards may be limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be utilized against future taxes. As a result, we may not be able to take full advantage of these carryforwards for federal and state tax purposes.

As of December 31, 2010, we have received $1.3 million in refunds through scientific research and experimental development tax credits through our consolidated subsidiary in Canada.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under Securities and Exchange Commission, or SEC, rules.

Recent Accounting Pronouncements

On January 1, 2010, we adopted new accounting and disclosure guidance for the consolidation of variable interest entities, or VIE’s, which required enhanced disclosures intended to provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE. We performed an assessment of our VIE, DC Bio, and determined that continued consolidation under the new guidance is appropriate. Accordingly, there was no impact on our financial position and results of operations. The impact of this pronouncement on future transactions will be evaluated under the new criteria when and if encountered.

In October 2009, the FASB issued new guidance for revenue recognition with multiple deliverables, which is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, although early adoption is permitted. This guidance eliminates the residual method under the current guidance and replaces it with the “relative selling price” method when allocating revenue in a multiple deliverable arrangement. The selling price for each deliverable shall be determined using vendor specific objective evidence of selling price, if it exists, otherwise third-party evidence of selling price shall be used. If neither exists for a deliverable, the vendor shall use its best estimate of the selling price for that deliverable. After adoption, this guidance will also require expanded qualitative and quantitative disclosures. We will evaluate the impact of adoption on future transactions and material modifications of existing agreements when and if encountered.

In April 2010, the FASB issued authoritative guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and non substantive milestones, and each milestone should be evaluated individually to determine if it is substantive. The guidance is effective on a prospective basis for

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milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010, with early adoption permitted. We adopted this guidance on January 1, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2010, the FASB amended the existing disclosure guidance on fair value measurements, which is effective January 1, 2010, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which is effective January 1, 2011. Among other things, the updated guidance requires additional disclosure for the amounts of significant transfers in and out of Level 1 and Level 2 measurements and requires certain Level 3 disclosures on a gross basis. Additionally, the updates amend existing guidance to require a greater level of disaggregated information and more robust disclosures about valuation techniques and inputs to fair value measurements. Since the amended guidance requires only additional disclosures, the adoption of the provisions effective January 1, 2010 did not, and for the provisions effective in 2011 will not, impact our financial position or results of operations.

In June 2011, the FASB issued authoritative guidance related to the Presentation of Comprehensive Income. This standard eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The new U.S. GAAP requirements are effective for public entities for fiscal years beginning after December 15, 2011 and interim and annual periods thereafter, with early adoption permitted. As this accounting standard only requires enhanced disclosure, the adoption of this standard will not impact our financial position or results of operations.

In May 2011, the FASB issued amended guidance on fair value measurements. This newly issued accounting standard clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This accounting standard is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011. We do not expect that adoption of this standard will have a material impact on our financial position or results of operations.

Quantitative and Qualitative Disclosure about Market Risk

Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates.

Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 10.0% change in interest rates would not have a material effect on the fair market value of our portfolio. Accordingly, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates on our investment portfolio.

We do not believe that our cash, cash equivalents and available-for-sale investments have significant risk of default or illiquidity. While we believe our cash, cash equivalents and available-for-sale investments do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits.

Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during 2008, 2009, 2010 or through March 31, 2011.

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BUSINESS

Overview

We are a biopharmaceutical company focused on the development and commercialization of fully personalized immunotherapies for the treatment of cancer and infectious diseases based on our proprietary technology platform called Arcelis. Using biological components obtained from each patient, our Arcelis-based immunotherapies employ a specialized white blood cell, called a dendritic cell, to activate an immune response that is specific to the patient’s disease. Our most advanced product candidate is AGS-003 for the treatment of metastatic renal cell carcinoma, or mRCC. We plan to initiate patient enrollment in a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib, an oral small molecule drug marketed under the trade name Sutent that is the current standard of care for mRCC, in the fourth quarter of 2011. We are also developing a second Arcelis-based product candidate, AGS-004 for the treatment of HIV. We are studying AGS-004 in a phase 2b clinical trial that is funded entirely by the National Institutes of Health, or NIH. In addition to our Arcelis-based product candidates, we are developing two other product candidates based on our expertise in dendritic cell biology: AGS-009, a monoclonal antibody for the treatment of lupus, which we are studying in a phase 1a clinical trial, and AGS-010, a preclinical biologic compound, which we are developing for the treatment of psoriasis and for organ transplantation.

We use our Arcelis platform to generate RNA-loaded dendritic cell immunotherapies using biological components derived from the individual patient to be treated. Specifically, we manufacture these fully personalized therapies using that patient’s disease sample, either tumor cells in the case of cancer or a blood sample containing virus in the case of infectious disease, and dendritic cells derived from the patient’s white blood cells. By using messenger RNA, or mRNA, from the patient’s own cancer cells or virus, our Arcelis platform yields a fully personalized immunotherapy that is designed to contain all of the patient’s disease-specific antigens, which are foreign or mutated proteins associated with the cancer cells or virus, and to elicit a rapid, broad and potent immune response that is specific to the patient’s own disease. Our Arcelis-based immunotherapies have been well tolerated in clinical trials in more than 100 patients with no serious adverse events attributed to our immunotherapies. We believe that our Arcelis platform can be used for a wide range of oncology and infectious disease indications.

We have tested AGS-003 in clinical trials in combination with sunitinib and as a monotherapy for the treatment of mRCC. In our phase 2 clinical trial of AGS-003 in combination with sunitinib, the combination therapy showed median progression free survival of 11.9 months in intermediate and poor risk patients that had a time from diagnosis to initiation of systemic therapeutic treatment of less than one year. This represented an approximately 50% extension over the eight month median progression free survival achieved by sunitinib alone in similar intermediate and poor risk patients in the pivotal phase 3 clinical trial of sunitinib as a monotherapy. Progression free survival is the length of time that passes after treatment begins and before the patient’s disease worsens or the patient dies. We have submitted to the FDA for review a protocol for our planned pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib compared to sunitinib plus placebo. Under this protocol, in order to achieve the primary endpoint of the trial, the data must demonstrate an increase of at least 30% in median progression free survival for the AGS-003 plus sunitinib arm compared to the sunitinib plus placebo control arm. We expect to complete enrollment of this trial in late 2013 and have data on the primary endpoint in mid-2014. In addition, under the protocol, the independent data monitoring committee will conduct two interim analyses of data from the trial to assess both safety and futility.

Renal cell carcinoma, or RCC, is the most common type of kidney cancer. According to the National Cancer Institute, or NCI, there are approximately 61,000 new cases of kidney cancer each year in the United States. The National Comprehensive Cancer Network, or NCCN, and the National Cancer Data Base, or NCDB, estimate that 90% of these new cases are RCC. According to the NCDB, 15% to 20% of these newly diagnosed RCC cases are mRCC. Additionally, patients initially diagnosed with early stage RCC may later present with mRCC.

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We have completed two early stage clinical trials of AGS-004 for the treatment of HIV, and are currently conducting a phase 2b clinical trial that is funded entirely by the NIH. We expect to complete enrollment in this trial in the fourth quarter of 2011 and to complete primary endpoint analysis of the data from this trial in mid-2012. According to the World Health Organization, the number of people living with HIV in the world was approximately 33.3 million in 2009. The Henry J. Kaiser Family Foundation estimates that more than 1.1 million people are currently living with HIV in the United States. According to the Centers for Disease Control and Prevention, the number of new cases of HIV infection in the United States is expected to remain steady at about 55,000 cases per year for the next decade.

We are developing our other two product candidates based on our expertise in dendritic cell biology. We have completed enrollment in a phase 1a clinical trial of AGS-009, a monoclonal antibody for the treatment of lupus, and are planning to commence enrollment in a phase 1b clinical trial of this product candidate in the fourth quarter of 2011. We are continuing preclinical testing on AGS-010, a recombinant human soluble CD83 protein, for the treatment of psoriasis and for organ transplantation.

We currently manufacture our Arcelis-based product candidates at our single, centralized manufacturing facility located in Durham, North Carolina. To prepare for the commercial launch of AGS-003 and any other Arcelis-based products we develop, we plan to establish automated manufacturing processes based on existing functioning prototypes of automated devices and disposables, to identify and lease suitable space for a new U.S. commercial manufacturing facility and to build out and equip the new facility for this purpose. We have developed proprietary processes to generate Arcelis-based products that we believe will allow us to manufacture the drug product for all of North America at this one centralized facility. Our plan is to file our biologics license application, or BLA, for AGS-003 with the FDA using the automated manufacturing processes that we have developed. We rely on contract manufacturers for the production of AGS-009 and AGS-010 and do not plan to build our own manufacturing capacity for those product candidates.

Immunotherapy to Treat Cancer and Infectious Diseases

According to the NCI, cancer is the second leading cause of death in the United States and is responsible for nearly one quarter of all deaths in the United States each year. Cancer is characterized by aberrant cells that multiply uncontrollably, resulting in tumors that may invade other tissues throughout the body and producing additional tumors, called metastases. Cancer growth can cause tissue damage, organ failure and, ultimately, death.

Many immunologists believe that cancer cells occur frequently in the human body, yet are effectively controlled by the immune system because the cancer cells, or the antigens that are associated with the cancer cells, are recognized by the immune system as abnormal and then killed. Specifically, the cancer cells or antigens are recognized by cytotoxic T lymphocytes, or T-cells, which are the cells responsible for killing the cancer cells.

Cancer cells utilize several strategies to escape detection by the immune system and T-cells. Typically, cancer cells secrete factors that act systemically to prevent T-cells from responding to activation signals, resulting in the T-cells not acting and remaining quiescent. In addition, large tumor masses are associated with a greater level of suppression of immune responses.

Chronic viral infections such as HIV or hepatitis C present the same challenges to the immune system as cancer in terms of the immune system needing to overcome disease-induced immune dysfunction to recognize and respond to virus-infected cells.

Immunotherapy Approaches

Immunotherapy is intended to stimulate and enhance the body’s natural mechanism for killing cancer cells and virus-infected cells. Immunotherapeutic approaches to treat disease can be separated into two broad classes, passive and active, based on their mechanism of action.

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Passive Immunotherapy.    Passive immunotherapies do not rely on or actively stimulate the body’s immune system to initiate the attack on the disease. Instead, the attack is made by the therapy which is manufactured ex vivo, or outside of the body. These therapies are not considered to be personalized and consist mainly of monoclonal antibodies directed at a single disease-specific enzyme or protein on the surface of targeted cells. The goal of these passive immunotherapies is to prevent targeted cells from dividing or to cause their death.

Passive immunotherapy is well established in cancer and infectious disease therapy. In 1997, Rituxan was the first passive immunotherapy to receive FDA approval when it was approved for the treatment of non-Hodgkin lymphoma. Since then, numerous other monoclonal antibody-based products have been approved for use in a variety of different cancer types. These products are typically positioned for use as second-line or third-line therapies in advanced disease settings at a time when the patient’s immune system has been weakened by prior therapy and by the disease. Most recently, in March 2011, the FDA approved Bristol-Myers Squibb’s passive immunotherapy Yervoy™ (ipilimumab), a monoclonal antibody, for the treatment of patients with unresectable or metastatic melanoma. Passive immunotherapies have also been approved for the treatment of infectious diseases, including the use of immunoglobulins to both prevent and treat viral infections such as hepatitis A and B.

Active Immunotherapy.    Active immunotherapies, on the other hand, are designed to trigger or stimulate the body’s own immune system to fight the disease. Active immunotherapy is a more specific approach to immunotherapy than passive immunotherapy because active immunotherapies contain a particular tumor-associated antigen or set of antigens that are designed to activate the patient’s own immune system to seek out and kill cells that carry the same antigen. Active immunotherapies have no direct therapeutic action, but rather rely on the patient’s immune system to recognize and kill the intended target. Most active immunotherapies utilize off-the-shelf, also referred to as defined, antigens, rather than antigens that are patient specific, and are frequently paired with adjuvants, which are agents that non-specifically activate the cells of the immune system to enhance tumor-specific immune responses.

In April 2010, the FDA approved the first active immunotherapy for the treatment of cancer – Dendreon Corporation’s Provenge (sipuleucel-T) for metastatic castrate-resistant prostate cancer. Sipuleucel-T is a partially personalized cellular immunotherapy that consists of white blood cells obtained from the patient combined with a fusion protein consisting of two parts: the antigen prostatic acid phosphatase, which is present in many prostate cancer cells, and an adjuvant, granulocyte-macrophage colony stimulating factor (GM-CSF).

A number of active cancer immunotherapies are currently being tested in late stage clinical development. For example, GlaxoSmithKline plc is conducting the largest ever phase 3 clinical trial in lung cancer with its investigational active cancer immunotherapy, MAGE-3. In addition, Amgen, Inc., through its March 2011 acquisition of Biovex, is conducting a multinational phase 3 clinical trial in metastatic melanoma of an active cancer immunotherapy that utilizes a virus to stimulate anti-tumor immunity and kill cancer cells.

Shortcomings of Immunotherapies.    Although passive and active immunotherapies have been proven to be incrementally effective in malignant and infectious diseases, both approaches have shortcomings, which include:

• Due to tumor-induced or virus-induced immunosuppression, even with the administration of immunotherapies, many patients may not be able to mount effective immune responses against the intended target antigens due to the reliance of the immunotherapy on accessory cells such as CD4+ helper T-cells, which are functionally impaired by the patient’s disease.

• Most passive and active immunotherapies target one or only a few antigens, which increases the probability that the cancer or virus-infected cells will escape detection by the immune system. The antigens used in most active immunotherapies are normal, non-mutated, self-antigens which are generally poor at stimulating immune responses, even from healthy immune systems, as the natural protection against autoimmune disease is that the human immune system generally does not generate immune responses against self-antigens.

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• Most active immunotherapies employing defined antigens are not directly applicable to multiple types of cancer and require significant preclinical development work to identify relevant antigens that address the targeted cancer.

• We believe that most active immunotherapies do not impact early clinical endpoints, such as progression free survival, but rather manifest their clinical effects after a protracted period of time, with benefit generally seen only in overall survival.

• Toxicity is frequently associated with these therapies as the presence of the target antigen on some normal cells can result in collateral damage to healthy tissues.

• Therapies involving cells derived from the patient’s own cells present challenges to commercialization due to the difficulty of producing such therapies at commercial scale using manual processes, producing multiple doses from a limited amount of patient material, storing and shipping individual doses and keeping costs as low as possible.

Another shortcoming of these immunotherapies is highlighted by a study recently published in Nature Medicine, which provides evidence that, even in the same type of cancer, the genetic makeup of the tumor is dramatically different from patient to patient. In the study, scientists sequenced the whole genomes of 50 patients’ breast cancer tumors alongside matching DNA from the same patients’ healthy cells in order to identify genomic alterations present only in the cancerous cells. The results revealed that the genetic makeup of each of the tumors was highly diverse. Of the approximately 1,700 gene mutations found in total, most were unique to individual patients’ tumors, and only three occurred in 10% or more of the patients. These results demonstrate that, even within the same indication, each patient’s tumor contains distinct antigens and suggests that immunotherapies that rely on defined, off-the-shelf antigens or a single targeted antigen may have limited effectiveness.

Although many of the immunotherapies currently in clinical development have shown promising results, we do not believe that any of them utilizes a technology that employs the patient’s own cancer or virus-infected cells to create a fully personalized immunotherapy that is directly targeted to the patient’s unique genetic disease.

Arcelis Technology Platform

Arcelis is our proprietary active immunotherapy technology platform for generating fully personalized RNA-loaded dendritic cell immunotherapies. We use our Arcelis platform to manufacture AGS-003, which we are developing for the treatment of mRCC, and AGS-004, which we are developing for the treatment of HIV. We believe that Arcelis is potentially applicable to a wide range of cancers and infectious diseases.

Our Arcelis platform is focused on dendritic cells that present antigens to the attention of the immune system and are critical to the human immune system’s recognition of the presence of proteins derived from cancer cells or virus-infected cells. Dendritic cells are capable of internalizing cancer protein antigens or virus protein antigens and displaying fragments of these protein antigens on their surface as small peptides. The dendritic cells then present these peptide antigens to T-cells capable of binding to these peptide antigens and producing a large complement of molecular factors that, in the case of cancer, lead to direct cancer cell death and, in the case of infectious disease, kill virus-infected cells to control the spread of infectious pathogens.

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The following graphic illustrates the processes comprising our Arcelis platform:

As shown in the graphic above, our Arcelis platform requires two components derived from the particular patient to be treated, specifically:

• a disease sample from the patient — tumor cells in the case of cancer or a blood sample containing virus in the case of infectious disease — which is generally collected at the time of diagnosis or initial treatment, and

• dendritic cells derived from the patient’s monocytes, a particular type of white blood cell, which are obtained from the patient through a laboratory procedure called leukapheresis that occurs after diagnosis and at least four weeks prior to the initiation of our immunotherapy.

The tumor cells, or the blood sample containing the virus, and the leukapheresis product are shipped separately following collection from the clinical site to our single, centralized manufacturing facility in Durham, North Carolina.

At our facility, we use standard methods to isolate the patient’s mRNA, which is a key component of the genetic code, from the disease sample and amplify the mRNA. In parallel, we take the monocytes from the leukapheresis product and culture them using a proprietary process to create matured dendritic cells. We then immerse the matured dendritic cells in a solution of the patient’s isolated mRNA and a synthetic RNA that encodes a protein known as CD40 ligand, or CD40L, and apply a brief electric pulse to the solution, in a process referred to as electroporation. This process enables the patient’s isolated mRNA and the CD40L protein to pass into, or load, the dendritic cells. We then further culture the mRNA-loaded dendritic cells so that these cells allow for antigen expression from the patient’s mRNA and presentation in the form of peptides on the surface of the dendritic cells. These mature, loaded dendritic cells are formulated into the patient’s plasma that was collected during the leukapheresis to become the Arcelis-based drug product. We then vial, freeze and ship the drug product to the clinic, which thaws the drug product and administers it to the patient by intradermal injection.

Upon injection into the skin of the patient, the antigen-loaded dendritic cells in the drug product migrate to the lymph nodes near the site of the injection. It is at these lymph nodes that the drug product comes into contact with T-cells. We believe that through this interaction the loaded dendritic cells orchestrate the differentiation, expansion and education, of antigen-specific T-cells. A unique property of our dendritic cells is that they result in

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the generation of a special kind of T-cell known to be associated with good clinical outcome. These are known as CD8+ central effector and memory T-cells which are long-lived and provide durable immune responses. Once activated and expanded, these T-cells are able to seek out and kill cancer or virus-infected cells that express the identical antigens as those displayed on the surface of the dendritic cells. Because the generation of these T-cells is dependent on secretion of the cytokine interleukin 12, or IL-12, from the dendritic cells, measurement of IL-12 is a marker for potency of AGS-003 and potentially other Arcelis-based products.

We believe that our Arcelis platform addresses important shortcomings of both passive and other active immunotherapies:

• We believe that the inclusion of the CD40L protein in our Arcelis platform results in Arcelis-based products not requiring CD4+ helper T-cells or adjuvants with potential adverse side effects to mount an immune response with strong anti-tumor or anti-viral reactivity. Our Arcelis-based products have demonstrated the ability to completely reverse tumor-induced immunosuppression with as few as three doses.

• Our Arcelis platform, by using mRNA from the patient’s own cancer or virus, yields a fully personalized immunotherapy that is designed to contain all of the patient’s disease-specific antigens, including mutated antigens, and to elicit a broad and potent immune response that is specific to the patient’s own disease. Accordingly, we believe our Arcelis platform limits the probability that cancer or virus-infected cells will escape detection by the immune system.

• Our Arcelis technology is a platform technology that can potentially be used to treat any cancer or virus with essentially the same manufacturing process and equipment.

• In clinical trials, our Arcelis-based products have been shown in a majority of patients to rapidly establish anti-tumor or anti-viral immunity. We believe that this is due to the unique mechanism of action of our Arcelis-based products, which mimics the natural immune response to foreign antigens. This rapid immune response may allow achievement of early clinical endpoints, such as progression free survival.

• Our Arcelis-based product candidates have been well tolerated in clinical trials in more than 100 patients with no serious adverse events attributed to our immunotherapies.

• Our Arcelis technology, though fully personalized, requires only a small disease sample and a single leukapheresis to produce several years of therapy for each patient — five years of therapy in the case of AGS-003 based on our current dosing regimen. In addition, Arcelis-based products can be stored and shipped frozen, which we expect will allow the use of a single, centralized manufacturing facility for North America. We believe that this facility, when built and equipped to use the automated manufacturing processes that we have developed, will enable manufacturing with a cost of goods for our fully personalized Arcelis-based products that we expect will be comparable to other biologics.

Strategy

Our goal is to build a commercial biopharmaceutical company, founded on our extensive expertise in dendritic cell biology and immunology, primarily through the use of our Arcelis platform. Key elements of our strategy are to:

• Complete development of AGS-003 for mRCC, and manufacture and commercialize AGS-003 on our own in North America and collaborate with third parties for the manufacture and commercialization of AGS-003 outside North America, or, if we determine that it is in our best interest, with third parties on a worldwide basis.

• Continue development of AGS-004 for HIV through government or other third-party funding and collaborate with third parties for commercialization on a worldwide basis.

• Continue to build on our Arcelis platform by developing fully personalized immunotherapies for other cancers and infectious diseases.

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• Establish automated manufacturing processes based on existing functioning prototypes of automated devices and disposables and, prior to the filing of our BLA for AGS-003, identify, lease, build out and equip a new U.S. facility for the commercial manufacture of products based on our Arcelis platform.

• Seek partners for further development and commercialization of AGS-009 for lupus and AGS-010 for the treatment of psoriasis and for organ transplantation.

• Pursue broad intellectual property protection for our Arcelis technology platform, product candidates and proprietary manufacturing processes through U.S. and international patent filings and maintenance of trade secret confidentiality.

Our Development Programs

The following table summarizes our four development programs and their development status. We currently hold all commercial rights to all four of these programs in all geographies.

Product Candidate	Description	Primary Indication(s)	Status
AGS-003	Arcelis-based fully personalized immunotherapy	mRCC	Planned pivotal phase 3 with initiation of enrollment expected in the fourth quarter of 2011
AGS-004	Arcelis-based fully personalized immunotherapy	HIV	Ongoing phase 2b with completion of enrollment expected in the fourth quarter of 2011
AGS-009	Anti-interferon-a monoclonal antibody	Lupus	Ongoing phase 1a with results expected in the fourth quarter of 2011
AGS-010	CD83 recombinant protein	Psoriasis; Organ transplantation	Preclinical

AGS-003 for Metastatic Renal Cell Carcinoma

Our most advanced product candidate, AGS-003, is based on our Arcelis platform. We are developing AGS-003 for use in combination with sunitinib and potentially other therapies for the treatment of mRCC. Sunitinib is an oral small molecule drug sold under the trade name Sutent and is the current standard of care for first-line treatment of mRCC. First-line treatment means the initial treatment of a disease following diagnosis. We have conducted multiple clinical trials of AGS-003 for the treatment of mRCC, including a phase 2 clinical trial of AGS-003 in combination with sunitinib. We have submitted a protocol for a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib compared to sunitinib plus placebo to the FDA for review. We expect to commence patient enrollment in this pivotal phase 3 clinical trial in the fourth quarter of 2011.

Renal Cell Carcinoma.    Renal cell carcinoma is the most common type of kidney cancer. The NCI estimated that there would be approximately 61,000 new cases of kidney cancer and that approximately 13,000 people would die from this disease in the United States in 2011. According to the NCCN and the NCDB, it is estimated that 90% of new kidney cancer cases each year are RCC. Relative to the general population, the NCI estimates that the five-year survival rate from 2001 to 2007 for patients with RCC was approximately 70%; however, for patients with RCC that had metastasized by the time RCC was first diagnosed, which condition we refer to as newly diagnosed mRCC, the five-year survival rate has historically been approximately 10%.

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NCDB statistics indicate that from 2000 through 2008 between 15% and 20% of newly diagnosed RCC patients presented with mRCC annually in the United States. Additional patients that were initially diagnosed with earlier stage RCC may also present with mRCC as these patients suffer relapses. The NCCN estimates that between 20% to 30% of patients with early stage RCC will relapse within three years of surgical excision of the primary tumor. Although the NCI does not provide prevalence of RCC by stage, we believe that the estimated three-year relapse rate suggests that there may be an additional 10,000 to 15,000 cases of mRCC identified annually in the United States. Combining newly diagnosed mRCC patients with patients who relapse, we estimate that there may be between 20,000 to 25,000 new cases of mRCC in the United States each year.

The diagnosis of RCC is generally made by examination of a tumor biopsy under a microscope. Upon evaluation of the visual appearance of the tumor cells, the pathologist will classify the RCC into clear cell or non-clear cell types. According to NCCN, approximately 85% of all RCC diagnoses are clear cell RCC. Because clear cell types are the most common type of tumor cell and are more likely to respond favorably to treatment, most of the more recently approved therapies for mRCC have limited their clinical trials to patients with the clear cell type of tumor cell. However, approvals for these therapies have not been limited to clear cell types of RCC, and these therapies may be used for both clear cell and non-clear cell types.

Diagnosis and Current Treatment of mRCC.    The initial treatment for most patients with RCC, including mRCC, is surgical removal of the tumor, usually requiring partial or complete removal of the affected kidney, referred to as nephrectomy. In the absence of metastatic disease, the NCCN recommends observation after nephrectomy, although systemic therapies are recommended for patients who are believed to be at higher risk of relapse. Notably, patients whose tumors have metastasized to other organs beyond the primary kidney at the time of diagnosis are considered to have newly diagnosed mRCC and have the poorest overall prognosis and survival. For patients who present with mRCC upon diagnosis or as a result of a relapse from an earlier stage of RCC, the NCCN recommends systemic treatment with currently available therapies, except in the rare instances where metastatic lesions can be removed by surgery alone.

Upon diagnosis, the prognosis for patients with mRCC is classified into three overall disease risk profiles—favorable, intermediate and poor—using objective prognostic risk factors developed by researchers at Memorial Sloan-Kettering Cancer Center, or MSKCC. These risk factors have been correlated to reduced progression-free and overall survival in mRCC and include:

• time from diagnosis to the initiation of systemic therapeutic treatment of less than one year, which is indicative of more aggressive disease. We refer to this risk factor as the less than one year to treatment risk factor;

• low levels of hemoglobin, a protein in the blood that carries oxygen;

• elevated corrected calcium levels;

• diminished patient performance status or physical functioning; and

• elevated levels of the enzyme lactate dehydrogenase in the blood.

Patients exhibiting zero risk factors at the time of treatment are included in the favorable risk group; patients exhibiting one or two risk factors are included in the intermediate risk group; and patients exhibiting three or more risk factors are included in the poor risk group. Patients in the intermediate and poor risk groups, even when treated with standard of care therapies such as sunitinib, generally have an expected survival of less than one to two years.

mRCC is generally resistant to conventional systemic approaches such as chemotherapy, radiation and hormonal therapies. Although mRCC has been treated with cytokine-based immunotherapies such as interferon-a and IL-2, which have demonstrated a clinical benefit in a small number of mRCC patients, these therapies have been shown to have severe toxicities which limit their use, including cardiopulmonary,

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neuropsychiatric, dermatologic, renal, hepatic and hematologic side effects. Although high-dose IL-2 has demonstrated durable complete mRCC remissions, its toxicity restricts its use to a small minority of patients.

In the past few years, several new agents, such as Sutent (sunitinib), Votrient™ (pazopanib), Torisel^® (temsirolimus), Nexavar^® (sorafenib), Avastin™ (bevacizumab) plus interferon-a, and Afinitor^® (everolimus) have been approved for the treatment of mRCC. While the majority of these new agents have been evaluated in first-line treatment of mRCC, we do not believe that any of them demonstrated in their pivotal phase 3 clinical trials progression free survival or overall survival greater than the progression free survival and overall survival demonstrated in the pivotal phase 3 clinical trial of sunitinib. According to Datamonitor, in 2007 Sutent controlled a majority of the market share for systemic therapies for first-line treatment of mRCC. Although multiple other agents have been approved for first- or second-line mRCC since 2007, in 2010 Sutent continued to control a majority of the market share for first-line treatment of mRCC. Additional agents, such as axitinib and tivozanib, are in late-stage development for mRCC and could be approved by or during 2012. We estimate, based on publicly available information, including 2010 quarterly and annual reports of companies that market drugs approved for RCC, that the current worldwide RCC market for these new agents is over $1.5 billion.

Although most of these new agents have demonstrated prolonged progression free survival as compared to interferon-a, they are rarely associated with durable remissions or survival, particularly in patients who are not classified as favorable risk at the time of treatment. In addition, each of these new agents has shortcomings that limit its use in the treatment of mRCC, including significant toxicities, such as neutropenia and other hematologic toxicities, fatigue, diarrhea, hand-foot syndrome, hypertension and other cardiovascular effects. For example:

• Sunitinib is limited in ability to achieve long-term disease control and overall survival in intermediate and poor risk patients, including in particular those with the less than one year to treatment risk factor. In addition, approximately 19% of patients in the pivotal phase 3 clinical trial of sunitinib discontinued treatment prior to disease progression due to the toxicities associates with the drug. These toxicities have prevented other new agents for mRCC from being readily combined with sunitinib for first-line treatment of mRCC.

• In the pivotal phase 3 clinical trial of pazopanib, 16% of patients discontinued treatment prior to disease progression due to toxicities. Although pazopanib demonstrated median progression free survival of 11.1 months and median overall survival of 22.9 months in 155 first-line mRCC patients in its pivotal phase 3 trial, we do not believe that, since its approval in 2009, it has substantially reduced the use of sunitinib in first-line treatment.

• Temsirolimus is administered by IV infusion, which is inconvenient for patients. Temsirolimus has been evaluated in clinical trials primarily in poor risk patients and was approved by the FDA for first-line treatment in poor risk mRCC patients. However, its benefits in this population have been shown to be short-lived. For example, in the pivotal phase 3 trial of temsirolimus, the median progression free survival in poor risk mRCC patients was 5.5 months and median overall survival was 10.9 months.

• Sorafenib has shown lower efficacy in first-line therapy for mRCC than sunitinib and other new agents, as demonstrated by the median progression free survival of 5.7 months that it achieved in a randomized phase 2 trial in first-line treatment. Sorafenib is primarily used as a second-line or third-line treatment for mRCC.

• Bevacizumab has been approved for use in combination with interferon-a as a first-line treatment for mRCC. However, the combined toxicities of the two therapies and the multiple weekly injections of interferon-a appear to make this a less appealing option for mRCC patients and oncologists. In two separate phase 3 studies of this combination, 23% and 28% of patients discontinued treatment due to toxicities.

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• Everolimus has been approved for mRCC patients who have progressed after initial treatment with sunitinib, sorafenib or both. While its activity in this setting is improved over placebo, it only demonstrated an overall response rate of 2% and median progression free survival of 4.9 months in its pivotal phase 3 clinical trial.

AGS-003 Opportunity.    The overlapping and combined toxicities of the new agents described above have prevented their use in combination therapies. For instance, a phase 1 clinical trial of the combination of sunitinib and temsirolimus was discontinued due to toxicities. Furthermore, in a phase 2 clinical trial of the combination of temsirolimus with bevacizumab, 41% of patients discontinued treatment early due to toxicities. We believe that the lack of success to date in combining these therapies without significant toxicity and the lack of durable remissions and prolonged survival in subjects with intermediate and poor risk disease, suggest that there remains an unmet need for novel therapeutic approaches for mRCC that can improve efficacy without adding any appreciable toxicity. We believe that the safety profile that AGS-003 has demonstrated to date, which may enable its use in combination with other therapies with little or no additional toxicities, gives it the potential to address this unmet need.

Development Status.    The following table summarizes our clinical development of AGS-003 and its predecessor program, MB-002.

Clinical Trial	Enrollment Time Frame	Number  of Patients Receiving Therapy	Status
Pivotal Phase 3 Combination Therapy Clinical Trial of AGS-003 in Combination with Sunitinib (planned)	2011 – 2013 (planned)	325 planned (650 planned to be randomized)	Planned to commence enrollment in the fourth quarter of 2011
Phase 2 Combination Therapy Clinical Trial of AGS-003 in Combination with Sunitinib	2008 – 2009	21	Completed (4 patients ongoing as of June 30, 2011)
Phase 1/2 Monotherapy Clinical Trial of AGS-003	2006 – 2008	22	Completed (2 patients ongoing as of June 30, 2011)*
Monotherapy Rollover Clinical Trial of AGS-003	2006 – 2010	2	Completed
Phase 1/2 Monotherapy Clinical Trial of MB-002	2004 – 2005	20	Completed

* One of these two patients is receiving AGS-003 after progression per the investigator’s discretion as allowed under the protocol for the trial.

Efficacy Endpoints.    There are a number of standard efficacy endpoints that clinicians use to measure outcomes for clinical trials for cancer therapies. The following are explanations of the meanings of the various efficacy endpoints that we have used and will be using in our clinical trials of AGS-003 and MB-002. Each is determined in accordance with Response Criteria in Solid Tumors, or RECIST, measurement guidelines.

• Progression free survival (PFS): the length of time that passes after treatment begins and before the patient’s disease worsens or the patient dies.

• Overall survival (OS): the time interval from treatment to death.

• Overall response rate: the number of patients in the trial who achieve a partial or complete response.

• Complete response: disappearance of all measurable target lesions and non-target lesions.

• Partial response: overall tumor regression based on a decrease of at least 30% in the overall amount of measurable tumor mass in the body and improvement or no change in non-target lesions.

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• Stable disease: neither sufficient decrease in tumor size to qualify as a partial response nor sufficient increase in tumor size to qualify as disease progression.

• Clinical benefit rate: the number of patients in the trial who achieve stable disease or a partial or complete response.

• Disease progression: growth of at least 20% in the size of the measurable tumor mass, appearance of new tumor(s) or growth of non-target lesions since beginning of treatment.

Planned Pivotal Phase 3 Combination Therapy Clinical Trial.    We have submitted a protocol for a pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib for the treatment of newly diagnosed mRCC to the FDA for review. We expect to initiate patient enrollment in this trial in the fourth quarter of 2011.

We have designed this trial to be a randomized, multicenter, double-blind, placebo-controlled trial of AGS-003 in combination with sunitinib compared to sunitinib plus placebo. We plan to enroll approximately 650 patients in the trial to generate 600 evaluable patients. We plan to enroll these patients at approximately 100 to 120 clinical sites in North America and Europe. Under the protocol, these patients will be randomized between the two arms on a one-to-one basis. We anticipate that we will require approximately two years to fully enroll patients in the trial. We expect to monitor these patients for approximately 11 months following randomization, at which time we believe we will have data from at least 460 patients that reach disease progression during the trial, which would provide us with sufficient data to determine whether the primary endpoint of the trial has been achieved. If we complete enrollment as planned, we expect to have primary endpoint data in mid-2014.

We have designed this study with a primary endpoint of progression free survival, which has served as the primary endpoint in the pivotal phase 3 trials for five of the six products most recently approved by the FDA for the treatment of mRCC. Secondary endpoints will include overall survival, overall response rate and safety. In order to achieve the primary endpoint, results from the trial must demonstrate an increase of at least 30% in progression free survival for the AGS-003 plus sunitinib arm compared to the sunitinib plus placebo arm. Such a result would be statistically significant (p £ 0.05). The statistical significance of clinical trial results is determined by statistical methods that establish the p-value of the results. Typically, clinical trial results are statistically significant if they have a p-value of 0.05 or less, meaning that there is less than a one-in-20 likelihood that the observed results occurred by chance. There will be an interim analysis of data from the trial at 30% and 50% information by the independent data monitoring committee to assess both safety and futility.

Our design for this trial requires patients to be adults who have been newly diagnosed with mRCC with primary tumor intact (no prior nephrectomy) and measurable metastatic disease, who are histologically confirmed to have a component of clear cell RCC based upon the tumor collected at nephrectomy, who are suitable for sunitinib therapy and who are poor risk or intermediate risk patients with the less than one year to treatment risk factor and not more than three MSKCC risk factors in total. The protocol provides for exclusion of patients from the trial if they have brain metastases or autoimmune conditions requiring chronic immunosuppressive therapy or if they have received any prior therapies for RCC. As part of the trial design, the two arms of the trial will be balanced based upon known prognostic risk factors and enrollment location. Patients who are randomized will be stratified by overall performance status (0, 1), number of MSKCC risk factors (1, 2 or 3) and geographic region (North America, Western Europe and other).

Under the protocol we have submitted to the FDA, patients in the AGS-003-sunitinib arm would be dosed with AGS-003 once every three weeks for five doses, followed by a booster dose every three months until disease progression. Sunitinib would be dosed in six-week cycles, consisting of four weeks on drug and two weeks on drug holiday. A total of four six-week cycles of sunitinib, combined with five AGS-003 doses would comprise the 24-week induction phase. AGS-003 dosing would be initiated at the end of the initial six-week sunitinib cycle. The first dose of AGS-003 would be administered prior to the start of sunitinib dosing in the second sunitinib cycle. Patients in the placebo-sunitinib arm would receive placebo on the same dosing schedule as AGS-003 in the AGS-003-sunitinib arm and sunitinib on the same dosing schedule as sunitinib in the AGS-003-sunitinib arm. This

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dosing regimen is identical to the dosing regimen used in our phase 2 combination therapy clinical trial of AGS-003 and sunitinib. We also expect the patient population in the planned pivotal phase 3 clinical trial to be comparable to the patient population treated in our phase 2 combination therapy clinical trial. In addition, we have submitted to the FDA a separate protocol under which, following disease progression, patients in the placebo-sunitinib arm will be able to participate in an optional extension trial of AGS-003 in combination with other compatible second-line agents.

Phase 2 Combination Therapy Clinical Trial.    From July 2008 to October 2009, we enrolled 21 newly diagnosed mRCC patients in a single arm, multicenter, open label phase 2 trial of AGS-003 in combination with sunitinib. We conducted this clinical trial at nine clinical sites in the United States and Canada. In selecting an agent to study with AGS-003 in combination therapy, we chose to evaluate the combination of AGS-003 with sunitinib for the following reasons:

• Sunitinib was quickly establishing itself as the first-line standard of care for the treatment of mRCC in our targeted patient population.

• In our laboratory tests measuring the potency of the immune responses generated by the combination of AGS-003 and sunitinib as measured by CD8+ central effector and memory T-cell responses, we observed that sunitinib had not demonstrated any detrimental effect on the ability of AGS-003 to generate the desired immune response.

• Due to the anti-cancer activity of sunitinib, by initiating dosing of AGS-003 following the first treatment cycle of sunitinib, patients were likely to have less metastatic tumor burden, or at least a slowing of tumor progression, at the time of initiation of AGS-003 therapy, making it more likely that AGS-003 would have the opportunity to elicit immunologic responses and an effect on the tumor.

• In its pivotal phase 3 clinical trial, sunitinib had demonstrated a significant improvement in median progression free survival over interferon-a, the previous standard of care. However, because of sunitinib’s toxicity, oncologists have not been able to improve upon these results by trying to combine sunitinib with other approved targeted agents as a result of the overlapping toxicities and inability to combine full doses of these various targeted agents. Because of AGS-003’s relative lack of toxicity, we were comfortable that we could combine AGS-003 with sunitinib and administer a full dose of both compounds without added toxicity.

In addition, although we only learned this after starting the phase 2 combination therapy trial, sunitinib decreases regulatory T-cells and myeloid-derived suppressor cells, or MDSC’s, both of which are known to expand during cancer and suppress T-cell responses. As a result, we hypothesized that AGS-003 would be particularly potent in combination with sunitinib because of the ability of AGS-003 to generate T-cell responses in patients who may have experienced a reduction in these immunosuppressive regulatory T-cells and MDSC’s after the initiation of sunitinib therapy.

The original design for this trial called for the recruitment of 50 patients to generate 38 fully evaluable patients. The primary endpoint of the trial was complete response rate. Secondary endpoints included progression free survival, overall survival, safety, clinical benefit rate and immune response.

Our design for the trial required patients to be adults with previously untreated mRCC with no prior nephrectomy or at least one accessible lesion for biopsy, a histologically confirmed predominantly clear cell tumor and suitability for sunitinib therapy. Patients with brain metastases or autoimmune conditions requiring chronic immunosuppressive therapy, and those who had received prior RCC therapy, were excluded from the trial.

Patients in the trial generally received one initial six-week cycle of sunitinib, consisting of four weeks on drug and two weeks on drug holiday, prior to initiating the combined treatment with AGS-003. Patients then received a dose of AGS-003 every three weeks for a total of five doses, while also continuing three additional six-week cycles of sunitinib. This 24-week induction phase was followed by a booster phase during which patients received a dose of AGS-003 once every three months and continued to receive sunitinib in six-week cycles until disease progression.

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In October 2009, we terminated enrollment in this trial early in connection with the anticipated termination of our former collaboration involving AGS-003 with Kyowa Hakko Kirin Co., Ltd., or Kirin, and the resulting termination of funding for the trial by Kirin. As a result, only a total of 21 patients were enrolled and received at least one dose of AGS-003 in this trial. In addition, the trial population evaluated in the trial differed significantly from the intended population. The trial was originally designed to enroll subjects with favorable and intermediate risk disease profiles. Instead, the actual population enrolled consisted entirely of patients with intermediate or poor risk disease profiles that had the less than one year to treatment risk factor. Based on published research, the expected complete response rate, progression free survival rate and overall survival rate for patients treated with sunitinib alone with intermediate and poor risk factors is greatly diminished compared to the expectations for patients treated with sunitinib alone who present with a favorable risk disease profile at the time of diagnosis. Primarily for these reasons, we could not and did not perform the statistical analysis to determine whether the primary endpoint of complete response rate was achieved, as we did not have sufficient number of evaluable patients nor any favorable risk patients included at the time of early trial closure. For this reason, we expect the data from this trial to be considered by the FDA for the purpose of evaluating the safety and feasibility of AGS-003, but that it will only have a limited impact on the FDA’s ultimate assessment of the efficacy of AGS-003.

As a result, we concluded that the initial trial design and expectation of complete responses in patients with mRCC was inappropriate for our immunotherapy, and particularly inappropriate for the enrolled patient population of intermediate and poor risk patients with the less than one year to treatment risk factor. We also concluded that the secondary endpoints in the trial, progression free survival and overall survival, along with immunologic response, were the appropriate endpoints to consider for measuring the efficacy of AGS-003 in combination with sunitinib in patients with mRCC.

The following table summarizes certain key data from the 21 patients (15 intermediate risk; 6 poor risk) enrolled in the trial:

Outcome	(N=21)
Median PFS	11.9 months
Median OS	Not yet reached
Complete response	0 patients
Partial response	6 patients
Stable disease	7 patients
Immune response	IL-2 and interferon-g (IFN-g) recovery

Particular observations from these data and the trial, which have informed our further clinical development of AGS-003, include:

• To date, four patients have not progressed and continue to be dosed. Eleven of the 21 patients are still alive. As a result, we have not yet reached median overall survival.

• Of the six patients that exhibited a partial response, one partial response was observed during the 24-week induction phase. The other five partial responses were observed after prolonged dosing with AGS-003 in combination with sunitinib during the booster phase. We do not believe that these late occurring partial responses have been routinely observed in clinical trials of sunitinib alone in intermediate and poor risk patients. As a result, we believe that these late responses may relate to the immunologic effects of AGS-003 and AGS-003’s effect on CD8+ central effector and memory T-cells.

• AGS-003 was found to have positive impact on immune cell function and restoration of cellular immunity, including an increase in levels of IL-2 and IFN-g in a majority of patients.

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• In the trial, we observed a trend towards correlation between the increase in percentage expansion or proliferation of CD8+ central effector and memory T-cells and prolonged progression-free intervals in patients who have benefited for the longest period of time on study. These results were accepted for presentation during the 2011 annual American Society of Clinical Oncology (ASCO) meeting.

• The adverse events in this trial associated with AGS-003 were generally only mild injection site reactions, while the toxicities with sunitinib were consistent with those expected from treatment with sunitinib alone.

AGS-003 Phase 2 Combination Therapy Clinical Trial, as Compared to Sunitinib Pivotal Phase 3 Clinical Trial and Sunitinib EFFECT Clinical Trial.    Our phase 2 combination therapy clinical trial used similar patient inclusion and exclusion criteria as the pivotal phase 3 clinical trial of the use of sunitinib as a monotherapy in mRCC conducted between 2004 and 2006 and a more recently reported 2011 “EFFECT” clinical trial of sunitinib at two different doses and schedules as a monotherapy in mRCC. A summary comparison of the results of these two sunitinib monotherapy trials and of our phase 2 clinical trial of AGS-003 in combination with sunitinib is set forth in the graph below. The results of the sunitinib monotherapy clinical trials were presented by Dr. Robert Motzer of MSKCC in oral presentations at the 2007 ASCO annual meeting and the 2011 ASCO Genitourinary annual meeting. Although we believe this comparison is useful in evaluating the overall results of our phase 2 clinical trial, the three studies were separate trials conducted at different sites and at different times. Moreover, the patient population with mRCC is heterogeneous and the differences in patient population in the trials could have had a significant impact on the results of the trials. We have not conducted a head-to-head comparison of sunitinib and AGS-003 as a combination therapy against sunitinib as a monotherapy in a clinical trial. This is the design of the protocol for our planned pivotal phase 3 combination therapy clinical trial of AGS-003. Results of this head-to-head comparison may differ significantly from those set forth in the following graph. In addition, because the three studies were separate trials and because only 21 patients received AGS-003 in our phase 2 combination therapy clinical trial, differences between and among the results of the three trials may not be statistically meaningful.

The results from the sunitinib phase 3 pivotal trial set forth in the graph above represent the results of sunitinib monotherapy in intermediate or poor risk patients with the less than one year to treatment risk factor. We have excluded the results for the 38% favorable risk patients in the sunitinib phase 3 pivotal trial and any intermediate and poor risk patients who did not have the less than one year to treatment risk factor, as we do not believe that these patients are comparable to the patient population that we evaluated in our phase 2 combination therapy clinical trial. The EFFECT trial results shown in the above graph show median progression free survival of 8.5 months for all three patient groups (favorable, intermediate and poor) because the results of the trial were not analyzed separately by risk

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group or by MSKCC risk factors. As a result, the stated EFFECT median progression free survival includes the results from the 29% favorable risk patients enrolled in the trial. In the sunitinib pivotal trial, favorable risk patients exhibited a substantially longer period of progression free survival than either intermediate or poor risk patients. We did not enroll any favorable risk patients in our phase 2 combination therapy clinical trial of AGS-003.

Phase 1/2 Monotherapy Clinical Trial.    From April 2006 through October 2008, we enrolled 22 newly diagnosed mRCC patients in a single arm, multicenter, open label phase 1/2 clinical trial of AGS-003 as a monotherapy. These patients were enrolled at six sites in the United States and Canada, including 13 at one site. The trial was designed as a two-stage trial. In stage 1, we would recruit 24 patients to generate at least 18 evaluable patients, and in stage 2, we would recruit an additional 22 patients to generate at least a total of 35 evaluable patients. In order to advance to stage 2 of the trial, we were required to achieve the primary endpoint for stage 1, which was three patients with a complete response or partial response. Secondary endpoints included progression free survival, overall survival, safety and immunogenicity.

Our design for the trial required patients to be asymptomatic or symptomatic but fully functional adults with mRCC, whether or not displaying symptoms, with no prior nephrectomy and with sufficient renal function in the remaining kidney. Patients with brain metastases, those who had received prior RCC therapy and those with active autoimmune disease were excluded from the trial. The trial was designed to enroll subjects with favorable and intermediate risk disease profiles.

In the trial, patients were administered a dose of AGS-003 every two weeks for a total of five doses, followed by a dose of AGS-003 every month for an additional four doses during the 24-week induction phase of the trial. These doses were followed by booster doses every three months until disease progression. However, due to the approval of sunitinib and sorafenib at the time we were beginning to enroll patients in the trial and the changing standard of care for mRCC as a result of the approvals, we experienced delays in enrolling patients and were unable to enroll any favorable risk patients in the trial. For these reasons, we shifted our development focus for subsequent trials to AGS-003 as a combination therapy.

To date, one patient in the trial has continued to be dosed for more than three years, and two other patients in the trial continue to be monitored for overall survival.

The following table summarizes certain key data from the 22 patients (13 intermediate risk; 9 poor risk) enrolled in the trial:

Outcome	(N=22)
Median PFS	5.6 months
Median OS	13.6 months
Complete response	0 patients
Partial response	1 patient
Stable disease	7 patients
Immune response	IL-2 and IFN-g recovery

Particular observations from these data and the trial, which have informed our further clinical development of AGS-003, include:

• Despite the intermediate and poor risk population, seven of the evaluable patients experienced some degree of tumor regression at one point during the induction phase of treatment with AGS-003.

• AGS-003 was found to have positive impact on immune cell function and restoration of cellular immunity, including an increase in levels of IL-2 and IFN-g in a majority of patients.

• AGS-003 was well-tolerated, with adverse events limited to mild injection site reactions, transient flu-like symptoms and tenderness in the lymph nodes.

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Phase 1/2 Monotherapy Clinical Trial of MB-002.    Prior to developing AGS-003, we developed a predecessor RNA-loaded dendritic cell drug product candidate, MB-002, for the treatment of mRCC. From April 2004 through March 2005, we enrolled 20 newly diagnosed mRCC patients in a single arm, multicenter, open label phase 1/2 clinical trial of MB-002 as a monotherapy. The overall endpoints for this trial included safety, feasibility of developing and supplying patient-specific product to clinical sites from a central facility, clinical benefit, progression free survival and immunologic response. In order to achieve success for this trial, we had to demonstrate the product was safe, could be readily manufactured and supplied from a central facility, generated anti-tumor activity and had the ability to induce an immunologic response capable of restoring IL-2 and IFN-g based T-cell responses in treated subjects.

This trial was designed to enroll patients with newly diagnosed mRCC, whether or not displaying symptoms, with no prior nephrectomy and with sufficient renal function in the remaining kidney. Patients with brain metastases, those who had received prior RCC therapy and those with active autoimmune disease were excluded from the trial.

In the trial, patients were administered a dose of MB-002 every two weeks for five doses, followed by a dose of MB-002 every month for four doses, during the 24-week induction phase. This dosing of MB-002 was followed by booster doses every three months until disease progression.

The following table summarizes certain key data from the 20 patients (15 intermediate risk; 5 poor risk) enrolled in the trial:

Outcome	(N=20)
Median PFS	6.3 months
Complete response	0 patients
Partial response	0 patients
Immune response	IL-2 recovery only

Particular observations from these data and the trial, which informed our further development of AGS-003, include:

• Four patients experienced some tumor regression at one point during the induction phase of treatment with MB-002.

• MB-002 was well-tolerated, with adverse events limited to mild injection site reactions, transient flu-like symptoms and tenderness in the lymph nodes.

• MB-002 was feasible to manufacture and deliver from a central facility to clinical trial sites in the United States and Canada.

• The immunologic response data suggested that MB-002 was only able to partially overcome the immune suppression observed in mRCC. While IL-2 recovery was observed, IFN-g recovery was not observed in the majority of patients.

Because MB-002 corrected defects in the production of only one of the two critical cytokines - IL-2, but not IFN-g - required for an effective immune response, we conducted further laboratory research and developed an optimized product candidate, AGS-003. AGS-003 differs from MB-002 in the way we mature the dendritic cells prior to administration. Based on in vitro experiments that simulate immunization in the laboratory, we observed that AGS-003 could overcome both critical cytokine defects in RCC patient cells and fully restore immune response. We subsequently confirmed this observation in vivo in the phase 1/2 monotherapy clinical trial of AGS-003 and in the phase 2 combination therapy clinical trial of AGS-003 and sunitinib.

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Monotherapy Rollover Clinical Trial.    In 2006, we enrolled two intermediate risk patients who had completed dosing in the phase 1/2 monotherapy clinical trial of MB-002 and who had experienced two years of stable disease in a separate, open label rollover trial of AGS-003 monotherapy. As this trial was an extension trial and observational in nature, the endpoints for this trial consisted of continued safety assessments and immunologic assessments to denote any differences between MB-002 and AGS-003. In this trial, the two patients received an induction phase of AGS-003 doses, followed by continued booster doses, consistent with the AGS-003 dosing schedule in the phase 1/2 monotherapy clinical trial of AGS-003, and were treated with AGS-003 for an additional four and four and a quarter years, respectively, until disease progression occurred.

Other Development Activities.    We are conducting preclinical testing of AGS-003 in combination with some of the new mRCC therapies and the mRCC therapies in late-stage development with the goal of determining whether AGS-003 may be used in combination with multiple approved therapies and therapies in late-stage development in addition to sunitinib.

AGS-004 for Human Immunodeficiency Virus

We are developing AGS-004, our second Arcelis-based product candidate, for the treatment of HIV. We completed two early stage clinical trials of AGS-004 and are currently conducting a phase 2b clinical trial. Our phase 2b clinical trial of AGS-004 is currently being funded entirely by the NIH as part of a $29.9 million contract awarded to us as part of a competitive submission process in 2006. We plan to proceed with further clinical development of AGS-004 following completion of the phase 2b trial if we are able to obtain government or other third-party funding for such efforts.

Human Immunodeficiency Virus.    HIV is characterized by a chronic viral infection and an associated deterioration of immune function. Specifically, the virus disables and kills crucial human immune cells called CD4+ T-cells. Over time, this viral impact on an infected person’s immune system outpaces the body’s natural ability to replace CD4+ T-cells and immunodeficiency results. CD4+ T-cells are a sub-group of lymphocytes, a type of white blood cell. CD4+ T-cells play an important role in establishing and maximizing the capabilities of the immune system. These cells provide signals for orchestrating an immune response by activating and directing other immune cells, which ultimately leads to the cytotoxic activity.

According to the World Health Organization, the number of people living with HIV in the world was approximately 33.3 million in 2009. The Henry J. Kaiser Family Foundation estimates that more than 1.1 million people are currently living with HIV in the United States. According to the Centers for Disease Control and Prevention, the number of new cases of HIV infection in the United States is expected to remain steady at about 55,000 cases per year for the next decade. The number of new cases of HIV in Western Europe in 2009 was 30,000 according to the World Health Organization.

Existing Therapies.    In 1996, a combination of oral medications known as highly-active antiretroviral therapy, or HAART, was introduced to treat patients with HIV. Since then, the introduction of new therapeutic drug classes and combination drug treatment strategies has enhanced treatment for HIV. Datamonitor estimates 2008 global sales of HIV treatments to be $10.7 billion.

New drugs for the treatment of HIV are continually being introduced because current treatments are imperfect. The requirement of existing therapies for lifelong daily treatment has made population-wide adherence difficult. Poor compliance has led to drug resistant HIV variants that are ineffectively controlled by the available armamentarium of approved drugs. In addition, although some current drugs used for the treatment of HIV are relatively benign, few combination regimens are wholly non-toxic. The most recent U.S. guidelines on antiretroviral treatment contain a number of tables of adverse effects of combination regimens and how to manage them. Some combinations present potentially life-threatening complications and other complications that are chronic, cumulative and overlapping, and sometimes irreversible. As a result, although HAART and these new therapeutic drug classes and drug treatment strategies have saved many lives, there is a need to develop new therapies that address these shortcomings.

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Description and Development Status.    AGS-004 is a fully personalized immunotherapy based on our Arcelis platform. It is produced by electroporating dendritic cells with RNA encoding for patient-specific HIV antigens that have been derived from a patient’s virus-infected blood and with the CD40L protein. The process for producing AGS-004 is the same process as is used to produce AGS-003, with the one key difference being that AGS-003 contains all of the antigens from a patient’s tumor cells and AGS-004 contains all variants unique to each individual patient of four selected HIV antigens.

Phase 2b Clinical Trial.    In July 2010, we began enrolling patients in a randomized, placebo-controlled, double-blind phase 2b clinical trial of AGS-004. We plan to enroll 42 patients in the trial at approximately nine sites in the United States and Canada. These patients will be randomized between AGS-004 treatment and a placebo control on a two-to-one basis. As of June 30, 2011, we had enrolled 25 patients in this trial. We expect to complete enrollment of this trial in the fourth quarter of 2011. We expect to complete primary endpoint analysis of the data from this trial in mid-2012.

The primary endpoint of the trial is a comparison against placebo of the anti-HIV effects of AGS-004 as measured by viral load after the discontinuation of standard HIV antiretroviral drug therapy. Secondary endpoints include change in viral load from pre-antiretroviral therapy to the end of the antiretroviral treatment interruption, changes in CD4+ T-cell counts, assessment of plasma viral load kinetics and safety. In order to achieve the primary endpoint, the trial must demonstrate a 1.1 log 10 reduction in the median viral load in patients in the AGS-004 arm from the point of discontinuation of antiretroviral drug therapy to the date that is 12 weeks later as compared to the placebo control arm. Such a result would be statistically significant. A log 10 reduction means a decrease in virus concentration to 10% of the original concentration. A 1.1 log 10 reduction means a decrease to 8% of the original concentration. Viral load is reported as copies of the HIV virus in a milliliter (mL) of blood. Changes in viral load are reported as a log change.

To be included in this trial, patients must be adults with HIV-1 infection that was virally suppressed with a stable antiretroviral therapy regimen, adequate CD4+ T-cell counts and a pre-antiretroviral therapy plasma viral sample to be used to manufacture AGS-004. Patients with HIV Type 2, or HIV-2, active viral infection other than HIV Type 1, or HIV-1, active syphilis infection or a history of hepatic, renal or cardiac impairment which would increase risks associated with prolonged interruption of antiretroviral therapy are being excluded.

In this trial, patients will receive intradermal doses of AGS-004 or placebo every four weeks for a total of four doses, together with their standard antiretroviral therapy. Following the fourth dose of AGS-004 or placebo, the patient will discontinue their antiretroviral therapy but continue to receive AGS-004 or placebo every four weeks for 12 weeks. Patients in the AGS-004 arm that demonstrate control of viral replication and maintain adequate CD4+ T-cell counts can remain off their antiretroviral therapy and continue their treatment interruption past 12 weeks, which we expect will enable us to assess the durability of the clinical benefit to these patients.

Phase 2a Clinical Trial.    From 2008 to 2009, we enrolled 29 patients in a single arm, multicenter, open label phase 2a clinical trial of AGS-004. These patients were enrolled at eight clinical sites in Canada. Eight of these patients had previously participated in our phase 1/2 clinical trial of AGS-004. We are still following five patients post-treatment to evaluate safety and durability.

The primary endpoint of this trial was to measure the ability of AGS-004 to improve immune control of HIV as measured by the proportion of patients with HIV viral loads of less than 1,000 copies/mL on at least three time points during a 12-week antiretroviral treatment interruption. Secondary endpoints included safety, change in viral load from pre-antiretroviral therapy to the end of the antiretroviral treatment interruption and changes in CD4+ T-cell counts.

To be included in this trial, patients were required to be adults with HIV-1 infection that was virally suppressed with a stable antiretroviral therapy regimen, adequate CD4+ T-cell counts and a pre-antiretroviral therapy plasma viral sample to be used to manufacture AGS-004. Patients with HIV-2, active viral infection other than HIV-1, active syphilis infection or active autoimmune disease were excluded.

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Patients initially received four monthly doses of AGS-004, together with their standard antiretroviral therapy. After receiving those doses, antiretroviral therapy was discontinued and two additional monthly doses of AGS-004 were administered. Patients who maintained plasma viral loads under 10,000 copies/mL and CD4+ T-cell counts above 350 were eligible to remain off of their antiretroviral drugs and receive up to two additional booster doses of AGS-004 at eight and 12 weeks, respectively, after the second monthly dose administered during the period of antiretroviral treatment interruption.

In this clinical trial, eight of the 24 patients that continued the trial during the 12-week period of antiretroviral treatment interruption had HIV viral loads of less than 1,000 copies/mL on at least three time points during the 12-week period of antiretroviral treatment interruption. In addition, we observed the following other results:

• AGS-004 was safe and well-tolerated, with no additional risk observed during antiretroviral treatment interruption, no subjects experienced serious adverse events that were related to treatment with AGS-004 and no subjects reported an adverse event leading to the discontinuation of AGS-004.

• Sixteen patients had reduced HIV viral loads at the end of the antiretroviral treatment interruption period as compared to their pre-antiretroviral therapy viral loads.

• Similar to the trend we observed in our phase 2 combination therapy trial of AGS-003, we observed a trend towards correlation between the percentage expansion or proliferation of CD8+ central effector and memory T-cells and improved virologic control.

• The median CD4+ T-cell counts three months after the antiretroviral treatment interruption did not demonstrate a statistically significant decrease from the median of the last three CD4+ T-cell counts for the period during which the patients received AGS-004 and antiretroviral drug therapy.

Phase 1/2 Clinical Trial.    From 2006 to 2007, we enrolled 10 patients in a single arm, single center, open label phase 1/2 clinical trial of AGS-004. The primary endpoint of this trial was to examine the immunogenicity of AGS-004 monotherapy through CD8+ central effector and memory T-cell response. The secondary endpoint was the safety of AGS-004 in combination with antiretroviral therapy. The inclusion and exclusion criteria were substantially similar to those for the phase 2a clinical trial of AGS-004. Patients received four doses of AGS-004 one month apart.

This trial met its predefined endpoint of demonstrating multifunctional CD8+ central effector and memory T-cell response against multiple HIV antigens in four of the nine patients whose materials were available for testing. AGS-004 was well-tolerated, with adverse events limited to mild injection site reactions, transient flu-like symptoms and tenderness in the lymph nodes.

Future Clinical Development.    Our ongoing phase 2b clinical trial of AGS-004 may support a similar phase 3 trial design with viral load control as the primary endpoint. However, we are considering other potential endpoints, such as maintenance of CD4+ T-cell counts or reduction in inflammatory markers. Alternatively, we may target HIV-infected individuals who have not received any prior treatment with the goal of significantly delaying the need for antiretroviral therapy. We are working with key opinion leaders to determine the appropriate future clinical development plan for AGS-004. We expect to make this determination based, in part, on the outcome of our ongoing phase 2b clinical trial. We do not plan to conduct a phase 3 trial or other clinical trials of AGS-004 unless we obtain government or other third-party funding for such efforts.

NIH Contract.    Our development of AGS-004 has received significant funding from the U.S. federal government. In September 2006, we entered into a multi-year research contract with the NIH and the National Institute of Allergy and Infectious Diseases, or NIAID, to design, develop and clinically test an autologous HIV immunotherapy capable of eliciting therapeutic immune responses. We are developing AGS-004 under this

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agreement. Under this contract, as it has been amended, the NIH and NIAID have committed to fund up to $29.9 million, including reimbursement of our direct expenses and allocated overhead and general and administrative expenses and payment of specified amounts totaling up to $1.4 million upon our achievement of specified development milestones. This commitment extends until May 2013. As of June 30, 2011, there was up to approximately $11.9 million of potential revenue remaining to be earned under the agreement with the NIH.

AGS-009 for Lupus

AGS-009 is a monoclonal antibody that we are developing for the treatment of systemic lupus erythematosus, or lupus. We discovered AGS-009 through our dendritic cell biology research. We are currently conducting a phase 1a clinical trial of AGS-009 in lupus patients.

Lupus.    Lupus is a chronic and disabling autoimmune disorder, characterized by inflammation that can affect a person’s skin, joints, kidneys and other organs. Most patients suffer from joint pain and swelling. Other common symptoms include fever, rash, malaise, myalgia, fatigue, temporary cognitive impairment, anemia and other hematologic complications. The Lupus Foundation of America estimates that there are approximately 1.5 million people living with lupus in the United States.

Existing Therapies.    No permanent cure is available for lupus. Physicians typically use steroids, non-steroidal anti-inflammatory drugs, anti-malaria agents and immunosuppressive drugs to treat the symptoms of lupus. In 2011, the FDA approved Benlysta^® (belimumab) as the first new drug regimen for lupus in over 50 years. In clinical trials, patients treated with belimumab and standard therapies experienced less disease activity than those who received a placebo and standard therapies. Although belimumab has the potential to improve the quality of life for many lupus patients, it appears to have limited benefit to patients with certain severe variations of lupus. In addition, African American patients and patients of African heritage participating in two belimumab studies did not appear to respond to treatment. Overall, lupus treatments have proven inadequate to control the disease and there remains a need for new lupus treatments.

Description and Development Status.    AGS-009 is a humanized monoclonal antibody with the ability to bind and neutralize human interferon-a. Interferon-a is a protein that induces inflammation and which, when uncontrolled, has been suggested, to be involved in a range of chronic inflammatory diseases, including lupus. Interferon-a is activated and produced by dendritic cells. In preclinical testing, AGS-009 demonstrated high binding affinity and broad specificity against all subtypes of interferon-a, which we believe enables it to target a cytokine hypothesized to be a major factor in lupus symptoms and progression. We expect that inhibiting interferon-a in lupus patients may control the disease and mitigate its debilitating side effects.

Phase 1a Clinical Trial.    From September 2009 to July 2011, we enrolled 24 patients in a randomized, double-blind, placebo-controlled, single dose escalation phase 1a clinical trial of AGS-009 in adult patients with mild to moderate lupus. These patients were enrolled at seven clinical sites in North America. Patients enrolled in the trial had laboratory confirmed lupus for six months or more. There were six dose levels involving four patients at each level. The dose levels in each cohort were 0.01, 0.1, 1, 3, 10 and 30 mg/kg. Within each cohort of four patients, three were randomized to receive AGS-009 and one received placebo. Each patient was administered a single intravenous dose of AGS-009 or placebo. Each patient was then monitored continuously for 12 weeks for safety, pharmacokinetics, pharmacodynamics and preliminary indications of bioactivity. We expect results of this trial will be available in the fourth quarter of 2011.

The primary endpoint for safety and tolerability in this trial is dose-limiting toxicity. Secondary endpoints include pharmacodynamic and pharmacokinetic parameters, bioactivity and immunogenicity assays, including changes in disease status. This clinical trial was initially conducted by Novo Nordisk A/S, or Novo, with which we had a partnership related to this program. The partnership was terminated in June 2010, and we assumed sponsorship of the trial.

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Future Clinical Development.    We are currently planning a randomized, placebo-controlled, multiple dose escalation phase 1b clinical trial of AGS-009 in adult lupus patients. We expect that there will be both a subcutaneous injection arm and an intravenous administration arm. Trial participants would be administered drug or placebo every two weeks for 26 weeks. If the results of the phase 1a clinical trial justify proceeding, we expect to commence enrollment in the phase 1b trial in the fourth quarter of 2011. We plan to seek a partner for funding the trial and for the further development and commercialization of AGS-009, but plan to commence the phase 1b clinical trial even if we have not entered into a funding arrangement with a partner.

AGS-010 for Psoriasis and Organ Transplantation

We are developing AGS-010, a recombinant human soluble CD83 protein, for the treatment of psoriasis and for organ transplantation. This drug candidate is the result of our research efforts into how the ability to turn off specific undesirable immune responses can have a therapeutic effect on all immune mediated diseases, including organ transplant rejection and autoimmune and inflammatory diseases.

In preclinical testing, AGS-010 has demonstrated strong immunomodulatory attributes in vitro and in vivo. In these tests, AGS-010 was active in autoimmune disease models of multiple sclerosis, Type 1 diabetes, inflammatory bowel disease and solid organ transplant rejection. Specifically, in animal models, nine or fewer daily bolus intravenous doses conferred complete clinical resolution of disease and, therefore, did not require chronic administration or the maintenance of concomitant drug therapies. The effects were complete and permanent, and treated animals were not globally immunosuppressed.

We believe these data suggest that a limited course of AGS-010 treatment may be able to permanently turn off any immune responses that are active during the time of administration of AGS-010. Thus, we believe that AGS-010 may impact the underlying pathophysiology of the disease and potentially have broad utility in a wide spectrum of autoimmune and inflammatory disorders, as well as in organ transplantation.

Psoriasis.    Psoriasis is a common chronic autoimmune disorder of the skin, causing redness and irritation, for which no cure is available and existing treatments have significant drawbacks. According to the NIH, psoriasis affects between two and three percent of the world’s population, and there are approximately 7.5 million Americans with the disease.

Organ Transplantation.    In connection with organ transplantation, transplant rejection and failure of the transplant therapy can occur when the transplant recipient’s body recognizes the new organ as foreign and attacks it. As a result, transplant recipients must take drugs, generally for the duration of the patient’s life, to suppress the immune system and prevent such rejection.

Planned Clinical Development.    We plan to seek government or other third-party funding for continued development of AGS-010. If we obtain such funding, we plan to advance the development of AGS-010 and conduct the necessary studies to enable the submission of an investigational new drug application, or IND, for AGS-010.

Manufacturing

We manufacture our Arcelis-based products, AGS-003 and AGS-004, for use in our clinical trials of those product candidates and rely on third-party contract manufacturers for clinical supply of AGS-009 and preclinical supply of AGS-010.

Manufacturing of AGS-003 and AGS-004

Our facility in Durham, North Carolina includes manufacturing suites for the production of drug products using our Arcelis technology platform. We have designed these suites to comply with the FDA’s current good

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manufacturing practice, or cGMP, requirements. We have manufactured the drug product for our development and clinical trial activities associated with AGS-003 and AGS-004 to date, and plan to manufacture the drug product for our planned pivotal phase 3 combination therapy trial of AGS-003 using our current processes at our current facility. We do not believe that our current manufacturing processes and current facility can be used to produce AGS-003 on a commercial scale. Accordingly, we plan to establish automated manufacturing processes based on existing functioning prototypes of automated devices and disposables, to identify and lease suitable space for a new U.S. commercial manufacturing facility and build out and equip the new facility for manufacture of our Arcelis-based products. As part of our BLA for AGS-003, we will need to demonstrate comparability between AGS-003 that we produce using our current processes in our current facility and AGS-003 produced using the automated processes in our planned new facility.

Arcelis Manufacturing Processes.    Our Arcelis platform requires two components derived from the particular patient to be treated, specifically:

• a disease sample from the patient — tumor cells in the case of cancer or a blood sample containing virus in the case of infectious disease — which is generally collected at the time of diagnosis or initial treatment, and

• dendritic cells derived from the patient’s monocytes, a particular type of white blood cell, which are obtained from the patient through a laboratory procedure called leukapheresis that occurs after diagnosis and at least four weeks prior to the initiation of our immunotherapy.

Monocytes are obtained from the patient’s blood at his or her clinical site through leukapheresis. The tumor cells or blood sample containing the virus and the leukapheresis product, including plasma from the patient, are separately shipped from the clinical site following collection to our manufacturing facility in Durham, North Carolina. The tumor cells or blood sample containing the virus are shipped to us in a kit that we provide to the clinical site. The shipping containers that we provide for the leukapheresis product are temperature-controlled. The leukapheresis product is viable for manufacture if it arrives at our facility within four days after being taken from the patient.

At our facility, we isolate the mRNA from the disease sample. Using standard methods, we amplify the mRNA so that only small disease samples are required to manufacture drug product. This process allows us to manufacture additional drug product at a later date without requiring new disease samples from the patient. In parallel, we take the monocytes from the leukapheresis product and use a proprietary process to culture them to create mature dendritic cells.

We then take the mature dendritic cells and immerse them in a solution of the patient’s isolated mRNA and a synthetic RNA that encodes CD40L. The CD40L protein enables the dendritic cells to secrete IL-12, a cytokine required to induce new immune responses. We then apply a brief electric pulse to the solution, which is a process referred to as electroporation. This process generates pores in the dendritic cell membranes and permits the patient’s isolated mRNA and the CD40L protein to pass into the cells. We refer to this process as loading the dendritic cells.

We then culture the mRNA-loaded dendritic cells to allow for antigen expression from the patient’s mRNA in the form of peptides on the surface of the dendritic cells in order to interact with the patient’s immune system upon administration. These mature, loaded dendritic cells are formulated into the patient’s plasma that was collected during leukapheresis. We also add cryoprotectants to protect the cells during freezing and thawing. The resulting mixture is the Arcelis-based drug product. We then vial, freeze and cryogenically store the drug product using liquid nitrogen. We ship the drug product to the clinic using containers that can maintain a constant temperature for up to three weeks. Following receipt of the drug product, the clinic thaws the drug product and administers it to the patient by intradermal injection.

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Commercial Manufacturing Facility and Automated Process.    We have developed an automated manufacturing process for the production of commercial volumes of Arcelis-based drug product. We have produced functioning prototypes of the automated manufacturing equipment for this process. This equipment can be used to perform all steps required for the manufacture of our Arcelis-based product candidates. We intend to identify and lease suitable space for the build-out and equipping of a new U.S. commercial manufacturing facility for the manufacture of AGS-003, AGS-004 and other Arcelis-based products.

In the new facility, we plan to use the automated equipment to perform Arcelis drug product processing in closed, single-use disposable components. A patient’s disease sample would only be in contact with these disposable sets or components and not with the balance of our manufacturing equipment. These disposable components would be discarded as biological waste upon completion of the manufacturing process for the particular patient’s drug product. Because our equipment would never be in direct contact with patient material, we believe that the time required to prepare the equipment between batches would be minimal. We also believe that processing material in disposable components will reduce the complexity and size of the facility by reducing the amount of required labor. We expect that automation will help ensure consistency of the manufacturing processes and facilitate compliance with cGMP.

Specifically, we estimate that using our automated manufacturing processes in a new facility would enable a 70% reduction in the personnel required for commercial scale production as compared to our existing processes, resulting in the need for a facility only approximately one-third the size of what would be required for commercial scale production using our existing processes. Furthermore, we estimate that our cost of goods would be reduced by approximately 75% by manufacturing our Arcelis-based drug products using automated processes, as compared to our existing processes.

Prior to implementing automated manufacture of AGS-003, we will be required to demonstrate that the new facility and the automated equipment are constructed and operated in accordance with cGMP and the comparability between AGS-003 that we produce using the processes in our current facility and AGS-003 produced using the automated processes in our new facility. We expect that it will require approximately two years and an approximately $25 million investment to build out and equip the facility from the time we begin the build-out.

We believe that this facility and automated process will provide us key advantages, including:

• manufacturing methods which are consistent and reproducible across patients and indications;

• centralized manufacturing capable of delivering AGS-003 to clinical sites throughout North America;

• commercial scale manufacturing of AGS-003;

• manufacturing with a cost of goods for our fully personalized Arcelis-based products that we expect will be comparable to other biologics; and

• an automated manufacturing platform that is scalable for large disease indications such as HIV and other cancer indications.

Manufacturing of AGS-009 and AGS-010

We use contract manufacturers for the production of our AGS-009 and AGS-010 product candidates and purchase drug product from these manufacturers on a purchase order basis. AGS-009 is produced in Chinese hamster ovary cells using conventional recombinant, cell culture and antibody purification methods. AGS-010 is produced in bacteria and purified to a sufficient level for use in laboratory research and animal studies. We are currently working with a contract manufacturing organization to further refine this process for AGS-010 and scale it in order to provide sufficient material for our planned preclinical studies and early stage clinical trials. We believe that a number of suppliers are available for the production of AGS-009 and AGS-010. We do not plan to build our own manufacturing capacity for these products.

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Sales and Marketing

We own exclusive worldwide commercial rights to all of our product candidates. We currently intend to retain North American marketing rights for AGS-003 and any future oncology products that we may develop. To exploit these rights, we would expect to build a commercial infrastructure for such products comprised of a targeted specialty sales force led by several sales management personnel, an internal marketing and medical affairs staff and a specialty distribution team. Our sales infrastructure would also include personnel to establish and direct reimbursement activities with third-party payors, such as managed care organizations, group purchasing organizations, oncology group networks and government accounts. We would need to hire selected personnel to fill key positions in advance of the approval of AGS-003. We currently have no sales and marketing or distribution capabilities or in-house personnel specializing in these functions. Outside North America, we plan to seek to enter into collaboration agreements with other pharmaceutical or biotechnology firms to commercialize AGS-003. We may, however, decide to collaborate with third parties to commercialize AGS-003 or any of our future oncology product candidates on a worldwide basis if we determine such arrangement to be in our best interest.

For AGS-004, AGS-009 and AGS-010, we plan to seek to enter into collaboration agreements with other pharmaceutical or biotechnology firms to commercialize these product candidates on a worldwide basis.

Competition

The biotechnology and pharmaceutical industries are highly competitive. There are many pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively engaged in the research and development of products that may be similar to or competitive with our products. There are a number of multinational pharmaceutical companies and large biotechnology companies currently marketing or pursuing the development of products or product candidates targeting the same indications as our product candidates. It is probable that the number of companies seeking to develop products and therapies for the treatment of unmet needs in these indications will increase. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approaches, and others are based on entirely different approaches.

Many of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining approval for drugs and achieving widespread market acceptance. Our competitors’ drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available. We expect any products that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.

mRCC

Historically, mRCC was treated with chemotherapy, radiation and hormonal therapies, as well as cytokine-based therapies such as interferon-a and IL-2. More recently, the FDA has approved several new agents as monotherapies for mRCC, including Nexavar, marketed by Bayer Healthcare Pharmaceuticals, Inc. and Onyx Pharmaceuticals, Inc., Sutent, marketed by Pfizer, Inc., Avastin, marketed by Genentech, Inc., a member of the Roche Group, and Votrient, marketed by GlaxoSmithKline. Other recently approved agents for the treatment of mRCC are Torisel, marketed by Pfizer, and Afinitor, marketed by Novartis Pharmaceuticals Corporation. In

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addition, there are product candidates in late-stage clinical development for the treatment of mRCC, such as tivozanib and axitinib. We believe that each of these existing therapies has efficacy or safety limitations and, as a result, that there remains an unmet need for novel therapeutic approaches for mRCC that can improve efficacy without adding appreciable toxicity. We believe that the safety profile that AGS-003 has demonstrated to date, which may enable it to be used in combination with these therapies with little or no additional toxicities, gives AGS-003 the potential to address this unmet need. Accordingly, existing therapies with which AGS-003 would be used as part of a combination would not be competitive with AGS-003. However, a standalone therapy for mRCC that demonstrated improved efficacy over currently marketed therapies with a favorable safety profile and without the need for combination therapy might pose a significant competitive threat to AGS-003.

Immatics Biotechnologies GmbH is developing a therapeutic cancer vaccine, IMA-901, which is a mixture of defined tumor-associated peptides, for the treatment of RCC. Immatics is conducting a pivotal phase 3 clinical trial comparing IMA-901 in combination with sunitinib against sunitinib alone. If this clinical trial is successful, IMA-901 and sunitinib combination therapy would be in direct competition with AGS-003 and sunitinib combination therapy. Immatics could have a competitive advantage if it is able to introduce its product to the market before the time, if any, at which we receive marketing approval for AGS-003.

We estimate that there are numerous other cancer immunotherapy products in clinical development by many public and private biotechnology and pharmaceutical companies targeting numerous different cancer types. A number of these product candidates are in late-stage clinical development.

HIV

There are numerous FDA-approved treatments for HIV, primarily antiretroviral therapies, marketed by large pharmaceutical companies. In addition, generic competition has recently developed as patent exclusivity periods for older drugs have expired, with more than 15 generic bioequivalents currently on the market. The presence of these generic drugs is resulting in price pressure in the HIV therapeutics market.

Lupus

Several biopharmaceutical companies are marketing or developing products for the treatment of lupus. In March 2011, the FDA approved Benlysta (belimumab) for marketing by Human Genome Sciences, Inc. and GlaxoSmithKline for the treatment of lupus. Two other monoclonal antibodies that employ a similar mechanism of action as AGS-009, Genentech’s rontalizumab and Medimmune, Inc.’s sifalimumab, are currently in phase 2 clinical trials.

Psoriasis and Organ Transplantation

FDA-approved treatments for psoriasis include topical ointments, phototherapy and biologic agents, marketed by Abbott Laboratories, Amgen, Pfizer, Centocor Ortho Biotech, Inc. and Astellas Pharma, Inc. Although many therapies have been approved, they only relieve symptoms and do not cure the disease. The standard of care for immunosuppression in organ transplantation is cyclosporine, which is marketed as a generic by a number of manufacturers. The FDA has approved numerous other therapies for the prophylaxis of organ rejection, and several more are in clinical development.

Intellectual Property

Our success depends in part on our ability to obtain and maintain proprietary protection for our products and product candidates, technology and know-how, to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights. We are seeking a range of patent and other protections for our product candidates and platform technology. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.

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Patents

We own or exclusively license four U.S. patents and 15 U.S. patent applications, as well as more than 100 foreign counterparts to various of these patents and patent applications.

Arcelis Technology Platform and Arcelis-Based Products.    We use our Arcelis technology platform to generate fully personalized RNA-loaded dendritic cell immunotherapies. As described above, the process of obtaining a disease sample and dendritic cells from a patient, using those materials to manufacture a fully personalized drug product and shipping the drug product to the clinical site for use in the treatment of the patient involves many important steps. These steps include:

• isolating and amplifying mRNA from a disease sample obtained from the patient;

• differentiating dendritic cell precursors (monocytes) isolated from the patient into immature dendritic cells;

• maturing the immature dendritic cells in culture and loading the mature dendritic cells with the amplified mRNA and CD40L protein; and

• formulating the matured, loaded dendritic cells in the patient’s plasma with cryoprotectants to protect the cells in the resulting drug product when the drug product is frozen and thawed.

We have sought to protect each of these steps and the combination of these steps through patents, trade secrets, know-how and other protections. We have also sought to protect the resultant drug product through patents and other protections.

Four of the U.S. patents and ten of the U.S. patent applications that we own or exclusively license, as well as several of the foreign counterparts to various of these patents and patent applications, cover one or more aspects of our Arcelis technology platform or Arcelis-based products. Specifically, these patents and patent applications cover:

• Arcelis-based composition of matter and products;

• methods of manufacturing Arcelis-based products;

• methods of using Arcelis-based products for treatment;

• equipment that we intend to use for the automated manufacture of Arcelis-based products; and

• equipment that we intend to use for the frozen storage and delivery of Arcelis-based products.

The U.S. patents expire in 2016, the U.S. patent applications, if issued, would expire between 2016 and 2028, the counterpart European patents expire between 2017 and 2025, and the counterpart European patent applications, if issued, would expire between 2017 and 2027. Included in these patents and patent applications are:

• four U.S. patents and one U.S. patent application that are directed toward the composition of matter of Arcelis-based products (dendritic cells loaded with RNA from tumors or pathogens), methods of manufacture of these products and methods of using these products to treat tumors and pathogen infection. Each of the four U.S. patents encompass the AGS-003 composition of matter. One of the four U.S. patents encompasses the AGS-004 composition of matter. The U.S. patents expire in 2016 and the U.S. patent application, if issued, would expire in 2016. A corresponding European patent and pending corresponding patent applications, if issued, will expire in 2017.

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• one U.S. patent application and a corresponding European patent directed towards methods of manufacture of cryoconserved dendritic cells. The U.S. patent application, if issued, would expire in 2021, and the European patent expires in 2021.

• three U.S. patent applications, two corresponding European patents and a corresponding European patent application directed towards methods of maturing dendritic cells and the composition of matter of dendritic cells that have undergone this maturation process. The U.S. patent applications, if issued, would expire in 2025, the European patents expire in 2025 and 2027 and the European patent application, if issued, would expire in 2025.

• one U.S. patent application and one corresponding European patent application directed towards methods of manufacture of dendritic cells from monocytes stored for more than six hours without freezing or culturing and the composition of matter of dendritic cells that have been manufactured from these monocytes. The U.S. patent application, if issued, and the European patent application, if issued, would expire in 2026.

• one U.S. patent application and one European patent application are directed towards the composition of matter of AGS-004. The U.S. patent application and the European patent application, if issued, would expire in 2025.

• one U.S. patent application is directed towards the composition of matter of the primers that we use in the manufacture of AGS-004. The U.S. patent application, if issued would expire in 2028.

AGS-009.    We own or exclusively license two U.S. patent applications, and several foreign counterparts to these patent applications, which are directed toward the composition of matter of AGS-009. The U.S. and European patent applications, if issued, would expire between 2026 and 2029.

AGS-010.    We own three U.S. patent applications, and several foreign counterparts to these patent applications, which are directed toward the AGS-010 composition of matter, related reagents and/or methods of treatment. The U.S. patent applications and corresponding European patent applications, if issued, would expire between 2023 and 2029.

In addition, depending upon the timing, duration and conditions of FDA approval of the use of Arcelis-based products for the treatment of RCC and HIV, our anti-interferon-a monoclonal antibody AGS-009 and our recombinant human soluble CD83 protein AGS-010, some of our U.S. patents may be eligible for limited patent term extension under the Hatch-Waxman Act.

Trade Secrets

In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. For example, significant aspects of the process by which we manufacture our Arcelis-based drug product candidates are based on unpatented trade secrets and know-how. Trade secrets and know-how can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and commercial partners. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with a third party. 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. Although we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

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Key Licenses and Other Agreements

We are party to a number of license and other agreements that are important to our business.

Duke University. Pursuant to a 2000 agreement with Duke University, we hold an exclusive worldwide license to specified patents, patent applications and know-how owned or otherwise controlled by Duke, including for use in the development, manufacture and commercialization of dendritic cells loaded with tumor or pathogen RNA. Under the agreement, we:

• issued 5,000 shares of our common stock to Duke upon execution of the agreement;

• must pay all costs of prosecution and maintenance of the licensed patent rights;

• must pay an annual minimum royalty to Duke beginning two years after first approval of a licensed product approved by the FDA or a comparable regulatory authority in a foreign country or any sale of a licensed product that does not require regulatory approval; and

• must pay low single-digit percentage royalties, subject to reduction in specified circumstances, to Duke on net sales of licensed products, which are creditable against the annual minimum royalty.

We are required to use reasonable commercial diligence to research, develop and market licensed products. If we fail to satisfy specified obligations following notice from Duke, Duke may terminate the agreement or convert it to a nonexclusive license. We must sublicense patent rights for indications that we choose not pursue. Pursuant to this requirement, we have sublicensed rights under this agreement to Geron Corporation for the treatment or prophylaxis of cancer, as discussed below.

We may terminate our agreement with Duke at any time upon three months’ written notice. The agreement will terminate upon expiration of the last to expire of the patent rights licensed under the agreement. Either party may terminate the agreement upon written notice for fraud, willful misconduct or illegal conduct of the other party that materially adversely affects the terminating party. If either party fails to fulfill any of its material obligations under the agreement, subject to a cure process specified in the agreement, the non-breaching party may terminate the agreement. A party’s ability to cure a breach will only apply to the first two breaches. In addition, the agreement will terminate if we become insolvent, bankrupt or placed in the hands of a receiver or trustee.

Baylor Research Institute.    Pursuant to two agreements with Baylor Research Institute, which we refer to as Baylor, one from 2002 and the other from 2005, we hold exclusive worldwide licenses in specified fields of use under specified patent rights and technical information directed toward treating autoimmune diseases and anti-interferon-a antibody technologies. Under these agreements, we must pay:

• all costs of prosecution and maintenance of licensed patent rights, including reimbursement for patent costs incurred by Baylor prior to the effective date of the agreement;

• low- to mid-single-digit percentage royalties on net sales of licensed products by us, our affiliates or sublicensees; and

• up to an aggregate of $1.5 million (payable in cash or capital stock, in our discretion) based on the achievement of specified regulatory milestones.

We were required under the 2002 agreement to use best commercial efforts to file a BLA with the FDA by January 2007. We are also required under the 2005 agreement to use commercially reasonable efforts to file a BLA with the FDA by a specified date in the future, and under both agreements to use commercially reasonable

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efforts to develop, evaluate, test and commercialize at least one licensed product. Baylor may terminate the applicable agreement if we fail to meet these diligence obligations following written notice from Baylor and an opportunity to cure.

We may terminate these agreements at any time upon 60 days’ notice. Each agreement will terminate upon the later of the expiration of the last to expire of the patent rights licensed under the agreement or 20 years after its effective date. Baylor may terminate the applicable agreement if we are more than 30 days late paying Baylor any monies due under the agreement and we do not pay all uncontested amounts with ten days after Baylor’s written demand, if we become insolvent, bankrupt or generally fail to pay our debts when due or under similar specified circumstances, or if we materially breach the agreement and fail to cure the breach within specified periods.

Geron Corporation.    In 2004, in exchange for an equity interest in Geron Corporation, we granted Geron a worldwide, fully paid-up license, under specified patent rights and other technology that we then owned or otherwise controlled, to develop, manufacture and sell products using dendritic cells with one or more defined antigens, but expressly excluding any use or incorporation of exogenously added uncharacterized antigens, in a field limited to the treatment or prophylaxis of cancer. The sublicense does not include the freedom to produce AGS-003, because AGS-003 incorporates undefined antigens (encoded by total tumor mRNA). The sublicense also does not include the freedom to produce AGS-004 because AGS-004 is outside the licensed field of treatment or prophylaxis of cancer. The agreement also includes non-exclusive, fully paid-up cross licenses under certain improvements made by either party during the first three years of the agreement. Under the agreement, we may only grant further licenses of the patent rights and technology that are the subject of the agreement to academic or other non-profit organizations, or pursuant to a bona fide active development or commercialization collaboration with one or more commercial entities, or for products and in fields other than those licensed to Geron under the agreement.

The agreement will terminate upon expiration of all patent rights licensed under the agreement. Either party may terminate the agreement for the other party’s uncured material breach or if specified conditions occur relating to the other party’s insolvency or bankruptcy.

Terminated Collaboration and License Agreements and Assignment of Patent Rights.    We were a party to two collaboration and license agreements that have been terminated. In each case, our former collaborative partner has assigned to us its patent rights under the terminated agreement, and we have agreed to pay the partner future royalty and sublicense income payments.

Kirin.    In 2004, we entered into a Collaboration and License Agreement, or the Kirin agreement, with Kirin. We and Kirin agreed to terminate the agreement in 2009. Upon termination, Kirin assigned to us its ownership interest in specified jointly owned patent rights. In return, we must pay Kirin low single-digit percentage royalties on net sales of specified AGS-003 and AGS-004 products beginning with their first commercial sale and continuing for 15 years thereafter.

Novo Nordisk.    In 2010, we entered into an agreement with Novo to terminate a 2006 license agreement in which we had granted Novo certain rights. Pursuant to the 2010 agreement, Novo granted us an exclusive worldwide license to patent rights directed to technologies for use in the development and commercialization of humanized antibodies against human interferon-a, including AGS-009, as well as a non-exclusive license to specified know-how. Novo also granted us an option to obtain a non-exclusive worldwide license to a specified downstream manufacturing patent family. Under the termination agreement, we made a $100,000 upfront payment, and we must also pay:

• a low single-digit percentage royalty on net sales of licensed products; and

• a double-digit percentage of any additional consideration paid to us in excess of the single-digit royalty by third parties for a sublicense of licensed patent rights and/or know-how, up to a maximum payment to Novo of $8,000,000.

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Under the termination agreement, we are required to use commercially reasonable efforts to develop, commercialize and exploit licensed products. The agreement expires concurrently with the obligation to pay royalties, which occurs on the expiration of the last to expire patent or patent application covered by the license, at which time we receive a perpetual, fully paid-up license to the licensed patent rights and know-how. We have the right to terminate the agreement upon six months prior written notice. Novo may terminate the agreement upon 180 days written notice if we decide to abandon our anti-interferon-a antibody program. Either party may terminate the agreement if the other party fails to remedy a material breach within specified periods. In addition, the agreement may be terminated by either party if specified events of insolvency occur involving the other party. In 2011, Novo assigned its rights in the previously licensed patent rights to us.

Government Regulation

Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacture, including any manufacturing changes, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of pharmaceutical and biological products such as those we market and are developing. The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.

U.S. Drug and Biological Product Approval Process

In the United States, the FDA regulates drugs and biological products under the Federal Food, Drug, and Cosmetic Act, or FDCA, the Public Health Service Act, or PHSA, and implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug or biological product may be marketed in the United States generally involves the following:

• completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;

• submission to the FDA of an IND which must become effective before human clinical trials may begin;

• approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated;

• performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug or biological product for each indication;

• submission to the FDA of a new drug application, or NDA, or a BLA;

• satisfactory completion of an FDA advisory committee review, if applicable;

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• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and

• FDA review and approval of the NDA or BLA.

Preclinical Studies.    Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess its potential safety and efficacy. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.

Clinical Trials.    Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness 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. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their ClinicalTrials.gov website.

Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

• Phase 1: The drug or biological product is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.

• Phase 2: The drug or biological product is administered to 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: The drug or biological product is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. Phase 1, phase 2 and phase 3 clinical trials may not be completed successfully within any specified period, or at all. Furthermore, the FDA or the 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. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

Marketing Approval.    Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry,

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manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA or BLA requesting approval to market the product for one or more indications. In most cases, the submission of an NDA or BLA is subject to a substantial application user fee.

In addition, under the Pediatric Research Equity Act of 2003, or PREA, as amended and reauthorized by the Food and Drug Administration Amendments Act of 2007, or FDAAA, an NDA, BLA or supplement to an NDA or BLA must contain data that are adequate to assess the safety and effectiveness of the drug or biological product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation.

The FDA also could require submission of a risk evaluation and mitigation strategy, or REMS, plan to mitigate any identified or suspected serious risks. The REMS plan could include medication guides, physician communication plans, assessment plans, and elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.

The FDA conducts a preliminary review of all NDAs and BLAs within the first 60 days after submission before accepting them for filing to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA or BLA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA or BLA to determine, among other things, whether the product is safe, pure and potent and the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, purity and potency. The FDA is required to refer an application for a novel drug or biological product to an advisory committee or explain why such referral was not made. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA or BLA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application 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 will typically inspect one or more clinical sites to assure compliance with GCP.

The testing and approval process requires substantial time, effort and financial resources, and each 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 develop our product candidates and secure necessary governmental approvals, which could delay or preclude us from marketing our products.

If the FDA’s evaluation of the NDA or BLA and inspection of the manufacturing facilities are favorable, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA or BLA and may require additional clinical or preclinical testing in order for FDA to reconsider the application. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug or biological product with

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specific prescribing information for specific indications. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

Even if the FDA approves a product, it may limit the approved indications for use for the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Special FDA Expedited Review and Approval Programs.    The FDA has various programs, including fast track designation, accelerated approval and priority review, that are intended to expedite or simplify the process for the development and FDA review of drug and biological products that are intended for the treatment of serious or life threatening conditions and demonstrate the potential to address unmet medical needs. The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures.

To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious aspect of a serious or life threatening condition and will fill an unmet medical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors.

In addition, the FDA may give a priority review designation to drugs or biological products that offer major advances in treatment, or provide a treatment where no adequate therapy exists. For products regulated by the Center for Biologics Evaluation and Research, or CBER, the product must be intended to treat a serious or life-threatening disease or condition. A priority review means that the targeted time for the FDA to review an application is six months, rather than ten months. Most products that are eligible for fast track designation are also likely to be considered appropriate to receive a priority review.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Post-Approval Requirements.    Any drug or biological products manufactured or distributed by us 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, most changes to the approved product, such as adding 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.

The FDA may impose a number of post-approval requirements as a condition of approval of an NDA or BLA. For example, the FDA may require post-marketing testing, including phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization. Regulatory approval of oncology products often requires that patients in clinical trials be followed for long periods to determine the overall survival benefit of the drug or biologic.

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In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs and biological products are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often 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 cGMP compliance.

Once an approval is granted, the FDA may withdraw the 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 post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

• 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 applications or supplements to approved applications, or suspension or revocation of product license approvals;

• product seizure or detention, or refusal to permit the import or export of products; or

• injunctions or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs 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 liability.

In addition, the distribution of prescription pharmaceutical and biological products is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution.

Exclusivity and Approval of Competing Products

Non-Patent Exclusivity.    Under the Patient Protection and Affordable Care Act, or PPACA, newly-approved biological products may benefit from statutory periods of non-patent data and marketing exclusivity. The PPACA, among other things, permits the FDA to approve biosimilar or interchangeable versions of biological products through an abbreviated approval pathway following periods of data and marketing exclusivity. Biological products that are considered to be “reference products” are granted two overlapping periods of data and marketing exclusivity: a four-year period during which no abbreviated biologics license application, or abbreviated BLA, relying upon the reference product may be submitted, and a twelve-year period during which no abbreviated BLA relying upon the reference product may be approved by FDA. For purposes of the PPACA, a reference product is defined as the single biological product licensed under a full BLA against which a biological product is evaluated in an application submitted under an abbreviated BLA.

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We believe that our investigational products, if approved via full BLAs, will be considered “reference products” that are entitled to both four-year and twelve-year exclusivity under the PPACA. The FDA, however, has not issued any regulations or guidance explaining how it will implement the PPACA, including the exclusivity provisions for reference products. In November 2010, the FDA held a two-day public hearing to obtain feedback on how to interpret and implement the abbreviated BLA provisions of the PPACA. The FDA subsequently received letters from several U.S. Senators and members of the U.S. House of Representatives regarding the proper interpretation of PPACA exclusivity provisions. It is thus, possible that the FDA will decide to interpret the PPACA in such a way that our products are not considered to be reference products for purposes of the PPACA or be entitled to any period of data or marketing exclusivity. Even if our products are considered to be reference products and obtain exclusivity under the PPACA, another company nevertheless could also market a competing version of any of our biological products if such company can complete, and the FDA permits the submission of and approves, a full BLA. Although protection under PPACA will not prevent the submission or approval of another “full” BLA, the applicant would be required to conduct its own preclinical and adequate and well-controlled clinical trials to demonstrate safety, purity, and potency (i.e., effectiveness).

Pediatric Exclusivity.    Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the four- and 12-year non-patent exclusivity periods described above. This six-month exclusivity may be granted based on the voluntary completion of a pediatric study or studies in accordance with an FDA-issued “Written Request” for such a study or studies.

Orphan Drug Designation and Exclusivity.    Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug (including a biologic) intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug. Orphan drug designation must be requested before submitting an NDA or BLA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA or full BLA, to market the same drug for the same indication for seven years. For purposes of small molecule drugs, the FDA defines “same drug” as a drug that contains the same active moiety and is intended for the same use as the previously approved orphan drug. For purposes of large molecule drugs, the FDA defines “same drug” as a drug that contains the same principal molecular structural features, but not necessarily all of the same structural features, and is intended for the same use as the drug in question. Notwithstanding the above definitions, a drug that is clinically superior to an orphan drug will not be considered the “same drug” and thus will not be blocked by orphan drug exclusivity.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the drug to meet the needs of patients with the rare disease or condition.

The FDA also administers a clinical research grants program, whereby researchers may compete for funding to conduct clinical trials to support the approval of drugs, biologics, medical devices, and medical foods for rare diseases and conditions. An application for an orphan grant should propose one discrete clinical study to facilitate FDA approval of the product for a rare disease or condition. The study may address an unapproved new product or an unapproved new use for a product already on the market.

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Foreign Regulation

Although we do not currently market any of our products outside the United States and have no current plans to engage in product commercialization outside the United States, we may decide to do so in the future. In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country and can involve additional product testing and additional administrative review periods, and may be otherwise complicated by some of our products and product candidates being controlled substances. The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.

To date, we have not initiated any discussions with the European Medicines Agency, or EMEA, or any other foreign regulatory authorities with respect to seeking regulatory approval for any of our products in Europe or in any other country outside the United States.

Pharmaceutical Coverage, Pricing and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any drug products for which we obtain regulatory approval. Sales of any of our product candidates, if approved, will depend, in part, on the extent to which the costs of the products will be covered by third-party payors, including government health programs such as Medicare and Medicaid, commercial health insurers and managed care organizations. The process for determining whether a payor will provide coverage for a drug product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the drug product once coverage is approved. Third party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the approved drugs for a particular indication.

In order to secure coverage and reimbursement for any product that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable regulatory approvals. Our product candidates may not be considered medically necessary or cost-effective. A payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Third party reimbursement may not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in product development.

The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of drugs have been a focus in this effort. Third party payors are increasingly challenging the prices charged for medical products and services and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. If these third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover our products 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 government-paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. Adoption of such controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals such as the drug product candidates that we are developing and could adversely affect our net revenue and results.

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Pricing and reimbursement schemes vary widely from country to country. Some countries provide that drug products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies. For example, the European Union provides options for its member states to restrict the range of drug products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. European Union member states may approve a specific price for a drug product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the drug product on the market. Other member states allow companies to fix their own prices for drug products, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become 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 competitive pressure that may reduce pricing within a country. There can be no assurance that any country that has price controls or reimbursement limitations for drug products will allow favorable reimbursement and pricing arrangements for any of our products.

The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. In addition, emphasis on managed care in the United States has increased and we expect will continue to increase the pressure on drug pricing. Coverage policies, third-party reimbursement rates and drug pricing regulation may change at any time. In particular, the PPACA and a related reconciliation bill, which we collectively refer to as the Affordable Care Act or ACA, contain 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. 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.

New Legislation and Regulations

From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the testing, approval, manufacturing and marketing of products regulated by the FDA. For example, the FDAAA and PPACA provisions discussed above were enacted in 2007 and 2010, respectively. In addition to new legislation, FDA regulations and policies are often revised or interpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether further legislative changes will be enacted, or FDA regulations, guidance, policies or interpretations changed or what the impact of such changes, if any, may be.

Facilities

Our only facility is located in Durham, North Carolina, where we occupy approximately 20,000 square feet of office, laboratory and cellular processing space. Our lease expires in November 2016, but we may terminate it in December 2014. We are in the process of identifying suitable space to lease for our planned new commercial manufacturing facility.

Employees

As of June 30, 2011, we had 57 employees, including 11 in research and development, seven in clinical development, 28 in manufacturing and 11 in general and administrative functions. None of our employees is subject to a collective bargaining agreement or represented by a labor or trade union. We believe that our relations with our employees are good.

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MANAGEMENT

The following table sets forth the name, age and position of each of our executive officers and directors as of June 30, 2011.

Name	Age		Position
Jeffrey D. Abbey		49	President, Chief Executive Officer and Director
Lori R. Harrelson		42	Vice President of Finance
Frederick M. Miesowicz, Ph.D.		62	Chief Operating Officer and Vice President of Manufacturing
Charles A. Nicolette, Ph.D.		48	Chief Scientific Officer and Vice President of Research and Development
Hubert Birner, Ph.D.(1)		45	Chairman of the Board of Directors
B. Jefferson Clark(2)		54	Director
Michel Gréco(3)		68	Director
Monique Laliberté		52	Director
Philip R. Tracy(2)(3)		69	Director
Brian J. Underdown, Ph.D.(1)(3)		70	Director
Sander van Deventer M.D., Ph.D.(1)(3)		56	Director

(1) Member of the nominating and corporate governance committee.

(2) Member of the audit committee.

(3) Member of the compensation committee.

Jeffrey D. Abbey has served as our President and Chief Executive Officer and a member of our board since February 2010. Mr. Abbey served in various other positions at our company from September 2002 to February 2010, including as our Vice President of Business Development from February 2004 to January 2009 and as our Chief Business Officer from January 2009 to February 2010. Prior to joining us, Mr. Abbey was Vice President of Business Development and Finance for Internet Appliance Network, an information technology company, from 1999 to 2001. Mr. Abbey was also formerly a partner at Eilenberg and Krause, LLP, a corporate law firm, from 1994 to 1999. Mr. Abbey received his A.B. in mathematical economics from Brown University and received an M.B.A. and J.D. from the University of Virginia. We believe that Mr. Abbey is qualified to serve on our board of directors due to his extensive knowledge of our company and our industry.

Lori R. Harrelson has served as our Vice President of Finance since July 2011. Ms. Harrelson served as our Director of Finance and Accounting from January 2007 to June 2011 and as our Director of Accounting and Financial Reporting from September 2004 to January 2007. Prior to joining us, Ms. Harrelson was Finance Manager at LipoScience, Inc., a diagnostic company, from 2001 to 2004. Ms. Harrelson received her B.S. in finance from East Carolina University and is a C.P.A.

Frederick M. Miesowicz, Ph.D. has served as our Chief Operating Officer and Vice President of Manufacturing since February 2005. Dr. Miesowicz served as our Vice President of Manufacturing from May 2003 to February 2005. Prior to joining us, Dr. Miesowicz was Vice President of U.S. Operations for Gamida-Cell Ltd., a stem cell company, from 2000 to 2003; Senior Vice President and General Manager of Hybridon Specialty Products, a manufacturing division of a biotechnology company, from 1998 to 2000; and Vice President and General Manager of Cellcor, a subsidiary of Cytogen Corporation, a biopharmaceutical company, from 1995 to 1998. Dr. Miesowicz received his B.S. in chemistry from Siena College and his Ph.D. in chemistry from Harvard University.

Charles A. Nicolette, Ph.D. has served as our Chief Scientific Officer since December 2007 and as our Vice President of Research and Development since December 2004. Dr. Nicolette served as our Vice President of Research from July 2003 to December 2004. Prior to joining us, Dr. Nicolette served in various positions at

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Genzyme Molecular Oncology, Inc., a biotechnology company, from 1997 to 2003, most recently as Director of Antigen Discovery. Dr. Nicolette received his B.S. from the State University of New York at Stony Brook and his Ph.D. in biochemistry and cellular and developmental biology from the State University of New York at Stony Brook, completing his doctoral dissertation and post-doctoral fellowship at Cold Spring Harbor Laboratory.

Hubert Birner, Ph.D. has been the Chairman of our board of directors since 2005 and a member of our board of directors since 2001. Dr. Birner joined the Munich office of TVM Capital, a venture capital firm, in 2000 and currently serves as a general partner for the firm’s life sciences group. From 1998 to 2000, Dr. Birner served as head of European business development and director of marketing for Germany at Zeneca Agrochemicals, a biopharmaceutical company. Prior to joining Zeneca Agrochemicals, Dr. Birner was a management consultant in McKinsey & Company’s European healthcare and pharmaceutical practice. Dr. Birner serves on the board of directors of Horizon Pharma, Inc. and several private biopharmaceutical companies. Dr. Birner received his M.B.A. from Harvard Business School and his doctorate in biochemistry from Ludwig-Maximillians University in Munich, Germany. His doctoral thesis was honored with the Hoffmann-La Roche prize for outstanding basic research in metabolic diseases. We believe that Dr. Birner is qualified to serve as the Chairman of our board of directors due to his extensive experience with biopharmaceutical companies and his years of experience providing strategic and advisory services to pharmaceutical and biotechnology companies.

B. Jefferson Clark has served as a member of our board since 1998. Mr. Clark co-founded the Aurora Funds, Inc., a venture capital firm, in 1994 and currently serves as the firm’s Managing General Partner. Prior to forming Aurora, Mr. Clark worked in development and external affairs for Duke University, including the Duke Comprehensive Cancer Center, Duke Medical Center and the School of Engineering, from 1981 to 1994. Mr. Clark serves and has served on the boards of several private biopharmaceutical companies. Mr. Clark received his B.S. in mechanical engineering from Duke University and an M.B.A. from the Fuqua School of Business at Duke University. We believe that Mr. Clark is qualified to serve on our board of directors due to his extensive experience serving as a director on a wide range of companies within the biopharmaceutical field, as well his expertise in venture capital financing and development.

Michel Gréco has served as a member of our board since 2004. Prior to retiring from Aventis Pasteur in 2003, Mr. Gréco served as deputy Chief Executive Officer and member of the board of Aventis Pasteur. Mr. Gréco serves and has served on the boards of several private and foreign public biopharmaceutical companies. Mr. Gréco received his master’s degree from Institut d’Etudes Politiques de Paris and an M.B.A. from the University of Western Ontario, Richard Ivey School of Business. We believe that Mr. Gréco is qualified to serve on our board of directors due to his extensive experience as an executive in the pharmaceutical industry and his years serving on boards of biotechnology and pharmaceutical companies.

Monique Laliberté has served as a member of our board since March 2011. Ms. Laliberté has served as Investment Manager, Private Equity of Caisse de dépôt et placement du Québec, a fund management company, since May 2002. She has also served on the board of directors of Pharmaxis Ltd. (formerly Topigen Pharmaceuticals Inc.) since 2008. Ms. Laliberté received her M.Sc. from Université Laval and an M.B.A. from HEC Montréal. We believe that Ms. Laliberté is qualified to serve on our board of directors due to her financial expertise and her extensive experience with biotechnology and pharmaceutical companies.

Philip R. Tracy has served as a member of our board since 2001. Mr. Tracy has been a Venture Partner at Intersouth Partners since 1998. He is currently Of Counsel with Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P, where he has practiced since 1996. Previously, Mr. Tracy served in various positions at the Burroughs Wellcome Fund, acting as President and Chief Executive Officer from 1989 to 1995 and as a member of the board of directors from 1989 to 2009. Mr. Tracy has served on the board of Alimera Sciences, Inc. since 2004. Mr. Tracy received his J.D. from George Washington University. We believe that Mr. Tracy is qualified to serve on our board of directors due to his extensive experience as an executive in the pharmaceutical industry and his years serving on boards of biotechnology and pharmaceutical companies.

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Brian J. Underdown, Ph.D. has served as a member of our board since 1999. Dr. Underdown joined Lumira Capital Corp. (formerly MDS Capital Corp.), a venture capital firm, in 1997, and currently serves as a Managing Director. Before joining Lumira, Dr. Underdown was Assistant Vice President of Research at Pasteur Merieux Connaught from 1994 to 1997. Dr. Underdown has been a member of the board of directors of Vistagen Therapeutics, Inc. since 2009. Dr. Underdown received his Ph.D. from McGill University and undertook post-doctoral studies at Washington University School of Medicine. We believe that Dr. Underdown is qualified to serve on our board of directors due to his experience in the biopharmaceutical industry and his scientific background.

Sander van Deventer, M.D., Ph.D. has served as a member of our board since 2001. Dr. van Deventer has been a General Partner of Forbion Capital Partners (formerly ABN AMRO Capital) since 2006. From 2008 to 2009, he served as the Chief Executive Officer of Amsterdam Molecular Therapeutics, or AMT, a gene therapy company that he co-founded in 1998. He has also served as a member of AMT’s board of directors since 2007. Dr. van Deventer has also been a Professor of Translational Gastroenterology at Leiden University since 2008. He received his M.D. and Ph.D. from the University of Amsterdam. We believe that Dr. van Deventer is qualified to serve on our board of directors due to his experience as a founder of a biopharmaceutical company and his expertise in clinical development.

Composition of the Board of Directors

Our board of directors is currently authorized to have up to ten members. In accordance with the terms of our certificate of incorporation and bylaws that will become effective upon the closing of this offering, our board of directors will be divided into three classes, class I, class II and class III, with members of each class serving staggered three-year terms. Upon the closing of this offering, the members of the classes will be divided as follows:

• the class I directors will be             ,             and             , and their term will expire at the annual meeting of stockholders to be held in 2012;

• the class II directors will be             ,             and             , and their term will expire at the annual meeting of stockholders to be held in 2013; and

• the class III directors will be             and             , and their term will expire at the annual meeting of stockholders to be held in 2014.

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Our directors may be removed only for cause by the affirmative vote of the holders of 75% or more of our voting stock.

Our board of directors has determined that each of our directors, other than Mr. Abbey, are independent directors, as defined by the applicable NASDAQ Marketplace Rules.

There are no family relationships among any of our directors or executive officers.

Board Leadership Structure

The positions of chairman of the board and chief executive officer are presently separated and have generally been separated at our company. The duties of the chairman of the board include the following:

• chairing meetings of the board and of the independent directors in executive session;

• meeting with any director who is not adequately performing his or her duties as a member of our board or any committees;

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• facilitating communications between other members of our board and the chief executive officer;

• determining the frequency and length of board meetings and recommending when special meetings of our board should be held;

• preparing or approving the agenda for each board meeting; and

• reviewing and, if appropriate, recommending action to be taken with respect to written communications from stockholders submitted to our board.

Our board of directors decided to separate the roles of chairman and chief executive officer because it believes that a bifurcated leadership structure offers the following benefits:

• increasing the independent oversight of our company and enhancing our board’s objective evaluation of our chief executive officer;

• freeing the chief executive officer to focus on company operations instead of board administration;

• providing the chief executive officer with an experienced sounding board;

• providing greater opportunities for communication between stockholders and our board;

• enhancing the independent and objective assessment of risk by our board; and

• providing an independent spokesman for our company.

Board Committees and Independence

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. Upon the closing of this offering, each of these committees will operate under a charter that has been approved by our board.

Our board of directors has determined that all of the members of the audit committee, the compensation committee and the nominating and corporate governance committee are independent as defined under The NASDAQ Marketplace Rules, including, in the case of all the members of our audit committee, the independence requirements contemplated by Rule 10A-3 under the Exchange Act.

Audit Committee

The members of our audit committee are Messrs. Clark and Tracy. Mr. Clark chairs the audit committee. Upon the closing of this offering, our audit committee’s responsibilities will include:

• appointing, approving the compensation of, and assessing the independence of our registered public accounting firm;

• overseeing the work of our registered public accounting firm, including through the receipt and consideration of reports from such firm;

• reviewing and discussing with management and the registered public accounting firm our annual and quarterly financial statements and related disclosures;

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• monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

• overseeing an internal audit function;

• overseeing our risk assessment and risk management policies;

• establishing policies regarding hiring employees from the registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns;

• meeting independently with our internal auditing staff, registered public accounting firm and management;

• reviewing and approving or ratifying any related person transactions; and

• preparing the audit committee report required by SEC rules.

All audit and non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.

Our board of directors has determined that             is an “audit committee financial expert” as defined in applicable SEC rules. We believe that, upon the closing of this offering, the composition of our audit committee will meet all applicable requirements with respect to audit committee composition under the current NASDAQ Global Market and SEC rules and regulations.

Compensation Committee

The members of our compensation committee are Messrs. Gréco and Tracy and Drs. Underdown and van Deventer. Mr. Tracy chairs the compensation committee. Upon the closing of this offering, our compensation committee’s responsibilities will include:

• annually reviewing and approving corporate goals and objectives relevant to chief executive officer compensation;

• determining our chief executive officer’s compensation;

• reviewing and approving, or making recommendations to our board with respect to, the compensation of our other executive officers;

• overseeing an evaluation of our senior executives;

• overseeing and administering our cash and equity incentive plans;

• reviewing and making recommendations to our board with respect to director compensation;

• reviewing and discussing annually with management our “Compensation Discussion and Analysis” disclosure required by SEC rules; and

• preparing the annual compensation committee report required by SEC rules.

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Nominating and Corporate Governance Committee

The members of our nominating and corporate governance committee are Drs. Birner, Underdown and van Deventer. Dr. Underdown chairs the nominating and corporate governance committee. Upon the closing of this offering, our nominating and corporate governance committee’s responsibilities will include:

• identifying individuals qualified to become members of our board;

• recommending to our board the persons to be nominated for election as directors and to each of our board’s committees;

• reviewing and making recommendations to the board with respect to management succession planning;

• developing and recommending to our board corporate governance principles; and

• overseeing an annual evaluation of our board.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee. None of the members of our compensation committee has ever been our employee.

Code of Ethics and Code of Conduct

Effective upon the closing of this offering, we plan to adopt a written code of business conduct and ethics that will apply to our directors, officers and employees, including our principal executive officer, principal financial officer, or persons performing similar functions. We will post a current copy of the code on our website, www.argostherapeutics.com. In addition, we intend to post on our website all disclosures that are required by law or NASDAQ stock market listing standards concerning any amendments to, or waivers from, any provision of the code.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following discussion relates to the compensation of our named executive officers for the fiscal year ended December 31, 2010 and provides an overview of the material elements of our executive compensation policies and programs. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and should be read together with the related tables and disclosures that follow.

Our named executive officers in 2010 were:

• Jeffrey D. Abbey, our president and chief executive officer;

• Lori R. Harrelson, our vice president of finance, who became our principal financial officer on February 24, 2010;

• Charles A. Nicolette, Ph.D., our vice president of research and development and chief scientific officer;

• Frederick M. Miesowicz, Ph.D., our vice president of manufacturing and chief operating officer;

• John N. Bonfiglio, Ph.D., our former president and chief executive officer, who served in that position until February 23, 2010; and

• Timothy W. Trost, our former chief financial officer, who served in that position until February 23, 2010.

The discussion that follows contains forward-looking statements that are based on current plans, considerations, expectations and determinations regarding future compensation programs. The actual compensation programs that we adopt may differ materially from the current or planned programs summarized in this discussion.

Overview of Our Compensation Philosophy and Objectives

Our primary objective with respect to executive compensation is to attract, retain and motivate highly talented individuals with skills and experience that can help us successfully execute our business strategy. Our executive compensation program is designed to:

• attract and retain high quality and experienced executive officers;

• motivate and reward executive officers whose knowledge and skills are critical to our business;

• recognize individual contributions;

• achieve accountability for performance by linking company performance and individual achievement to compensation; and

• align the interests of our executive officers and our stockholders by providing our executive officers with long-term incentives to increase stockholder value.

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To achieve these objectives, our executive compensation program ties a portion of each executive’s overall compensation to key corporate objectives. We also provide a portion of our executive compensation in the form of stock option awards that vest over time. We believe that the grant of stock options subject to vesting helps to retain our executive officers and serves to align their interests with those of our stockholders by allowing them to participate in our long-term performance as reflected in the value of shares of our common stock.

Overview of Our Executive Compensation Process

Roles of Our Board, Chief Executive Officer and Compensation Committee

As a private company, our compensation committee and board of directors, with input from our chief executive officer and chief financial officer, have historically overseen our executive compensation program. We initially established each of our executive officer’s compensation arrangements when negotiating their employment at the time they joined our company. We typically include these initial compensation terms in an offer letter or employment agreement with the executive. We have reviewed each executive officer’s compensation on an annual basis since they joined our company.

Our compensation committee, either as a committee or together with the other non-management directors, makes all compensation decisions regarding our chief executive officer. Our chief executive officer has historically reviewed compensation decisions relating to our executive officers other than himself. He has annually reviewed the performance of our other executive officers, and, based on these reviews, has made recommendations to our compensation committee regarding salary adjustments, annual incentive bonus payments and equity incentive awards for our executive officers. Our chief executive officer does not participate in the final decision-making discussions regarding his own compensation.

Based on the evaluation of our chief executive officer’s recommendations regarding the compensation of executive officers other than himself, our compensation committee, acting under authority delegated by our board of directors, either makes all compensation decisions itself regarding our executive officers, including the chief executive officer, or makes formal recommendations concerning executive compensation to the board of directors, with the non-management directors making the final compensation decisions.

Use of Competitive Data

From time to time, the compensation committee has reviewed surveys of compensation practices of similarly situated companies. To date, we have not identified a specified group of peer companies against which we would compare our compensation practices nor have we formally benchmarked our executive compensation against that of our competitors. In setting compensation for 2010, the compensation committee did not rely on any survey data.

Role of Compensation Consultant

Our compensation committee and board of directors has not engaged the services of outside consultants or advisors to review and provide advice with respect to our executive officer compensation policies and program for 2010, although they have done so from time to time in prior years. In reviewing compensation levels of our executive officers for 2010, our compensation committee and board of directors considered our financial condition and the contributions that the management team had made to our business, and relied on their members’ collective knowledge of compensation trends and standards in our industry and their experiences and business judgment. Based on a review of our executive compensation program for 2010, our board of directors determined that our existing program satisfies our compensation philosophy and objectives and will remain generally unchanged for 2011.

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Following the closing of this offering, our compensation committee will continue to be primarily responsible for developing and implementing our compensation policies and establishing and approving the compensation for all of our executive officers. In the future, our compensation committee may choose to retain the services of an independent compensation consultant to assist it in evaluating and reviewing executive compensation and to advise it regarding executive compensation practices in our industry.

We expect that, following the completion of this offering, our compensation committee will continue to review and evaluate our existing compensation programs, objectives and philosophy to determine whether such programs, objectives and philosophy are appropriate after we have become a public company. In addition, as we gain experience as a public company, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve.

Elements of Our Executive Compensation Program

The primary elements of our executive compensation program are:

• base salaries;

• annual incentive and other bonuses;

• equity incentive awards;

• other employee benefits; and

• severance and change in control benefits.

We strive to achieve an appropriate mix between the various elements of our compensation program to meet our compensation objectives and philosophy; however, we have not adopted any formal policies or guidelines for allocating compensation among these elements.

Base Salaries

We use competitive base salaries to attract and retain qualified candidates to help us achieve our business objectives and performance goals. We believe that a competitive salary is a necessary element of any compensation program that is designed to attract and retain qualified talent. Our base salaries are intended to recognize an executive officer’s level of responsibilities and immediate contribution to our organization, as well as his or her prior experience, knowledge and responsibilities.

Upon joining our company, each of our executive officers either entered into an offer letter or an executive employment agreement that provided for an initial base salary. These initial salaries are typically the product of negotiation with the executive, but we generally seek to establish salaries that we believe are commensurate with salaries being paid to executive officers serving in similar roles at comparable biopharmaceutical companies. Although we have not engaged in formal benchmarking of salaries, we have from time to time reviewed compensation surveys, conferred with compensation consultants and relied on our board of directors and compensation committee members’ collective experience in the marketplace for determining salaries for executives of comparable companies.

Historically, base salaries are reviewed annually by the compensation committee in conjunction with annual assessments of performance and bonus opportunities. Our board of directors has delegated authority for any annual salary adjustments to the compensation committee. Shortly before the end of each calendar year, the compensation committee reviews company and individual performance, as well as our financial status, to, among other things, determine whether adjustments in base salary are necessary or appropriate. Any annual adjustments to base salary adopted by the compensation committee typically take effect at the beginning of the following year. We may also adjust the base salary of an executive officer at other times due to market conditions or if a change in the scope of the officer’s responsibilities justifies such consideration.

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In December 2009, in light of our financial condition, our compensation committee determined not to make any adjustments to the base salaries for our chief executive officer or any of our other executive officers for 2010. In April 2010, the compensation committee recommended and the non-management directors approved an increase in the base salary of our current chief executive officer, Mr. Abbey, effective as of February 24, 2010, from $220,835 to $265,000, to reflect his promotion at that time to the position of chief executive officer. In December 2010, in light of our financial condition, our compensation committee determined that no adjustments to the base salaries of our chief executive officer or any of our other named executive officers would be made for 2011. However, Ms. Harrelson’s base salary was increased effective January 1, 2011 from $119,319 to $131,250, in recognition of the additional responsibilities and leadership she assumed since becoming our principal financial officer in February 2010. In July 2011, the compensation committee recommended and the board of directors approved a further increase in Ms. Harrelson’s base salary, from $131,250 to $150,000, in connection with her promotion at that time to the position of vice president of finance.

Annual Incentive and Other Bonuses

In addition to base salaries, our executive officers are eligible to receive annual discretionary cash bonuses based on the achievement of corporate objectives and individual performance. Bonuses are typically prorated on a monthly basis, as applicable, for executive officers who commence employment after the beginning of the year. Our executive officers’ annual bonus opportunities are generally set in their offer letters as a specified percentage of annual base salary. The current annual target bonus amount for each of our current executive officers is 20% of base salary. The target bonus for our former chief executive officer, Dr. Bonfiglio, was set forth in his employment agreement at 40% of base salary, and the target bonus for our former chief financial officer, Mr. Trost, was set forth in his offer letter at 20% of base salary. In determining annual bonuses, we have generally attributed 85% of the target bonus to the achievement of specified corporate objectives and 15% to the individual’s effectiveness in helping us achieve our corporate objectives or other individual performance criteria. The annual corporate objectives are recommended by our chief executive officer and approved by the compensation committee and the board of directors. Annual bonuses have been determined by the compensation committee and ratified by the non-management directors in December of each year and paid by the end of December of the year in which they were determined.

At the end of the year, our chief executive officer develops bonus recommendations for each of our executive officers based on our corporate objectives and the individual’s performance and contributions to those objectives during that year. These recommendations are generally based on an assessment of the extent to which we have achieved each of the specified annual corporate objectives which typically include goals tied to factors such as development and progression of our existing product candidates, achievement of clinical and regulatory milestones, operational goals and financial factors such as raising and maintaining capital. These recommendations may reflect achievement in whole or in part of each of the specified corporate objectives. Our compensation committee then assesses the bonuses recommended by the chief executive officer and make its bonus recommendations to the board of directors. Based on its consideration of the recommendations of the compensation committee, our board then makes the final decision in its discretion regarding cash bonus payments, if any, for the year.

Early in 2010, the board authorized the termination of the employment of seven of our employees, including three members of management. Taking into account a number of factors including prevailing market conditions and our financial position, the newly constituted executive management team presented, and our board of directors approved, a 2010 budget that did not provide for any bonuses for our executive officers for 2010 performance. Thereafter, our executive officers sought to achieve our 2010 corporate objectives without the additional incentive of a formal annual bonus program. Our compensation committee did not establish formal annual bonus goals based on 2010 corporate objectives, and at the end of the year made the decision not to pay annual bonuses for 2010 based on the need to manage expenses and allocate resources to our clinical, business development and other strategic initiatives. However, our compensation committee did award a $7,000 discretionary bonus to Ms. Harrelson in December 2010 in recognition of her performance in 2010 and her assumption in February 2010 of responsibility as our principal financial officer.

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Our board of directors determined to reinstate our annual bonus program for 2011. The compensation committee and board of directors have approved corporate objectives for 2011 which will serve as the basis for any annual cash bonuses to be awarded for performance in 2011. We expect that our compensation committee and our board of directors will evaluate each executive officer’s performance against these goals, consider their individual performance and determine and pay annual bonus amounts, if any, in December 2011, consistent with our historical practice.

Equity Incentive Awards.    Our equity award program is the primary vehicle for offering long-term incentives to our executives. We believe that equity awards provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. To date, we have used stock option grants for this purpose because we believe they are an effective means by which to align the long-term interests of our executive officers with those of our stockholders. The use of options also can provide tax and other advantages to our executive officers relative to other forms of equity compensation. We believe that our equity awards are an important retention tool for our executive officers, as well as for our other employees.

We award stock options broadly to our employees, including to our non-executive employees. Grants to our executives and other employees are made at the discretion of our board of directors and are not made at any specific time period during a fiscal year. All of our named executive officers have received stock option grants under our 1999 stock option plan or our 2008 stock incentive plan, both of which are described below. The 1999 stock option plan has expired and no further options may be granted under that plan. Our board of directors intends to adopt a new equity incentive plan described under “— Stock Option and Other Equity Compensation Plans” below, effective upon the closing of this offering, and has determined not to grant any additional awards under our 2008 stock incentive plan after the effectiveness of such plan. Our new 2011 plan will afford our compensation committee continued flexibility in making a wide variety of equity awards.

Initial option grants to our executive officers are generally set forth in their offer letters. These initial grants are the product of negotiation with the executive officer, but we generally seek to establish equity ownership levels that we believe are commensurate with the equity stakes held by executive officers serving in similar roles at comparable biopharmaceutical companies. In addition, from time to time in connection with corporate finance transactions and at other times as our compensation committee and board of directors deem appropriate, we provide subsequent option grants to those executive officers determined to be performing well.

The majority of the stock option grants we have made to our executive officers vest over four years. However, from time to time, our board of directors has approved grants with different and sometimes shorter vesting provisions. Our historical practice has been to provide for 100% acceleration of vesting of outstanding stock options in the event of a change of control. Additional information regarding the effect of accelerated vesting upon a change in control with respect to our named executive officers is discussed below under “— Agreements with our Named Executive Officers.”

We have not adopted stock ownership guidelines for our executive officers. Our board of directors’ grants of stock options have not been formula-based but rather have been based on the recommendation of the compensation committee, which generally takes into account the compensation committee’s determination of relevant qualitative factors, including the executive’s position and level of responsibility, the competitive market for the executive’s position and the executive’s contribution to the advancement of our clinical and business development programs, as well as the individual’s recent performance. Equity awards are not generally based on specific performance objectives, however. Typically, larger awards have been made to the executive officers who have areas of responsibility and functions that are more likely to build long-term stockholder value as determined by how directly linked their areas of responsibility are to our growth and success. We expect that after we become a public company our compensation committee will grant equity awards, at least in part, with reference to market surveys and based on input from third-party consultants.

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In December 2010, based on the recommendations of our compensation committee, our board of directors granted an option to purchase 1,984,850 shares of our common stock to Dr. Nicolette and an option to purchase 6,845,926 shares of our common stock to Mr. Abbey. These options were granted in recognition of the additional responsibilities assumed by Dr. Nicolette and Mr. Abbey after our corporate reorganization in February 2010, and in the case of Mr. Abbey, to reflect his promotion in February 2010 to the position of chief executive officer. In December 2010, our board of directors also granted an option to purchase 924,555 shares of our common stock to Dr. Miesowicz. In February 2011, our board of directors granted an option to Ms. Harrelson to purchase 375,883 shares of our common stock in recognition of her assumption of additional management responsibilities following the company’s management reorganization in February 2010.

The exercise price of each stock option granted under our 1999 stock option plan and our 2008 stock incentive plan is based on the fair market value of our common stock on the date of the grant. Prior to 2006, the fair market value of our common stock for purposes of determining the exercise price of stock options was determined by our board of directors based on its analysis of a number of factors it considered relevant. Beginning in 2006, our board of directors also obtained contemporaneous valuations to assist it in determining the fair market value of our common stock.

Following this offering, we expect that we will continue to grant all stock options with an exercise price equal to the fair market value of our common stock on the date of grant, but fair market value will be defined as the closing market price of a share of our common stock on the date of grant. We do not currently have any program, plan or practice of setting the exercise price based on a date or price other than the fair market value of our common stock on the date of grant of the option.

Additional Executive Benefits and Other Compensation.

We maintain broad-based benefits that are provided to all employees, including our 401(k) retirement plan, medical and dental care plans, life insurance, short- and long-term disability policies, vacation and company holidays. These benefits are provided to our executive officers on the same general terms as our non-executive employees. The compensation committee has the authority to match all or a portion of our employees’ 401(k) plan contributions. Each year since 2006, our compensation committee has approved matching contributions to our 401(k) plan in aggregate amounts of between $50,000 and $75,000 per year.

We do not view perquisites or other personal benefits as a significant component of our executive compensation program and did not provide perquisites to our executive officers during 2010.

Severance and Change of Control Arrangements.

Pursuant to offer letters, certain of our current executive officers are entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination following a change of control of our company. The terms of these arrangements are more fully described below under “— Agreements with our Named Executive Officers.” We have historically included these arrangements among the employment terms negotiated at the time each executive is hired. We have amended these provisions of the offer letters to increase these benefits from time to time to reflect promotions or the assumption of increased responsibilities. For example, in March 2011, we approved increased benefits for Mr. Abbey and Dr. Nicolette in the context of a termination of employment in connection with a change in control.

We have included these benefits in our arrangements with each of our executive officers because we believe they are necessary to induce these individuals to forego other opportunities or leave their existing positions to join our company, and we believe these protections also serve an important retention function for retention of executives. Further, we believe that providing such benefits in the context of a change of control of our company allows our executive officers to focus their attention on the requirements of the business rather than on the implications of the transaction for them personally.

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In December 2008, our board of directors adopted a management incentive plan that provided for a potential payment to specified executive officers in the event of a sale of our company that satisfied specified criteria. The purpose of the 2008 management incentive plan was to align the interests of our executive officers with those of our stockholders in connection with a sale transaction and to pay a portion of the sale proceeds to the executive officers in cases in which the executive’s outstanding stock options would not provide competitive compensation. The 2008 management incentive plan was not triggered during its term and expired by its terms at the end of 2010. Our compensation committee and board of directors have considered adopting a similar incentive plan to replace the 2008 management incentive plan, but do not currently intend to establish such a replacement plan.

Risk Considerations in our Compensation Program

When determining our compensation policies and practices, our board of directors and compensation committee consider various factors related to the development of a reasonable and prudent compensation program, including whether the policies and practices are reasonably likely to have a material adverse effect on us. We believe that the mix and design of our executive compensation plans and policies do not encourage management to assume excessive risks and are not reasonably likely to have a material adverse effect on us. We believe that our compensation program offers an appropriate balance of short and long-term incentives and fixed and variable amounts of compensation. The mix between fixed and variable, annual and long-term and cash and equity compensation are designed to encourage strategies and actions that balance the company’s short-term and long-term best interests. Our stock option awards vest over a period of time, which we believe encourages executives to take a long-term view of our business. In addition, our compensation committee and board of directors retains discretionary authority to adjust certain aspects of variable and other compensation as appropriate.

Federal Tax Considerations under Sections 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended, disallows a federal income tax deduction to any publicly traded corporation for any remuneration in excess of $1.0 million of compensation paid to specified executive officers in a calendar year. Compensation in excess of $1.0 million may be deducted if, among other things, it qualifies as performance-based compensation within the meaning of Section 162(m). We expect that once we are a publicly traded company our compensation committee will periodically review the potential consequences of Section 162(m) on the various elements of our executive compensation program and where reasonably practicable, will seek to structure the equity incentives component of our executive compensation program to comply with exemptions in Section 162(m). However, our board of directors or compensation committee may, in their judgment, authorize compensation payments that do not comply with the exemptions in Section 162(m) in situations where they believe that such payments are appropriate to attract and retain qualified executive talent.

Accounting Considerations

We have adopted the fair value provisions of ASC 718 for our stock-based compensation awards. Under ASC 718, we are required to estimate and record an expense for each award of equity compensation, including stock options, over the vesting period of the award. We expect to retain for the foreseeable future our stock option program as the principal component of our long-term compensation program, and, therefore, to record this expense on an ongoing basis in accordance with ASC 718. Our compensation committee may in the future consider the grant of restricted stock or other equity-based awards to our executive officers in lieu, in whole or in part, of stock option grants, in light of the accounting impact of ASC 718 with respect to stock option grants.

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Summary Compensation Table

The following table sets forth information regarding compensation awarded to, paid to or earned by our named executive officers during the year ended December 31, 2010.

Name and Principal Position	Year		Salary ($)			Bonus ($)		Option Awards(1) ($)		All Other Compensation(2) ($)			Total ($)
Jeffrey D. Abbey(3) President and Chief Executive Officer		2010	$	261,828			—	$	846,469	$	4,539		$	1,112,836
Lori R. Harrelson(4) Vice President of Finance		2010	$	120,972		$	7,000		—	$	2,374		$	130,346
Charles A. Nicolette, Ph.D. Chief Scientific Officer and Vice President of Research and Development		2010	$	238,828			—	$	245,418	$	3,592		$	487,838
Frederick M. Miesowicz, Ph.D. Chief Operating Officer and Vice President of Manufacturing		2010	$	264,502			—	$	114,305	$	3,650		$	705,101
John N. Bonfiglio, Ph.D.(5) Former President and Chief Executive Officer		2010	$	55,224	(5)		—		—	$	263,115	(6)	$	318,339
Timothy W. Trost(5) Former Chief Financial Officer		2010	$	49,332	(5)		—		—	$	126,345	(7)	$	175,677

(1) Amounts reported represent the grant date fair value of the stock options granted during 2010 over the entire term of the options, computed in accordance with ASC 718, formerly Statement of Financial Accounting Standards No. 123R. Our named executive officers will only realize compensation to the extent that the trading price of our common stock is greater than the exercise price of such stock options. The valuation assumptions used in calculating the fair value of the stock options are set forth in note 2 to our financial statements included elsewhere in this prospectus.

(2) Unless otherwise indicated, consists of a company matching contribution to our 401(k) plan and payment of life insurance premiums, as itemized below, and excludes medical, dental and certain other benefits received by the named executive officers that are available generally to all of our employees.

Name	401(k) Matching Contribution		Insurance Premium Payment
Jeffrey D. Abbey	$	3,675	$	864
Lori R. Harrelson	$	1,920	$	454
Charles A. Nicolette, Ph.D.	$	2,948	$	644
Frederick M. Miesowicz, Ph.D.	$	3,000	$	650

(3) Mr. Abbey became our president and chief executive officer on February 24, 2010.

(4) Ms. Harrelson became our principal financial officer on February 24, 2010. She was promoted to vice president of finance in July 2011.

(5) Our employment of Dr. Bonfiglio and Mr. Trost terminated on February 23, 2010. Salary information represents base salary paid through February 23, 2010.

(6) Represents payment of life insurance premiums in the amount of $150.86 and amounts paid to Dr. Bonfiglio, in accordance with his employment agreement with us and pursuant to a release and settlement agreement entered into in connection with his termination on February 23, 2010, which consist of cash payments representing continued base salary and the value of continued employee benefits. In addition, in connection with his termination we transferred to Dr. Bonfiglio ownership of a company owned cell phone.

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(7) Represents payment of life insurance premiums in the amount of $65.17 and amounts paid to Mr. Trost, in accordance with his offer letter with us and pursuant to a release and settlement agreement entered into in connection with his termination on February 23, 2010, which consist of cash payments representing continued base salary and the value of continued employee benefits. In addition, in connection with his termination, we transferred to Mr. Trost ownership of a company owned Blackberry.

The terms of our employment agreements and offer letters with our named executive officers are described below under “— Agreements with our Named Executive Officers.”

Grants of Plan-Based Awards

The following table sets forth, for each of our named executive officers, information regarding each grant of a plan-based award made during the fiscal year ended December 31, 2010. This information supplements the information about these awards set forth in the Summary Compensation Table.

Name	Grant Date		All Other Option Awards: Number of Securities Underlying Options (#)(1)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Option Awards(2)
Jeffrey D. Abbey		12/10/10		6,845,926	$	0.08	$	846,469
Lori R. Harrelson		—		—		—		—
Charles A. Nicolette, Ph.D.		12/10/10		1,984,850	$	0.08	$	245,418
Frederick M. Miesowicz, Ph.D.		12/10/10		924,555	$	0.08	$	114,305
John N. Bonfiglio, Ph.D.		—		—		—		—
Timothy W. Trost		—		—		—		—

(1) The vesting schedules for these options are described in the footnotes to the Outstanding Equity Awards at 2010 Fiscal Year End table below.

(2) Amounts reported represent the grant date fair value of the stock options granted during 2010 over the entire term of the options, computed in accordance with ASC 718, formerly Statement of Financial Accounting Standards No. 123R. The valuation assumptions used in calculating the fair value of the stock options are set forth in note 2 to our financial statements included elsewhere in this prospectus.

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Outstanding Equity Awards at 2010 Fiscal Year End

The following table provides information about outstanding stock options held by each of our named executive officers at December 31, 2010. All of the listed options were granted under our 2008 stock incentive plan.

Name	Number of  Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable			Option  Exercise Price ($)		Option Expiration Date
Jeffrey D. Abbey		1,924,518 774,710 1,426,234	(1) (2) (3)		— — 5,419,692	(3)	$ $ $	0.08 0.08 0.08		7/02/18 12/05/18 12/10/20
Lori R. Harrelson		236,621 95,251	(4) (5)		— —		$ $	0.08 0.08		7/02/18 12/05/18
Charles A. Nicolette, Ph.D.		1,987,617 800,110 413,510	(6) (7) (8)		— — 1,571,340	(8)	$ $ $	0.08 0.08 0.08		7/02/18 12/05/18 12/10/20
Frederick M. Miesowicz, Ph.D.		1,892,969 762,009 192,594	(9) (10) (11)		— — 731,861	(11)	$ $ $	0.08 0.08 0.08		7/02/18 12/05/18 12/10/20
John N. Bonfiglio, Ph.D.		5,652,615 2,275,444	(12) (13)		— —		$ $	0.08 0.08		12/31/10 12/31/10
Timothy W. Trost		—			—			—		—

(1) This option was granted on July 2, 2008 and vested as to 50% of the shares on the date of grant, with the remaining 50% of the shares vesting in equal amounts per month over the next two years commencing on April 1, 2008, provided that Mr. Abbey continued to provide services to us over such period.

(2) This option was granted on December 5, 2008 and vested in specified increments over a two-year period ending on April 1, 2010, provided that Mr. Abbey continued to provide services to us over such period.

(3) This option was granted on December 10, 2010. This option vests in equal monthly installments over a four year period, with the first installment vesting on February 24, 2010, provided that Mr. Abbey continues to provide services to us over such period.

(4) This option was granted on July 2, 2008 and vested as to 50% of the shares on the date of grant, with the remaining 50% of the shares vesting in equal amounts per month over the next two years commencing on April 1, 2008, provided that Ms. Harrelson continued to provide services to us over such period.

(5) This option was granted on December 5, 2008 and vested in specified increments over the period ending on April 1, 2010, provided that Ms. Harrelson continued to provide services to us over such period.

(6) This option was granted on July 2, 2008 and vested as to 50% of the shares on the date of grant, with the remaining 50% of the shares vesting in equal amounts per month over the next two years commencing on April 1, 2008, provided that Dr. Nicolette continued to provide services to us over such period.

(7) This option was granted on December 5, 2008 and vested in specified increments over the period ending on April 1, 2010, provided that Dr. Nicolette continued to provide services to us over such period.

(8) This option was granted on December 10, 2010. This option vests in equal monthly installments over a four year period, with the first installment vesting on February 24, 2010, provided that Dr. Nicolette continues to provide services to us over such period.

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(9) This option was granted on July 2, 2008 and vested as to 50% of the shares on the date of grant, with the remaining 50% of the shares vesting in equal amounts per month over the next two years commencing on April 1, 2008, provided that Dr. Miesowicz continued to provide services to us over such period.

(10) This option was granted on December 5, 2008 and vested in specified increments over the period ending on April 1, 2010, provided that Dr. Miesowicz continued to provide services to us over such period.

(11) This option was granted on December 10, 2010. This option vests in equal monthly installments over a four year period, with the first installment vesting on February 24, 2010, provided that Dr. Miesowicz continues to provide services to us over such period.

(12) Represents the vested portion of a stock option held by Dr. Bonfiglio as of the date his employment was terminated. Pursuant to the terms of the release and settlement agreement entered into in connection with the termination of Dr. Bonfiglio’s employment, the period of time within which this vested option could be exercised following his termination was extended until December 31, 2010. Dr. Bonfiglio did not exercise this option, and the option expired on December 31, 2010.

(13) Represents the vested portion of a stock option held by Dr. Bonfiglio as of the date his employment was terminated. Pursuant to the terms of the release and settlement agreement entered into in connection with the termination of Dr. Bonfiglio’s employment, the period of time within which this vested option could be exercised following termination was extended until December 31, 2010. Dr. Bonfiglio did not exercise this option, and the option expired on December 31, 2010.

Options Exercised and Stock Vested

Our named executive officers did not exercise any stock options during 2010, and they do not hold any other stock awards that vested in 2010.

Pension Benefits and Nonqualified Deferred Compensation

Our named executive officers did not participate in or have account balances in any qualified or nonqualified defined benefit plans sponsored by us during 2010 and did not earn any nonqualified deferred compensation benefits from us during 2010.

Agreements with our Named Executive Officers

We have entered into offer letters with each of our named executive officers. We entered into these letters with our executive officers upon the commencement of their employment with us and have amended them in certain cases since that time. These offer letters set forth the terms of the executive officer’s compensation package, including the executive officer’s initial base salary, the terms of a recommended initial stock option grant, severance arrangements, if applicable, in the event of a termination of employment and an annual incentive cash bonus target percentage. In addition, the offer letters provide that as a regular employee, the named executive officer is eligible to participate in company-sponsored benefit programs that are available generally to all salaried employees and entitled to a specified amount of paid vacation, in accordance with our general vacation policy. These offer letters also provide that the executive officer’s employment can be terminated by either party for any reason. In connection with the execution of these offer letters and commencing employment with us, we required our named executive officers to execute our standard confidential information, invention assignment and noncompetition agreement. Information regarding potential payments and benefits due upon a termination of employment or a change of control transaction are described below under “— Agreements with our Named Executive Officers.”

Jeffrey D. Abbey.    Under the terms of his offer letter with us, Mr. Abbey is eligible to receive an annual cash bonus of up to 20% of his annual base salary, subject to corporate and individual performance. Mr. Abbey’s

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current base salary is $265,000. In addition, under the terms of his original offer letter, we agreed that if we terminate Mr. Abbey’s employment without cause, as determined by the board of directors or the compensation committee, we would pay Mr. Abbey an amount equal to six months of his then annual base salary, payable monthly in accordance with our payroll practice for a period of six months, and continue to provide his standard health benefits for a period of six months, subject to such benefits being available to non-employees.

In March 2011, we amended Mr. Abbey’s offer letter with us to provide for enhanced benefits in the event of termination. Specifically, we agreed that if we terminate Mr. Abbey’s employment without cause, as determined by the board of directors or the compensation committee, we would pay Mr. Abbey an amount equal to nine months of his then annual base salary, payable monthly in accordance with our payroll practice for a period of nine months, and continue to provide his standard health benefits for the nine month severance period, subject to such benefits being available to non-employees. In addition, we agreed that if we terminated Mr. Abbey’s employment without cause within 90 days prior to or six months after a change of control, as defined in the amended offer letter, then in lieu of the nine months of severance and nine months of health benefits, we would provide Mr. Abbey 15 months of severance and 15 months of health benefits, subject to such benefits being available to non-employees. In the event that we were unable to provide Mr. Abbey health benefits as a non-employee post-termination, we would pay him the cash equivalent of such health benefits.

Our obligation to make the severance payments and provide the benefits is contingent upon Mr. Abbey’s execution of a release in a form reasonably acceptable to us. If required by Section 409A of the Internal Revenue Code, the payments we are required to make to Mr. Abbey in the first six months following the termination of his employment under his agreement will be made as a lump sum on the date that is six months and one day following such termination.

Lori R, Harrelson.    In July 2011, Ms. Harrelson was promoted to the position of vice president of finance and in connection with that promotion became eligible to receive an annual cash bonus of up to 20% of her annual base salary, subject to corporate and individual performance. Ms. Harrelson’s current annual base salary is $150,000. Ms. Harrelson is not currently entitled to payments upon termination of employment or in connection with a change of control transaction, other than amounts earned during the term of her employment, including salary and vested options, and accelerated vesting of her stock options in the event of a change of control. However, our historical practice generally has been to pay severance to our employees who are terminated without cause in an amount equal to two weeks of base salary plus one additional week for each year of service.

Charles A. Nicolette, Ph.D.    Under the terms of his offer letter with us, Dr. Nicolette is eligible to receive an annual cash bonus of up to 20% of his annual base salary, subject to corporate and individual performance. Dr. Nicolette’s current base salary is $235,872. In addition, under the terms of his original offer letter, we agreed that if we terminate Dr. Nicolette’s employment without cause, as determined by the board of directors or the compensation committee, we would pay Dr. Nicolette an amount equal to six months of his then annual base salary, payable monthly in accordance with our payroll practice for a period of six months, and continue to provide his standard health benefits for a period of six months, subject to such benefits being available to non-employees.

In March 2011, we amended Dr. Nicolette’s offer letter with us to provide for enhanced benefits in the event of termination. Specifically, we agreed that if we terminate Dr. Nicolette’s employment without cause, as determined by the board of directors or the compensation committee, we would pay Dr. Nicolette an amount equal to nine months of his then annual base salary, payable monthly in accordance with our payroll practice for a period of nine months, and continue to provide his standard health benefits for the nine month severance period, subject to such benefits being available to non-employees. In addition, we agreed that if we terminated Dr. Nicolette’s employment without cause within 90 days prior to or six months after a change of control, as defined in the amended offer letter, then in lieu of the nine months of severance and nine months of health benefits, we would provide Dr. Nicolette 15 months of severance and 15 months of health benefits, subject to

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such benefits being available to non-employees. In the event that we were unable to provide Dr. Nicolette health benefits as a non-employee post-termination, we would pay him the cash equivalent of such health benefits.

Our obligation to make the severance payments and provide the benefits is contingent upon Dr. Nicolette’s execution of a release in a form reasonably acceptable to us. If required by Section 409A of the Internal Revenue Code, the payments we are required to make to Dr. Nicolette in the first six months following the termination of his employment under his agreement will be made as a lump sum on the date that is six months and one day following such termination.

Frederick M. Miesowicz, Ph.D.    Under the terms of his offer letter with us, Dr. Miesowicz is eligible to receive an annual cash bonus of up to 20% of his annual base salary, subject to corporate and individual performance. Dr. Miesowicz’s current base salary is $261,380. In addition, under the terms of his offer letter, we agreed that if we terminate Dr. Miesowicz’s employment without cause, as determined by the board of directors or the compensation committee, we would pay Dr. Miesowicz an amount equal to nine months of his then annual base salary, payable monthly in accordance with our payroll practice for a period of nine months, and continue to provide his standard health benefits for a period of nine months, subject to such benefits being available to non-employees. In July 2011, we amended Dr. Miesowicz’s offer letter to provide that in the event that we were unable to provide Dr. Miesowicz health benefits as a non-employee post-termination, we would pay Dr. Miesowicz the cash equivalent of such health benefits.

Our obligation to make the severance payments and provide the benefits to Dr. Miesowicz is contingent upon Dr. Miesowicz’s execution of a release in a form reasonably acceptable to us. If required by Section 409A of the Internal Revenue Code, the payments we are required to make to Dr. Miesowicz in the first six months following the termination of his employment under his agreement will be made as a lump sum on the date that is six months and one day following such termination.

John N. Bonfiglio, Ph.D.    We were a party to an employment agreement with Dr. Bonfiglio which we entered into with him in December 2006. Under the terms of his employment agreement, Dr. Bonfiglio was entitled to an initial annual base salary of $300,000 and was eligible to receive an annual cash bonus of up to 40% of his annual base salary based on corporate and individual performance. The initial term of the employment agreement was two years, but under the agreement the term would renew automatically for additional one year terms unless either party provided notice of non-renewal. Other than non-renewal, if we terminated Dr. Bonfiglio’s employment other than for cause or he terminated his employment for good reason, as defined in his employment agreement, we would pay Dr. Bonfiglio as severance his annual base salary for a period equal to the longer of nine months or the period left in the term of his employment agreement and continue to provide his standard health benefits for a period of nine months or the cash equivalent if such benefits were not available to non-employees. In addition, his employment agreement provided that he would receive an additional nine months of accelerated vesting under each of his stock options if his employment were terminated other than for cause or he terminated his employment for good reason as well as full acceleration of vesting under all of his stock options in the event of a change of control.

In February 2010, we terminated the employment of Dr. Bonfiglio. In connection with his termination, Dr. Bonfiglio entered into a release and settlement agreement with us, pursuant to which we agreed to pay him the severance and benefits contemplated by his employment agreement and extended the period within which he was entitled to exercise his vested stock options to December 31, 2010.

Timothy W. Trost.    We were a party to an offer letter with Mr. Trost which we entered into with him in June 2002. Under the terms of his offer letter, Mr. Trost was entitled to an initial annual base salary of $220,000 and was eligible to receive an annual cash bonus of up to 20% of his annual base salary, subject to corporate and individual performance. If we terminated Mr. Trost’s employment other than for cause, we would pay Mr. Trost an amount equal to six months of his then annual base salary, payable monthly in accordance with our payroll practice for a period of six months, and continue to provide his standard health benefits for a period of six months, subject to such benefits being available to non-employees.

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In February 2010, we terminated the employment of Mr. Trost. In connection with his termination, Mr. Trost entered into a release and settlement agreement with us, pursuant to which we agreed to pay him the severance and benefits contemplated by his offer letter.

Potential Payments upon Termination or Change of Control

As described under “— Agreements with our Named Executive Officers,” each of our named executive officers other than Ms. Harrelson is entitled to severance and benefits in connection with the termination of their employment under their offer letters or employment agreements with us.

Under the terms of the stock options granted to our named executive officers under our 2008 stock incentive plan, upon a change of control transaction all unvested portions of any outstanding options held by them will vest in full.

In addition, eligible participants under our 2008 management incentive plan, which expired on December 31, 2010, would have been entitled to potential payments in the event of a qualifying change of control transaction that occurred during the term of the plan. See discussion above under “— 2008 Management Incentive Plan”. As of December 31, 2010, the eligible participants in the plan were Mr. Abbey, Dr. Miesowicz and Dr. Nicolette.

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The following table sets forth the estimated potential severance and healthcare benefits that our named executive officers would be entitled to receive upon their termination of employment with our company assuming the named executive officers’ employment terminated on December 31, 2010. Except as provided in note (1) below the table, the named executive officers would not be entitled to any additional severance and healthcare benefits if the termination of their employment occurred in connection with a change in control of our company. The following table also sets forth the estimated other potential benefits that our named executive officers would be entitled to receive in connection with a change in control of our company, assuming that the change in control occurred on December 31, 2010. Dr. Bonfiglio’s and Mr. Trost’s employment with us terminated on February 23, 2010. This table represents estimates only and does not necessarily reflect the actual amounts that would be paid to our named executive officers, which would only be known at the time that they become eligible for payment following their termination.

Name	Benefit	Termination Without Cause			Change of Control Event
Jeffrey D. Abbey	Salary Continuation	$	132,500	(1)		—
	Continuation of Benefits	$	6,249	(1)		—
	Vesting of Options		—		$		(2)
	Management Incentive Plan(3)		—		$
	Total	$	138,749
Lori R. Harrelson	Salary Continuation		—			—
	Continuation of Benefits		—			—
	Vesting of Options		—		$		(2)
	Management Incentive Plan(3)		—			—
	Total
Charles A. Nicolette, Ph.D.	Salary Continuation	$	117,936	(1)		—
	Continuation of Benefits	$	4,397	(1)		—
	Vesting of Options		—		$		(2)
	Management Incentive Plan(3)		—		$
	Total	$	122,333
Frederick W. Miesowicz, Ph.D.	Salary Continuation	$	196,035			—
	Continuation of Benefits	$	6,595			—
	Vesting of Options		—		$		(2)
	Management Incentive Plan(3)		—		$
	Total	$	202,630

(1) In March 2011 we amended Mr. Abbey’s and Dr. Nicolette’s offer letters to provide that their severance and healthcare benefits would increase from six to nine months in the event of termination without cause and from nine months to 15 months in the event of termination without cause within 90 days prior to or six months after a change of control.

(2) Represents the in-the-money value of the unvested portions of Mr. Abbey’s, Ms. Harrelson’s, Dr. Nicolette’s and Dr. Miesowicz’s stock options as of December 31, 2010. The value is calculated by multiplying (x) the amount, if any, by which the assumed initial public offering price of $            per share, which is the midpoint of the range listed on the cover page of this prospectus, exceeds the exercise price of the options, by (y) the number of shares subject to the unvested portion of such options.

(3) Under our 2008 management incentive plan, payments to executives would be calculated based on the sale proceeds from the change in control transaction and cannot be determined.

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Director Compensation

We currently do not have a formal non-employee director compensation policy. However, we do reimburse our non-employee directors for their reasonable expenses incurred in connection with attending our board of directors and committee meetings, and we have historically granted stock options to our independent directors who are not affiliated with one of our investors when they initially joined our board of directors. Other than reimbursement of out-of-pocket expenses as described above, we did not provide any cash or equity compensation to our non-employee directors during the year ended December 31, 2010.

We expect that our board of directors will adopt a formal non-employee director compensation policy that will become effective upon the completion of this offering, the goal of which would be to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.

Stock Option and Other Equity Compensation Plans

We believe that equity-based awards are an important vehicle by which to align the interest of our employees with the financial interests of our stockholders, and we historically have awarded stock options broadly to our employees, including our executive officers. The material terms and conditions of our stock option and other equity compensation plans are described below.

2011 Stock Incentive Plan

We expect our board of directors to adopt and our stockholders to approve the 2011 stock incentive plan, which will become effective immediately prior to the closing of this offering. The 2011 stock incentive plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. Upon effectiveness of the plan, the number of shares of our common stock that will be reserved for issuance under the 2011 stock incentive plan will be the sum of              shares plus (1) the number of shares of our common stock then available for issuance under the 2008 stock incentive plan, both described below, up to              shares, (2) the number of shares of our common stock subject to outstanding awards under the 2008 stock incentive plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right, and (3) an annual increase, to be added on the first day of each fiscal year beginning in fiscal year 2013 and each subsequent anniversary until the expiration of the 2011 stock incentive plan, equal to the lowest of (a)              shares of our common stock, (b)     % of the number of shares of our common stock outstanding on the first day of the fiscal year and (c) an amount determined by our board of directors.

Our employees, officers, directors, consultants and advisors are eligible to receive awards under the 2011 stock incentive plan. However, incentive stock options may only be granted to our employees. The maximum number of shares of our common stock with respect to which awards may be granted to any participant under the 2011 stock incentive plan is              per calendar year. For purposes of this limit on the maximum number of shares that may be awarded to any participant, the combination of an option in tandem with a stock appreciation right will be treated as a single award.

Pursuant to the terms of the 2011 stock incentive plan, our board of directors administers the plan and, subject to any limitations in the plan, selects the recipients of awards and determines:

• the number of shares of our common stock covered by options and the dates upon which the options become exercisable;

• the type of options to be granted;

• the duration of options, which may not be in excess of ten years;

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• the exercise price of options, which may not be less than the fair market value of our common stock on the date of grant of the options; and

• the number of shares of our common stock subject to any stock appreciation rights, restricted stock awards, restricted stock units or other stock-based awards and the terms and conditions of such awards, including conditions for repurchase, issue price and repurchase price.

If our board of directors delegates authority to an executive officer to grant awards under the 2011 stock incentive plan, the executive officer has the power to make awards to all of our employees, except executive officers. Our board of directors will fix the terms of the awards to be granted by such executive officer, including the exercise price of such awards, and the maximum number of shares subject to awards that such executive officer may make.

Upon a merger or other reorganization event, our board of directors may, in its sole discretion, take any one or more of the following actions pursuant to the 2011 stock incentive plan as to some or all outstanding awards other than restricted stock:

• provide that all outstanding awards shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring or successor corporation (or an affiliate thereof);

• upon written notice to a participant, provide that all of the participant’s unexercised awards will terminate immediately prior to the consummation of such reorganization event unless exercised by the participant;

• provide that outstanding awards shall become exercisable, realizable or deliverable, or restrictions applicable to an award shall lapse, in whole or in part, prior to or upon such reorganization event;

• in the event of a reorganization event pursuant to which holders of shares of our common stock will receive a cash payment for each share surrendered in the reorganization event, make or provide for a cash payment to the participants with respect to each award held by a participant equal to (1) the number of shares of common stock subject to the vested portion of the award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such reorganization event) multiplied by (2) the excess, if any, of the cash payment for each share surrendered in the reorganization event over the exercise, measurement or purchase price of such award and any applicable tax withholdings, in exchange for the termination of such award; and

• provide that, in connection with a liquidation or dissolution, awards shall convert into the right to receive liquidation proceeds.

In the case of certain restricted stock units, no assumption or substitution is permitted, and the restricted stock units will instead be settled in accordance with the terms of the applicable restricted stock unit agreement.

Upon the occurrence of a reorganization event other than a liquidation or dissolution, the repurchase and other rights with respect to outstanding restricted stock will continue for the benefit of the successor company and will, unless the board of directors may otherwise determine, apply to the cash, securities or other property into which shares of our common stock are converted or exchanged pursuant to the reorganization event. Upon the occurrence of a reorganization event involving a liquidation or dissolution, all restrictions and conditions on each outstanding restricted stock award will automatically be deemed terminated or satisfied, unless otherwise provided in the agreement evidencing the restricted stock award.

At any time, our board of directors may, in its sole discretion, provide that any award under the 2011 stock incentive plan will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part.

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No award may be granted under the 2011 stock incentive plan on or after             , 2021. Our board of directors may amend, suspend or terminate the 2011 stock incentive plan at any time, except that stockholder approval will be required to comply with applicable law or stock market requirements.

2008 Stock Incentive Plan

In February 2008, our board of directors adopted our 2008 stock incentive plan. Our stockholders approved our 2008 stock incentive plan in March 2008. Following the completion of this offering, our board of directors will not grant any further awards under the 2008 stock incentive plan but all outstanding awards will continue to be governed by their existing terms. We expect to make future equity-based awards under our new 2011 stock incentive plan described below.

Types of Awards.    The 2008 stock incentive plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, nonstatutory stock options, restricted stock awards, consisting of restricted stock and restricted stock units, and other forms of stock-based awards. Awards under the plan may be granted to our employees, directors and individual consultants and advisors. Only our employees are eligible to receive incentive stock options.

Share Reserve.    When initially adopted, an aggregate of 27,326,263 shares were reserved for issuance under the 2008 stock incentive plan. In December 2008, the 2008 stock incentive plan was amended by our board of directors, and approved by our stockholders, to increase to 37,612,814 the total number of shares available for issuance under the plan. As of June 30, 2011, options to purchase 24,190,022 shares of common stock at a weighted average exercise price per share of $0.09 were outstanding under the 2008 stock incentive plan. As of June 30, 2011, 13,205,160 shares of common stock remained available for future issuance under the plan.

Administration.    Our board of directors, or a duly authorized committee thereof, is authorized to administer our 2008 stock incentive plan. Our board of directors has delegated certain authority to administer the 2008 stock incentive plan to our compensation committee; however, our general practice has been that awards are approved by the board of directors. Our board of directors or its authorized committee has the authority under the plan to interpret and adopt rules and procedures relating to the 2008 stock incentive plan, as well as to determine the terms of any award or amend the terms of any award made under the plan. No amendment to any award made under the plan may materially and adversely affect the rights of a participant under any outstanding award without the participant’s consent.

Stock Options.    Each stock option awarded under the 2008 stock incentive plan is granted pursuant to a notice of stock option and stock option agreement. The board of directors determines the exercise price for a stock option, within the terms and conditions of the 2008 stock incentive plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. The vesting and other terms of each grant under the 2008 stock incentive plan is determined by the board of directors in its discretion; however, shares subject to stock options granted under the 2008 stock incentive plan generally vest in installments over a specified period of service, typically four years.

The board of directors determines the term of stock options granted under the 2008 stock incentive plan, subject to limitations in the case of some incentive stock options, as described below. In general, if an optionee’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the optionee may generally exercise the vested portion of any option for a period of three months following the cessation of service. If an optionee’s service relationship with us, or any of our affiliates, ceases due to disability or death or if an optionee dies within a specified period following cessation of service, the optionee or a beneficiary generally may exercise the vested portion of any option for a period of 12 months following the death or disability. If an optionee’s services are terminated for cause, options generally terminate immediately upon such termination. In no event may an option be exercised beyond the expiration of its term.

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Stock purchased upon the exercise of a stock option may, depending on the terms of the particular option agreement, be paid for using any of the following: (1) cash or check, (2) a broker-assisted cashless exercise, (3) when our common stock is registered under the Securities Exchange Act of 1934, the tender of common stock previously owned by the optionee, (4) delivery of a promissory note, (5) payment of other lawful consideration as determined by the plan administrator, or (6) any combination of the above.

Tax Limitations on Incentive Stock Options.     Incentive stock options are subject to certain restrictions contained in the Internal Revenue Code. Among such restrictions, incentive stock options may be granted only to our employees. The maximum term of an incentive stock option is ten years from the date of grant. Any incentive stock option granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates must have an exercise price equal at least to 110% of the fair market value of the stock subject to the option on the date of grant, and the term of the incentive stock option may not exceed five years from the date of grant. The aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to incentive stock options that are exercisable for the first time by an optionee during any calendar year under all of our stock plans may not exceed $100,000.

Restricted Stock Awards.     Each restricted stock award granted under the 2008 stock incentive plan is granted pursuant to a summary of restricted stock purchase and a restricted stock purchase agreement. An award of restricted stock entitles a participant to acquire shares of our common stock that are subject to specified restrictions, which may include a repurchase right or forfeiture right, if the shares are issued at no cost, in our favor that lapses in accordance with a vesting schedule or as conditions specified in the award are satisfied. The board of directors determines the terms and conditions of restricted stock awards, including the conditions for repurchase or forfeiture and the purchase price, if any. Unless the board of directors determines otherwise, participants holding shares of restricted stock are entitled to all ordinary cash dividends paid with respect to such shares.

Other Stock-Based Awards.     The board of directors may grant other awards based in whole or in part on our common stock. The board of directors sets the number of shares under the equity award, as well as the purchase price applicable to the equity award and all other terms and conditions of the award.

Term; Amendment.     No awards may be granted under the 2008 stock incentive plan after the expiration of ten years from the earlier of the date the plan was adopted by our board of directors or the date the plan was approved by our stockholders, but awards granted prior to such expiration may extend beyond that date. The board of directors may amend, suspend or terminate the plan at any time, subject to approval of the stockholders in certain circumstances if required by the Internal Revenue Code to ensure that incentive stock options are tax-qualified and to a participant’s consent to the extent that any amendment to the plan may materially and adversely affect the rights of a participant under any outstanding award.

Effect of Certain Corporate Transactions.     In the event of specified changes of control of our company, our board of directors may take any one or more actions as to outstanding equity award, or as to a portion of any outstanding equity award, including:

• providing that such awards will be assumed, or substantially equivalent awards substituted, by the acquiring or succeeding corporation or an affiliate thereof;

• providing, upon notice to the participant, that all unexercised awards will terminate immediately prior to the consummation of such transaction unless exercised within a specified period of time;

• providing that all or any outstanding awards will become vested or exercisable, or restrictions applicable to such awards will lapse, in full or in part, at or immediately prior to such event;

• in the event of a consolidation, merger, combination, reorganization or similar transaction under the terms of which holders of our common stock will receive a cash payment per share surrendered in the

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transaction, making or providing for an equivalent cash payment in exchange for the termination of such equity awards; or

• providing that in the event of a liquidation or dissolution awards will convert into the right to receive liquidation proceeds.

Transferability.     Awards made under the 2008 stock incentive plan are not transferable except by will or by the laws of descent or distribution or, other than in the case of an incentive stock option, pursuant to a domestic relations order.

1999 Stock Option Plan

Our board of directors adopted, and our stockholders approved, the 1999 stock option plan in December 1999. In 2008, our employees who then held options under the 1999 stock option plan agreed to the cancellation and termination of all of their options previously granted under the 1999 stock option plan in exchange for the grant of new options under our 2008 stock incentive plan described below, and the board of directors determined at that time to discontinue making awards under the 1999 stock option plan. As of June 30, 2010, options to purchase 6,196 shares of common stock at a weighted average exercise price per share of $28.44 were outstanding under the 1999 stock option plan. The 1999 stock option plan has expired and no shares of common stock are available for issuance under that plan, although all outstanding options remain outstanding in accordance with their terms.

Administration.     Our board of directors administered the 1999 stock option plan and had the authority to interpret the terms of the 1999 stock option plan and the options granted under it.

Eligibility.     The 1999 stock option plan provided for the grant of incentive stock options within the meaning of Section 422 of the Code and nonstatutory stock options. Our employees, including officers, non-employee directors, advisors and independent consultants, were eligible to receive options under the 1999 stock option plan, provided that incentive stock options could be granted only to employees.

Effect of Certain Corporate Transactions.     The 1999 stock option plan provided that, unless otherwise determined by our board of directors at the time of grant, in the event of a merger, consolidation, corporate reorganization or any transaction in which all or substantially all of our assets or stock were sold, leased, transferred or otherwise disposed of, unless otherwise provided in an individual’s option agreement, any unvested portion of a stock option granted under the 1999 stock option plan would become fully vested unless the surviving or acquiring corporation assumed or substituted comparable options for the outstanding options granted under the plan or replaced the options with a cash incentive program that preserved the intrinsic value of the options at the time of the transaction and provided for subsequent payout over the same vesting schedules as the options being replaced.

Limitation of Liability and Indemnification

Our certificate of incorporation, which will become effective upon the closing of this offering, limits the personal liability of directors for breach of fiduciary duty to the maximum extent permitted by the Delaware General Corporation Law and provides that no director will have personal liability to us or to our stockholders for monetary damages for breach of fiduciary duty or other duty as a director. However, these provisions do not eliminate or limit the liability of any of our directors for:

• any breach of the director’s duty of loyalty to us or our stockholders;

• any act or omission not in good faith or which involves intentional misconduct or a knowing violation of law;

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• voting or assenting to any unlawful payments of dividends, stock repurchases or other distributions; or

• any transaction from which the director derived an improper personal benefit.

Any amendment to or repeal of these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to such amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.

In addition, our certificate of incorporation, which will become effective upon the closing of this offering, provides that we must indemnify our directors and officers and we must advance expenses, including attorneys’ fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions.

We maintain a general liability insurance policy that covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers. In addition, we plan to enter into indemnification agreements with all of our directors and executive officers. These indemnification agreements may require us, among other things, to indemnify each such director for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by him in any action or proceeding arising out of his service as one of our directors.

Certain of our non-employee directors may, through their relationships with their employers, be insured or indemnified against certain liabilities incurred in their capacity as members of our board of directors.

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TRANSACTIONS WITH RELATED PERSONS

Since January 1, 2008, we have engaged in the following transactions, in which the amount involved in the transaction exceeds $120,000, with our directors, executive officers and holders of more than 5% of our voting securities, and affiliates or immediate family members of our directors, executive officers and holders of more than 5% of our voting securities. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties.

Series C Preferred Stock Financing

During March, April and November 2008, we issued and sold an aggregate of 123,099,041 shares of our series C preferred stock for an aggregate purchase price of $30,004,666. We issued and sold these shares at a price per share of $0.289018 in the case of shares of our series C preferred stock issued and sold for cash or upon the cancellation of interest then outstanding on our then outstanding convertible promissory notes, and at a price per share of $0.2167635 in the case of shares of our series C preferred stock issued and sold upon the cancellation of principal then outstanding under our then outstanding convertible promissory notes. Holders of our preferred stock that purchased their pro rata share of our series C preferred stock in the series C preferred stock financing also received an aggregate of 651,728 shares of our series A preferred stock, 9,314,522 shares of our series B preferred stock and 830,177 shares of our series B-1 preferred stock, in exchange for, in part, the cancellation of accrued but unpaid dividends on such shares of preferred stock.

The following table sets forth the number of shares of each series of our preferred stock that were issued to our directors, executive officers and holders of more than 5% of our voting securities, and affiliates or immediate family members of our directors, executive officers and holders of more than 5% of our voting securities in connection with the series C preferred stock financing, the amount of principal and interest cancelled on our then outstanding convertible notes, if any, held by such persons and entities and the aggregate cash purchase price paid by such persons and entities.

Name(1)	Shares of Series A Preferred Stock		Shares of Series B Preferred Stock		Shares of Series B-1 Preferred Stock		Shares of Series C Preferred Stock		Cancelled Convertible Note Principal Amount		Cancelled Convertible Note Interest Amount		Aggregate Cash Purchase Price(2)
Entities affiliated with The Aurora Funds(3)		113,905		743,130		—		4,124,833	$	255,874	$	71,346	$	779,640
Caisse de dépôt et de placement du Québec(4)		—		1,255,556		—		12,301,263	$	344,435	$	96,040	$	3,000,000
Coöperatieve AAC LS U.A. (Forbion)(5)		—		1,212,122		—		13,650,847	$	586,379	$	163,502	$	3,000,000
Entities affiliated with Intersouth Partners(6)		227,738		2,265,605		—		11,688,457	$	652,176	$	181,848	$	2,326,758
Kyowa Hakko Kirin Co., Ltd.		—		1,212,122		830,117		5,189,988		—		—	$	1,500,000
Entities affiliated with Lumira Capital(7)		—		1,098,612		—		21,342,351	$	175,126	$	48,830	$	5,000,000
TVM V Life Science Ventures GmbH & Co. KG(8)		—		1,191,919		—		26,322,097	$	873,086	$	243,445	$	6,200,000
Jeffrey D. Abbey		—		—		—		69,200		—		—	$	20,000
Frederick M. Miesowicz, Ph.D.		—		—		—		34,600		—		—	$	10,000
Charles A. Nicolette, Ph.D.		—		—		—		69,200		—		—	$	20,000

(1) See “Principal Stockholders” for more information about shares held by these persons and entities.

(2) Excludes any purchase price attributable to the cancellation of principal and interest under our then outstanding convertible promissory notes.

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(3) These amounts are distributed among the entities set forth in the table below. Mr. Clark, one of our directors, is the Managing General Partner of Aurora Funds, Inc. and is affiliated with these entities.

Name	Shares of Series A Preferred Stock		Shares of Series B Preferred Stock		Shares of Series C Preferred Stock		Cancelled Convertible Note Principal Amount		Cancelled Convertible Note Interest Amount		Cash Purchase Price
Aurora Ventures II, LLC		113,905		115,352		679,950		—		—	$	196,518
Harbinger/Aurora QP Venture Fund, LLC		—		371,035		2,036,026	$	151,229	$	42,167	$	344,642
Harbinger/Aurora Venture Fund, LLC		—		256,743		1,408,857	$	104,645	$	29,178	$	238,480

(4) Ms. Laliberté, one of our directors, is the Investment Manager, Private Equity of Caisse de dépôt et de placement du Québec.

(5) Dr. van Deventer, one of our directors, is a General Partner of Forbion Capital Partners and is affiliated with this entity.

(6) These amounts are distributed among the entities set forth in the table below. Mr. Tracy, one of our directors, is a Venture Partner at Intersouth Partners and is affiliated with these entities.

Name	Shares of Series A Preferred Stock		Shares of Series B Preferred Stock		Shares of Series C Preferred Stock		Cancelled Convertible Note Principal Amount		Cancelled Convertible Note Interest Amount		Cash Purchase Price
Intersouth Affiliates V, L.P.		—		52,834		262,747	$	15,479	$	4,316	$	50,984
Intersouth Partners IV, L.P.		227,738		1,057,019		5,678,164	$	298,093	$	83,118	$	1,160,516
Intersouth Partners V, L.P.		—		1,155,752		5,747,546	$	338,604	$	94,414	$	1,115,258

(7) These amounts are distributed among the entities set forth in the table below. Dr. Underdown, one of our directors, is the Managing Director of Lumira Capital Corp. and is affiliated with these entities.

Name	Shares of Series B Preferred Stock		Shares of Series C Preferred Stock		Cancelled Convertible Note Principal Amount		Cancelled Convertible Note Interest Amount		Cash Purchase Price
Lumira Capital Corp.		470,834		976,868	$	175,126	$	48,830		—
Lumira Capital I Limited Partnership		371,035		15,059,663		—		—	$	3,697,350
Lumira Capital I Quebec Limited Partnership		256,743		5,305,820		—		—	$	1,302,650

(8) Dr. Birner, one of our directors, is a general partner of TVM Capital and is affiliated with this entity.

2010 Convertible Note and Warrant Financing

In September and December 2010, we sold convertible promissory notes in the aggregate principal amount of $6.0 million in a private placement to certain of our existing holders of preferred stock. We refer to these notes as the 2010 convertible notes. The 2010 convertible notes accrue interest at a rate equal to 10% per year, and have a maturity date of September 15, 2011, unless converted prior thereto. No payments of principal or interest have been made under these notes. In July 2011, we amended the 2010 convertible notes to extend the maturity date to December 31, 2011 and to provide that all principal and accrued interest on the 2010 convertible notes will automatically convert into shares of our common stock upon the closing of this offering, at a conversion price per share equal to the price per share at which our common stock is sold to the public in this offering, if investors holding at least a majority-in-interest of the aggregate principal amount of the then outstanding 2010 convertible notes so elect.

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In connection with the issuance and sale of the 2010 convertible notes, we issued warrants to the purchasers of the 2010 convertible notes to purchase an aggregate of 20,759,953 shares of our series C preferred stock with an exercise price of $0.01 per share. The warrants have a term of seven years and will be automatically exercised by net exercise upon the closing of this offering.

The following table sets forth the aggregate original principal amount of the 2010 convertible notes purchased by our directors, executive officers and holders of more than 5% of our voting securities, and affiliates or immediate family members of our directors, executive officers and holders of more than 5% of our voting securities, and the number of shares of series C preferred stock underlying the warrants issued in connection with the purchase of the 2010 convertible notes.

Name	Original Principal Amount of Notes			Number of Warrant Shares
Entities affiliated with The Aurora Funds(1)	$	264,541	(1)		915,310
Caisse de dépôt et de placement du Québec(2)	$	605,433			2,094,795
Coöperatieve AAC LS U.A. (Forbion)(3)	$	1,023,048			3,539,740
Entities affiliated with Intersouth Partners(4)	$	772,509	(2)		2,672,877
Entities affiliated with Lumira Capital(5)	$	1,135,826	(3)		3,929,948
TVM V Life Science Ventures GmbH & Co. KG(6)	$	1,436,319			4,969,652
Jeffrey D. Abbey	$	2,263			7,831
Frederick M. Miesowicz, Ph.D.	$	1,132			3,916
Charles A. Nicolette, Ph.D	$	22,263			77,031

(1) These amounts are distributed among the entities set forth in the table below. Mr. Clark, one of our directors, is the Managing General Partner of Aurora Funds, Inc. and is affiliated with these entities.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Aurora Ventures II, LLC	$	20,000		69,200
Harbinger/Aurora QP Venture Fund, LLC	$	144,531		500,075
Harbinger/Aurora Venture Fund, LLC	$	100,010		346,034

(2) Ms. Laliberté, one of our directors, is the Investment Manager, Private Equity of Caisse de dépôt et de placement du Québec.

(3) Dr. van Deventer, one of our directors, is a General Partner of Forbion Capital Partners and is affiliated with this entity.

(4) These amounts are distributed among the entities set forth in the table below. Mr. Tracy, one of our directors, is a Venture Partner at Intersouth Partners and is affiliated with these entities.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Intersouth Affiliates V, L.P.	$	17,354		60,045
Intersouth Partners IV, L.P.	$	375,536		1,299,352
Intersouth Partners V, L.P.	$	379,619		1,313,479

(5) These amounts are distributed among the entities set forth in the table below. Dr. Underdown, one of our directors, is the Managing Director of Lumira Capital Corp. and an affiliate of these entities.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Lumira Capital Corp.	$	108,113		374,070
Lumira Capital I Limited Partnership	$	839,909		2,906,078
Lumira Capital I Quebec Limited Partnership	$	295,917		1,023,869

(6) Dr. Birner, one of our directors, is a general partner of TVM Capital and is affiliated with this entity.

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2011 Convertible Note and Warrant Financing

In July 2011, we sold convertible promissory notes in the aggregate principal amount of $3.5 million in a private placement to certain of our existing holders of preferred stock. We refer to these notes as the July 2011 convertible notes. The July 2011 convertible notes accrue interest at a rate equal to 10% per year, and have a maturity date of December 31, 2011, unless converted prior thereto. No payments of principal or interest have been made under these notes. All principal and accrued interest on the July 2011 convertible notes will automatically convert into shares of our common stock, at a conversion price per share equal to the price per share at which our common stock is sold to the public in this offering, if investors holding at least a majority-in-interest of the aggregate principal amount of the then outstanding July 2011 convertible notes so elect.

In connection with the issuance and sale of the July 2011 convertible notes, we issued warrants to the purchasers of the July 2011 convertible notes to purchase an aggregate of 12,109,972 shares of our series C preferred stock with an exercise price of $0.01 per share. The warrants have a term of seven years and will be automatically exercised upon the closing of this offering by net exercise.

The following table sets forth the aggregate original principal amount of the July 2011 convertible notes purchased by entities affiliated with our directors and our 5% stockholders and their affiliates, and the number of shares of series C preferred stock underlying the warrants issued in connection with the purchase of the July 2011 convertible notes.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Entities affiliated with The Aurora Funds(1)	$	171,139		592,140
Caisse de dépôt et de placement du Québec(2)	$	391,672		1,355,182
Coöperatieve AAC LS U.A. (Forbion)(3)	$	458,610		1,586,787
Entities affiliated with Intersouth Partners(4)	$	499,758		1,729,159
Entities affiliated with Lumira Capital(5)	$	689,300		2,834,972
TVM V Life Science Ventures GmbH & Co. KG(6)	$	697,786		2,414,333
Jeffrey D. Abbey	$	1,464		5,066
Frederick M. Miesowicz, Ph.D.	$	732		2,533
Charles A. Nicolette, Ph.D.	$	20,000		69,200

(1) These amounts are distributed among the entities set forth in the table below. Mr. Clark, one of our directors, is the Managing General Partner of Aurora Funds, Inc. and is affiliated with these entities.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Harbinger/Aurora QP Venture Fund, LLC	$	101,148		349,972
Harbinger/Aurora Venture Fund, LLC	$	69,991		242,168

(2) Ms. Laliberté, one of our directors, is the Investment Manager, Private Equity of Caisse de dépôt et de placement du Québec.

(3) Dr. van Deventer, one of our directors, is a General Partner of Forbion Capital Partners and is affiliated with this entity.

(4) These amounts are distributed among the entities set forth in the table below. Mr. Tracy, one of our directors, is a Venture Partner at Intersouth Partners and is affiliated with these entities.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Intersouth Affiliates V, L.P.	$	11,227		38,845
Intersouth Partners IV, L.P.	$	242,945		840,588
Intersouth Partners V, L.P.	$	245,586		849,727

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(5) These amounts are distributed among the entities set forth in the table below. Dr. Underdown, one of our directors, is the Managing Director of Lumira Capital Corp. and is affiliated with these entities.

Name	Original Principal Amount of Notes		Number of Warrant Shares
Lumira Capital Corp.	$	85,784		296,812
Lumira Capital I Limited Partnership	$	445,838		1,542,597
Lumira Capital I Quebec Limited Partnership	$	157,678		545,564

(6) Dr. Birner, one of our directors, is a general partner of TVM Capital and is affiliated with this entity.

Kirin Collaboration and License Agreement

In 2004, we entered into the Kirin agreement with Kirin, which is also a stockholder. Under this agreement, we and Kirin agreed to share all related worldwide research and development costs and profits relating to the development of AGS-003 and AGS-004. Pursuant to the Kirin agreement Kirin agreed to reimburse us on a quarterly basis for our direct costs and services related to specified development and manufacturing activities and for allocated internal time at a designated full time equivalent rate. In 2008 and 2009, we received reimbursements under the Kirin agreement of $8.1 million and $6.6 million, respectively. We and Kirin agreed to terminate the Kirin agreement effective December 31, 2009. Under the termination agreement, Kirin assigned to us its ownership interest in specified jointly owned patent rights. In return, we agreed to pay Kirin low single-digit percentage royalties on net sales of specified AGS-003 and AGS-004 products beginning with their first commercial sale and continuing for a specified period thereafter. We have not paid any such amounts to date.

Agreements With Our Stockholders

We have entered into a registration rights agreement with purchasers of our series A preferred stock, series B preferred stock, series B-1 preferred stock and series C preferred stock. The registration rights agreement provides those holders with the right to demand that we file a registration statement, subject to certain limitations, and to request that their shares be covered by a registration statement that we are otherwise filing. See “Description of Capital Stock — Registration Rights” for additional information.

We have also entered into a stockholders’ agreement with certain purchasers of our common stock, series A preferred stock, series B preferred stock, series B-1 preferred stock and series C preferred stock. The stockholders’ agreement provides for rights of first refusal in respect of sales of securities by certain holders of our common stock and preferred stock. The stockholders’ agreement also provides holders of our series C preferred stock with co-sale rights and with a participation right to purchase their pro rata share of new securities that the Company may propose to sell and issue, subject to specified exceptions. The stockholders’ agreement also contains provisions with respect to the election of our board of directors and its composition. The rights under this agreement will terminate upon the closing of this offering.

Indemnification Agreements

Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. In addition, we plan to enter into indemnification agreements with our directors and executive officers. See “Executive Compensation — Limitation of Liability and Indemnification” for additional information regarding these agreements.

Policies and Procedures for Related Person Transactions

Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which Argos is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest.

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If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our chief executive officer. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our audit committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chairman of the committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.

A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the committee will review and consider:

• the related person’s interest in the related person transaction;

• the approximate dollar value of the amount involved in the related person transaction;

• the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;

• whether the transaction was undertaken in the ordinary course of our business;

• whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party;

• the purpose of, and the potential benefits to us of, the transaction; and

• any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

The committee may approve or ratify the transaction only if the committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, Argos’ best interests. The committee may impose any conditions on the related person transaction that it deems appropriate.

In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our board of directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

• interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, and (c) the amount involved in the transaction equals less than the greater of $200,000 dollars or 5% of the annual gross revenues of the other entity that is a party to the transaction; and

• a transaction that is specifically contemplated by provisions of our charter or bylaws.

The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the compensation committee in the manner specified in its charter.

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PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial ownership of our common stock, as of June 30, 2011 by:

• each of our directors;

• each of our named executive officers;

• all of our directors and executive officers as a group; and

• each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock.

The column entitled “Percentage of Shares Beneficially Owned — Before Offering” is based on a total of shares of our common stock outstanding as of June 30, 2011, assuming:

• the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 157,871,415 shares of our common stock upon the closing of this offering;

• the automatic conversion of all principal and accrued interest on the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, into an aggregate of              shares of our common stock, at the initial public offering price, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                     , 2011;

• the issuance of an aggregate of              shares of our common stock upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

• the issuance of an aggregate of 4,609,457 shares of our common stock to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering.

The column entitled “Percentage of Shares Beneficially Owned — After Offering” also gives effect to the shares of our common stock that we are selling in this offering.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock. Shares of our common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of June 30, 2011 are considered outstanding and beneficially owned by the person holding the options or warrants for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investing power with respect to all of the shares of our common stock beneficially owned by them, subject to community property laws, where applicable.

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Except as otherwise set forth in the footnotes below, the address of the beneficial owner is c/o Argos Therapeutics, Inc., 4233 Technology Drive, Durham, North Carolina 27704.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned	Percentage of  Shares Beneficially Owned
		Before Offering	After Offering
5% Stockholders:
Entities affiliated with The Aurora Funds(1)
Caisse de dépôt et placement du Québec(2)
Entities affiliated with Intersouth Partners(3)
Entities affiliated with Lumira Capital(4)
Coöperatieve AAC LS U.A. (Forbion)(5)
TVM V Life Science Ventures GmbH &Co. KG(6)
Directors and Named Executive Officers
Jeffrey D. Abbey(7)
John N. Bonfiglio, Ph.D.(8)
Lori R. Harrelson(9)
Timothy W. Trost(10)
Frederick M. Miesowicz, Ph.D.(11)
Charles A. Nicolette, Ph.D.(12)
Hubert Birner, Ph.D.(6)
B. Jefferson Clark(1)
Michel Gréco(15)
Monique Laliberté (2)
Philip R. Tracy (3)
Brian J. Underdown, Ph.D.(4)
Sander van Deventer, M.D., Ph.D.(13)
All current executive officers and directors as a group (11 persons)(14)

* Represents beneficial ownership of less than one percent of our outstanding common stock.

(1) The address for the Aurora Funds is 3100 Tower Blvd, Ste 1600, Durham, North Carolina 27077. Consists of (i) 288,071 shares of common stock issuable upon conversion of shares of series A preferred stock held by Aurora Ventures II, LLC, (ii) 570,511 shares of common stock issuable upon conversion of shares of series B preferred stock held by Aurora Ventures II, LLC, (iii) 679,950 shares of common stock issuable upon conversion of shares of series C preferred stock held by Aurora Ventures II, LLC, (iv)              shares of common stock issuable upon exercise of warrants held by Aurora Ventures II, LLC, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (v)              shares of common stock issuable upon conversion of convertible notes held by Aurora Ventures II, LLC, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                     , 2011, (vi) 1,835,079 shares of common stock issuable upon conversion of shares of series B preferred stock held by Harbinger/Aurora QP Venture Fund, LLC, (vii) 2,036,026 shares of common stock issuable upon conversion of shares of series C preferred stock held by Harbinger/Aurora QP Venture Fund, LLC, (viii)              shares of common stock issuable upon exercise of warrants held by Harbinger/Aurora QP Venture Fund, LLC, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (ix)             shares of common stock issuable upon conversion of convertible notes held by Harbinger/Aurora QP Venture Fund, LLC assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on September 30, 2011, (x) 1,269,810 shares of common stock issuable upon conversion of shares of series B preferred stock held by Harbinger/Aurora Venture Fund, LLC, (xi) 1,408,857 shares of common stock issuable upon conversion of shares of

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series C preferred stock held by Harbinger/Aurora Venture Fund, LLC, (xii)              shares of common stock issuable upon exercise of warrants held by Harbinger/Aurora Venture Fund, LLC, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (xiii)             shares of common stock issuable upon conversion of convertible notes held by Harbinger/Aurora Venture Fund, LLC, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011. Aurora Management II, LLC is the managing member of Aurora Ventures II, LLC. Harbinger/Aurora Ventures, LLC is the managing member of Harbinger/Aurora QP Venture Fund, LLC and Harbinger/Aurora Venture Fund, LLC and has voting and investment power with respect to all shares held by those entities, which is exercised by the investment committee. B. Jefferson Clark, a member of our board of directors, is president and a member of the investment committee of Harbinger/Aurora Ventures, LLC and the president of Aurora Management II, LLC. Mr. Clark disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.

(2) The address for Caisse de dépôt et placement du Québec is 1000, place Jean-Paul-Riopelle Montréal, Québec, H2Z 2B3. Consists of (i) 6,209,779 shares of common stock issuable upon conversion of shares of series B preferred stock, (ii) 12,301,263 shares of common stock issuable upon conversion of shares of series C preferred stock, (iii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (iv)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011. Monique Laliberté, a member of our board of directors, is Investment Manager, Private Equity of Caisse de dépôt et placement du Québec. Ms. Laliberté disclaims beneficial ownership of these shares except to the extent of her pecuniary interest therein.

(3) The address for Intersouth Partners is 406 Blackwell Street, Suite 200, Durham, North Carolina 27701. Consists of (i) 267,850 shares of common stock issuable upon conversion of shares of series B preferred stock held by Intersouth Affiliates V, L.P., (ii) 262,747 shares of common stock issuable upon conversion of shares of series C preferred stock held by Intersouth Affiliates V, L.P., (iii)              shares of common stock issuable upon exercise of warrants held by Intersouth Affiliates V, L.P., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (iv)             shares of common stock issuable upon conversion of convertible notes held by Intersouth Affiliates V, L.P., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, (v) 575,961 shares of common stock issuable upon conversion of shares of series A preferred stock held by Intersouth Partners IV, L.P., (vi) 5,227,845 shares of common stock issuable upon conversion of shares of series B preferred stock held by Intersouth Partners IV, L.P., (vii) 5,678,164 shares of common stock issuable upon conversion of shares of series C preferred stock held by Intersouth Partners IV, L.P., (viii)              shares of common stock issuable upon exercise of warrants held by Intersouth Partners IV, L.P., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (ix)             shares of common stock issuable upon conversion of convertible notes held by Intersouth Partners IV, L.P., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, (x) 5,859,261 shares of common stock issuable upon conversion of shares of series B preferred stock held by Intersouth Partners V, L.P., (xi) 5,747,546 shares of common stock issuable upon conversion of shares of series C preferred stock held by Intersouth Partners V, L.P., (xii)              shares of common stock issuable upon exercise of warrants held by Intersouth Affiliates V, L.P., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (xiii)             shares of common stock issuable upon conversion of convertible notes held by Intersouth Partners V, L.P., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011. Intersouth Associates V, LLC, the general partner of each of Intersouth Partners V, L.P. and Intersouth Affiliates V, L.P., and Intersouth Associates IV, LLC, the general partner of Intersouth Partners IV, L.P., may be deemed to share voting and dispositive power over the shares held by each of Intersouth

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Affiliates V, L.P., Intersouth Partners IV, L.P. and Intersouth Partners V, L.P. Philip R. Tracy, a member of our board of directors, is a member of Intersouth Associates V, LLC and Intersouth Associates IV, LLC and shares voting and investment power over the shares held by Intersouth Affiliates V, L.P., Intersouth Partners IV, L.P. and Intersouth Partners V, L.P. Mr. Tracy disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.

(4) The address of Lumira Capital is 141 Adelaide Street West, Suite 770, Toronto, Ontario M5H 3L5. Consists of (i) 2,328,668 shares of common stock issuable upon conversion of shares of series B preferred stock held by Lumira Capital Corp., (ii) 976,868 shares of common stock issuable upon conversion of shares of series C preferred stock held by Lumira Capital Corp., (iii)              shares of common stock issuable upon exercise of warrants held by Lumira Capital Corp., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (iv)             shares of common stock issuable upon conversion of convertible notes held by Lumira Capital Corp., assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, (v) 2,119,948 shares of common stock issuable upon conversion of shares of series B preferred stock held by Lumira Capital I Limited Partnership, (vi) 15,059,663 shares of common stock issuable upon conversion of shares of series C preferred stock held by Lumira Capital I Limited Partnership, (vii)              shares of common stock issuable upon exercise of warrants held by Lumira Capital I Limited Partnership, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (viii)             shares of common stock issuable upon conversion of convertible notes held by Lumira Capital I Limited Partnership, assuming an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, (ix) 746,900 shares of common stock issuable upon conversion of shares of series B preferred stock held by Lumira Capital I Quebec Limited Partnership, (x) 5,305,820 shares of common stock issuable upon conversion of shares of series C preferred stock held by Lumira Capital I Quebec Limited Partnership, (xi)              shares of common stock issuable upon exercise of warrants held by Lumira Capital I Quebec Limited Partnership, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (xii)                 shares of common stock issuable upon conversion of convertible notes held by Lumira Capital I Quebec Limited Partnership, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011. The general partner of Lumira Capital I Limited Partnership is Lumira Capital I (GP) Inc. The general partner of Lumira Capital I Quebec Limited Partnership is Lumira Capital I (QGP) Inc. Lumira Capital I (GP) Inc. and Lumira Capital I (QGP) Inc. may be deemed to share voting and investment power over these shares. Lumira Capital I Limited Partnership and Lumira Capital I Quebec Limited Partnership are wholly-owned subsidiaries of Lumira Capital Corp. Brian J. Underdown, a member of our board of directors, is a Managing Director of Lumira Capital Corp. Dr. Underdown disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.

(5) The address of Forbion is Gooimeer 2-35 1411 DC Naarden, Netherlands. Consists of (i) 6,133,336 shares of common stock issuable upon conversion of shares of series B preferred stock, (ii) 13,650,847 shares of common stock issuable upon conversion of shares of series C preferred stock, (iii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (iv)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011. Sander van Deventer, a member of our board of directors, is general partner of Coöperatieve AAC LS U.A. Dr. van Deventer disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.

(6) The address of TVM V Life Science Ventures GmbH &Co. KG is 101 Arch Street, Suite 1950, Boston, Massachusetts 02110. Consists of (i) 6,097,778 shares of common stock issuable upon conversion of shares of series B preferred stock, (ii) 26,322,097 shares of common stock issuable upon conversion of shares of

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series C preferred stock, (iii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (iv)            shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011. Hubert Birner, a member of our board of directors, is a general partner of TVM V Life Science Ventures GmbH &Co. KG. Dr. Birner disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.

(7) Consists of (i) 69,200 shares of common stock issuable upon conversion of shares of series C preferred stock, (ii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (iii)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, and (iv) 5,266,450 shares of common stock issuable upon exercise of options that are exercisable as of June 30, 2011 or will become exercisable within 60 days after such date.

(8) Consists of (i) 193,760 shares of common stock issuable upon conversion of shares of series C preferred stock, (ii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (iii)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011.

(9) Consists of 331,872 shares of common stock issuable upon exercise of options that are exercisable as of June 30, 2011 or will become exercisable within 60 days after such date.

(10) Consists of (i) 69,200 shares of common stock issuable upon conversion of shares of series C preferred stock, (ii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and (iii)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011.

(11) Consists of (i) 34,600 shares of common stock issuable upon conversion of shares of series C preferred stock, (ii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (iii)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, and (iv) 3,001,648 shares of common stock issuable upon exercise of options that are exercisable as of June 30, 2011 or will be come exercisable within 60 days after such date.

(12) Consists of (i) 69,200 shares of common stock issuable upon conversion of shares of series C preferred stock, (ii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (iii)             shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, and (iv) 3,532,045 shares of common stock issuable upon exercise of options that are exercisable as of June 30, 2011 or will be come exercisable within 60 days after such date.

(13) Includes 1,260 shares of common stock issuable upon exercise of options that are exercisable as of June 30, 2011 or will become exercisable within 60 days after such date. Sander van Deventer, a member of our board of directors, is general partner of Coöperatieve AAC LS U.A. Dr. van Deventer disclaims beneficial

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ownership of these shares except to the extent of his pecuniary interest therein. Also includes the securities described in note 5 above.

(14) Includes (i) 89,602,848 shares of common stock issuable upon conversion of shares of series C preferred stock, (ii)              shares of common stock issuable upon exercise of warrants, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (iii)            shares of common stock issuable upon conversion of convertible notes, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011, and (iv) 12,354,523 shares of common stock issuable upon exercise of options that are exercisable as of June 30, 2011 or will become exercisable within 60 days after such date.

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DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock and provisions of our certificate of incorporation and bylaws are summaries and are qualified by reference to the certificate of incorporation and the bylaws that will be in effect upon the closing of this offering and to the applicable provisions of the Delaware General Corporation Law. We have filed copies of these documents with the SEC as exhibits to our registration statement of which this prospectus forms a part. The description of the capital stock reflects changes to our capital structure that will occur upon the closing of this offering.

Upon the closing of this offering, our authorized capital stock will consist of             shares of our common stock, par value $0.001 per share, and             shares of our preferred stock, par value $0.001 per share, all of which preferred stock will be undesignated.

As of June 30, 2011, we had issued and outstanding:

• 12,849,491 shares of our common stock outstanding and held of record by 43 stockholders;

• 1,400,153 shares of our series A preferred stock that are convertible into 1,400,153 shares of our common stock and held of record by four stockholders;

• 24,767,610 shares of our series B preferred stock that are convertible into 43,590,985 shares of our common stock and held of record by 16 stockholders;

• 1,835,543 shares of our series B-1 preferred stock that are convertible into 3,230,555 shares of our common stock and held of record by one stockholder; and

• 114,411,138 shares of our series C preferred stock that are convertible into 114,411,138 shares of our common stock and held of record by 32 stockholders.

As of June 30, 2011, we also had outstanding:

• options to purchase 24,190,022 shares of our common stock at a weighted average exercise price of $0.09 per share;

• warrants to purchase 21,617 shares of our common stock at a weighted average exercise price of $21.49 per share held by six holders; and

• warrants to purchase 20,759,953 shares of our series C preferred stock at an exercise price of $0.01 per share.

In July 2011, we issued and sold the July 2011 convertible notes in the aggregate original principal amount of $3.5 million. In connection with the issuance and sale of the July 2011 convertible notes, we issued warrants to purchase 12,109,972 shares of our series C preferred stock at an exercise price of $0.01 per share.

Upon the closing of this offering:

• all outstanding shares of our preferred stock will automatically convert into an aggregate of 157,871,415 shares of our common stock;

• all principal and accrued interest on our outstanding convertible notes, including the 2010 convertible notes and the July 2011 convertible notes, will convert into an aggregate of             shares of our common stock, at the initial public offering price, assuming an initial public offering price of $             per share,

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which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011;

•             shares of our common stock will be issued upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

• 4,609,457 shares of our common stock that are expected to be issued to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio.

Upon the closing of this offering and after giving effect to the automatic exercise of the Series C warrants by net exercise, warrants to purchase an aggregate of 5,617 shares of common stock will remain outstanding.

Common Stock

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock.

In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

Under the terms of our certificate of incorporation that will be effective upon the closing of this offering, our board of directors is authorized to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. Upon the closing of this offering, there will be no shares of preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.

Options

As of June 30, 2011, options to purchase 24,190,022 shares of our common stock at a weighted average exercise price of $0.09 per share were outstanding.

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Warrants

As of June 30, 2011, we had outstanding warrants to purchase an aggregate of 16,000 shares of our common stock at a weighted average exercise price of $17.60 per share held by three holders; warrants to purchase an aggregate of 5,100 shares of our common stock at an exercise price of $18.00 per share held by two holders; and warrants to purchase an aggregate of 517 shares of our common stock at an exercise price of $176.00 per share held by General Electric Capital Corporation.

Upon the closing of this offering:

• the warrants to purchase an aggregate of 5,100 shares of our common stock will remain outstanding and exercisable to purchase shares of our common stock at a weighted average exercise price of $18.00; and

• the warrants to purchase an aggregate of 517 shares of our common stock will remain outstanding and exercisable to purchase shares of our common stock at a weighted average exercise price of $176.00.

We have additional outstanding warrants to purchase an aggregate of 20,759,953 shares of series C preferred stock with an exercise price of $0.01 per share. We have assumed throughout this prospectus that these warrants will automatically be exercised by net exercise for              shares of common stock upon the closing of this offering, assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

Registration Rights

We have entered into a second amended and restated registration rights agreement, dated March 31, 2008, as amended, which we refer to as the registration rights agreement, with certain holders of shares of our registrable securities as described in the registration rights agreement. Upon the completion of this offering, holders of a total of              shares of our common stock as of June 30, 2011, including shares of our common stock issuable upon conversion of our preferred stock and our convertible notes and upon exercise of our warrants to purchase shares of series C preferred stock, will have the right to require us to register these shares under the Securities Act under specified circumstances and will have incidental registration rights. After registration pursuant to these rights, these shares will become freely tradable without restriction under the Securities Act.

Demand Registration Rights

Beginning on the earlier of (i) March 31, 2012 or (ii) the 180^th day after the effective date of the registration statement of which this prospectus forms a part, subject to specified limitations set forth in the registration rights agreement, at any time the holders of at least 25% of the then outstanding registrable securities, acting together, may demand in writing that we register the registrable securities under the Securities Act so long as the total amount of registrable securities registered have an aggregate proposed offering price of at least $3.0 million. We are not obligated to file a registration statement pursuant to this demand provision until 180 days after the completion of this offering, and on more than two occasions, subject to specified exceptions.

In addition, at any time after we become eligible to file a registration statement on Form S-3 under the Securities Act, subject to specified limitations, the holders of at least 15% of the registrable securities may demand in writing that we register on Form S-3 the registrable securities held by them so long as the total amount of registrable securities being registered have an aggregate offering price of at least $1.0 million. We are not obligated to file a Form S-3 pursuant to this provision within six months of the effective date of any other registration statement that we may file.

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Incidental Registration Rights

If, at any time after the completion of this offering, we propose to file a registration statement to register any of our securities under the Securities Act, either for our own account or for the account of any of our stockholders, other than pursuant to the demand registration rights and Form S-3 registration rights described above, the holders of our registrable securities will be entitled to notice of registration and, subject to specified exceptions, we will be required to use our best efforts to register the registrable securities then held by them that they request that we register.

Expenses

Pursuant to the registration rights agreement, we are required to pay all registration expenses, including registration and filing fees, printing expenses, fees and disbursements of our counsel and accountants, fees and expenses incurred in connection with complying with state securities or “blue sky” laws, fees of the Financial Industry Regulatory Authority, Inc., transfer taxes, fees of transfer agents and registrations, any insurance costs and reasonable fees and disbursements of one counsel representing the selling stockholders, other than any underwriting discounts and commissions, related to any demand or incidental registration. The registration rights agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify the selling stockholders in the event of material misstatements or omissions in the registration statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions in the registration statement attributable to them.

Delaware Anti-Takeover Law and Certain Charter and Bylaws Provisions

Delaware Law

We are subject to Section 203 of the Delaware General Corporation Law. Subject to certain exceptions, Section 203 prevents a publicly held Delaware corporation from engaging in a “business combination” with any “interested stockholder” for three years following the date that the person became an interested stockholder, unless either the interested stockholder attained such status with the approval of our board of directors, the business combination is approved by our board of directors and stockholders in a prescribed manner or the interested stockholder acquired at least 85% of our outstanding voting stock in the transaction in which it became an interested stockholder. A “business combination” includes, among other things, a merger or consolidation involving us and the “interested stockholder” and the sale of more than 10% of our assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person. The restrictions contained in Section 203 are not applicable to any of our existing stockholders that will own 15% or more of our outstanding voting stock upon the closing of this offering.

Staggered Board

Our certificate of incorporation and our bylaws that will become effective upon the closing of this offering divides our board of directors into three classes with staggered three-year terms. In addition, our certificate of incorporation and our bylaws provide that directors may be removed only for cause and only by the affirmative vote of the holders of 75% of our shares of capital stock present in person or by proxy and entitled to vote. Under our certificate of incorporation and bylaws, any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office. Furthermore, our certificate of incorporation provides that the authorized number of directors may be changed only by the resolution of our board of directors. The classification of our board of directors and the limitations on the ability of our stockholders to remove directors, change the authorized number of directors and fill vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of our company.

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The classification of our board of directors and the limitations on the removal of directors and filling of vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of our company.

Super-Majority Voting

The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our bylaws may be amended or repealed by a majority vote of our board of directors or the affirmative vote of the holders of at least 75% of the votes that all our stockholders would be entitled to cast in any annual election of directors. In addition, the affirmative vote of the holders of at least 75% of the votes that all our stockholders would be entitled to cast in any election of directors is required to amend or repeal or to adopt any provisions inconsistent with any of the provisions of our certificate of incorporation described above.

Stockholder Action; Special Meeting of Stockholders; Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our certificate of incorporation and our bylaws provide that any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such meeting and may not be taken by written action in lieu of a meeting. Our certificate of incorporation and our bylaws also provide that, except as otherwise required by law, special meetings of the stockholders can only be called by our chairman of the board, our president or chief executive officer or our board of directors. In addition, our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of candidates for election to our board of directors. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board of directors, or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely written notice in proper form to our secretary of the stockholder’s intention to bring such business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting stockholder actions that are favored by the holders of a majority of our outstanding voting securities. These provisions also could discourage a third party from making a tender offer for our common stock, because even if it acquired a majority of our outstanding voting stock, it would be able to take action as a stockholder, such as electing new directors or approving a merger, only at a duly called stockholders meeting and not by written consent.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be                             .

NASDAQ Global Market Listing

We have applied to have our common stock listed on The NASDAQ Global Market under the symbol “ARGS.”

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options and warrants or in the public market after this offering, or the anticipation of these sales, could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through sales of equity securities.

Upon the closing of this offering, we will have outstanding an aggregate of             shares of our common stock, after giving effect to:

• the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 157,871,415 shares of our common stock upon the closing of this offering;

• the automatic conversion of all principal and accrued interest on the 2010 convertible notes and the July 2011 convertible notes, upon the closing of this offering, into an aggregate of             shares of our common stock, at the initial public offering price, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and that the closing occurs on                 , 2011;

• the issuance of an aggregate of             shares of our common stock upon the automatic exercise of outstanding warrants to purchase shares of our series C preferred stock by net exercise at an exercise price of $0.01 per share upon the closing of this offering, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

• the expected issuance of an aggregate of 4,609,457 shares of our common stock to specified holders of the capital stock of DC Bio in exchange for their shares of DC Bio upon the closing of this offering

Of the shares to be outstanding immediately after the closing of this offering, we expect that the shares to be sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining            shares of our common stock outstanding after this offering will be “restricted securities” under Rule 144, and we expect that substantially all of these restricted securities will be subject to the 180-day lock-up period under the lock-up agreements as described below. These restricted securities may be sold in the public market only if registered or pursuant to an exemption from registration, such as Rule 144 or Rule 701 under the Securities Act.

Rule 144

In general, under Rule 144, beginning 90 days after the date of this prospectus, any person who is not our affiliate and has held their shares for at least six months, including the holding period of any prior owner other than one of our affiliates, may sell shares without restriction, subject to the availability of current public information about us. In addition, under Rule 144, any person who is not our affiliate and has held their shares for at least one year, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell an unlimited number of shares immediately upon the closing of this offering without regard to whether current public information about us is available.

Beginning 90 days after the date of this prospectus, a person who is our affiliate or who was our affiliate at any time during the preceding three months and who has beneficially owned restricted securities for at least six months, including the holding period of any prior owner other than one of our affiliates, is entitled to sell a number of shares within any three-month period that does not exceed the greater of:

• 1% of the number of shares of our common stock then outstanding; and

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• the average weekly trading volume of our common stock on The NASDAQ Global Market during the four calendar weeks preceding the filing of a Notice of Proposed Sale of Securities Pursuant to Rule 144 with respect to the sale.

Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Upon expiration of the 180-day lock-up period described below, approximately              shares of our common stock will be eligible for sale under Rule 144, including shares eligible for resale immediately upon the closing of this offering as described above. We cannot estimate the number of shares of our common stock that our existing stockholders will elect to sell under Rule 144.

Rule 701

In general, under Rule 701 of the Securities Act, any of our employees, consultants or advisors, other than our affiliates, who purchased shares from us in connection with a qualified compensatory stock plan or other written agreement, is eligible to resell these shares 90 days after the date of this prospectus in reliance on Rule 144, but without compliance with the holding period requirements of Rule 144 and without regard to the volume of such sales or the availability of public information about us. Subject to the 180-day lock-up period described below, approximately            shares of our common stock will be eligible for sale in accordance with Rule 701.

Lock-Up Agreements

We and each of our directors and executive officers and holders of substantially all of our outstanding stock and securities convertible into or exercisable for our stock, who collectively own            shares of our common stock, based on shares outstanding as of June 30, 2011, have agreed that, without the prior written consent of Lazard Capital Markets LLC and Canaccord Genuity Inc. on behalf of the underwriters, we and they will not, subject to limited exceptions, during the period ending 180 days after the date of this prospectus, subject to extension in specified circumstances:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock or publicly disclose the intention to do any of the foregoing;

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock or publicly disclose the intention to do any of the foregoing; or

• make any demand for or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

The lock-up restrictions, specified exceptions and the circumstances under which the 180-day lock-up period may be extended are described in more detail under “Underwriting.”

Equity Plans

We intend to file one or more registration statements on Form S-8 under the Securities Act to register all shares of common stock subject to outstanding stock options and common stock issued or issuable under our stock plans. We expect to file the registration statement covering shares offered pursuant to our stock plans shortly after the date of this prospectus, permitting the resale of such shares by nonaffiliates in the public market without restriction under the Securities Act and the sale by affiliates in the public market, subject to compliance with the resale provisions of Rule 144.

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Registration Rights

Upon the closing of this offering, the holders of            shares of our common stock as of June 30, 2011, including shares of our common stock issuable upon conversion of our preferred stock and our convertible notes and upon exercise of our warrants to purchase series C preferred stock, or their transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See “Description of Capital Stock — Registration Rights” for additional information. Shares covered by a registration statement will be eligible for sale in the public market upon the expiration or release from the terms of the lock-up agreement.

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UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement dated the date of this prospectus among us and the underwriters named below, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase from us, the number of shares of common stock listed next to its name in the following table. Lazard Capital Markets LLC and Canaccord Genuity Inc. are acting as joint book-running managers for the offering and as representatives of the underwriters.

Underwriters	Number of Shares
Lazard Capital Markets LLC
Canaccord Genuity Inc.
Needham & Company, LLC
BMO Capital Markets Corp.
Total

The underwriters are committed to purchase all the shares of common stock offered by us if they purchase any shares. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of nondefaulting underwriters may be increased or the offering may be terminated. The underwriters are not obligated to purchase the shares of common stock covered by the underwriters’ over-allotment option described below. The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Discounts and Commissions

The underwriters propose initially to offer the shares to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $             per share. After the initial offering of the shares, the public offering price and other selling terms may be changed by the representatives.

The following table shows the public offering price, underwriting discounts and commissions and proceeds before expenses to us. The information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

	Per Share	Without Option	With Option
Public offering price
Underwriting discounts and commissions
Proceeds, before expenses, to us

The total estimated expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding underwriting discounts and commissions, are approximately $             and are payable by us.

Lazard Frères & Co. LLC referred this transaction to Lazard Capital Markets LLC and will receive a referral fee from Lazard Capital Markets LLC in connection therewith.

Over-Allotment Option

We have granted the underwriters an option to purchase up to              additional shares of common stock at the public offering price, less underwriting discounts and commissions. The underwriters may exercise this option for 30 days from the date of this prospectus solely to cover sales of shares of common stock by the

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underwriters in excess of the total number of shares set forth in the table above. If any shares are purchased pursuant to this over-allotment option, the underwriters will purchase the additional shares in approximately the same proportions as shown in the table above. If any of these additional shares are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered. We will pay the expenses associated with the exercise of the over-allotment option.

Initial Public Offering Pricing

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between us and the representatives of the underwriters. Among the factors considered in these negotiations are:

• the prospects for our company and the industry in which we operate;

• our past and present financial and operating performance;

• financial and operating information and market valuations of publicly traded companies engaged in activities similar to ours;

• the prevailing conditions of U.S. securities markets at the time of this offering; and

• other factors deemed relevant.

The estimated initial public offering price range set forth on the cover of this preliminary prospectus is subject to change as a result of market conditions and other factors.

Lock-Up Agreements

We, our officers and directors and holders of substantially all of our outstanding stock, options and warrants have entered into lock-up agreements with the underwriters. Under these agreements, we and these other individuals have agreed, subject to specified exceptions, not to sell or transfer any common stock or securities convertible into, or exchangeable or exercisable for, common stock, during a period ending 180 days after the date of this prospectus, without first obtaining the written consent of Lazard Capital Markets LLC and Canaccord Genuity Inc. Specifically, we and these other individuals have agreed not to:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock or publicly disclose the intention to do any of the foregoing;

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock or publicly disclose the intention to do any of the foregoing; or

• make any demand for or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

The restrictions described above do not apply to:

• the sale of shares of common stock to the underwriters pursuant to the underwriting agreement;

• the issuance by us of shares of common stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing or that is described in this prospectus;

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• the grant by us of stock options or other stock-based awards, or the issuance of shares of common stock upon exercise thereof, to eligible participants pursuant to employee benefit or equity incentive plans described in this prospectus, provided that, prior to the grant of any such stock options or other stock-based awards that vest within the restricted period, each recipient of such grant shall sign and deliver a lock-up agreement agreeing to be subject to the restrictions on transfer described above;

• transactions by security holders relating to any shares of common stock or other securities acquired in open market transactions after the closing of this offering;

• the exercise of stock options to purchase shares of common stock granted under an equity incentive plan or any warrants to purchase shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; provided that any shares of common stock or such other securities obtained by such exercise shall remain subject to the terms of this letter;

• the establishment of a 10b5-1 trading plan under the Exchange Act by a security holder for the sale of shares of common stock, provided that such plan does not provide for the transfer of common stock during the restricted period;

• transfers by security holders of shares of common stock or other securities as a bona fide gift or by will or intestacy;

• transfers by security holders of shares of common stock or other securities to any trust for the direct or indirect benefit of the security holder or the immediate family of the security holder; or

• transfers by distribution by security holders of shares of common stock or other securities to partners, members, or shareholders of the security holder.

provided that in the case of each of the preceding three types of transactions, the transfer does not involve a disposition for value and each transferee or distributee signs and delivers a lock-up agreement agreeing to be subject to the restrictions on transfer described above.

The 180-day restricted period is subject to extension if (1) during the last 17 days of the restricted period we issue an earnings release or material news or a material event relating to us occurs or (2) prior to the expiration of the restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the restricted period, in which case the restrictions imposed in the lock-up agreements will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

NASDAQ Global Market Listing

We have applied to have our common stock listed on The NASDAQ Global Market under the symbol “ARGS.”

Price Stabilization, Short Positions and Penalty Bids

In order to facilitate the offering of our common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. In connection with the offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short

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sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares of common stock in the offering. The underwriters may close out any covered short position by either exercising their over-allotment option or purchasing shares of common stock in the open market. In determining the source of shares of common stock to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. “Naked” short sales are sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares of common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of the offering.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As result, the price of our common stock may be higher than the price that might otherwise exist in the open market.

The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of our common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.

The underwriters make no representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor the underwriters make any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Offer, Sale and Distribution of Shares

A prospectus in electronic format may be made available on the websites maintained by one or more underwriters or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares of common stock to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters’ websites and any information contained in any other website maintained by the underwriters is not part of this prospectus or the registration statement of which this prospectus forms a part.

Notice to Non-U.S. Investors

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive, each of which we refer to as a relevant member state, with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state, or the relevant implementation date, an offer of securities described in this prospectus may not be made to the public in that relevant member state other than:

• to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

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• to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

• to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of representatives for any such offer; or

• in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive;

provided that no such offer of securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares of common stock in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

Other Relationships

From time to time, certain of the underwriters and their affiliates have provided, and may provide in the future, various advisory, investment and commercial banking and other services to us in the ordinary course of business, for which they have received and may continue to receive customary fees and commissions.

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LEGAL MATTERS

The validity of the shares of common stock offered hereby is being passed upon for us by Wilmer Cutler Pickering Hale and Dorr LLP, Boston, Massachusetts. Goodwin Procter LLP is acting as counsel for the underwriters in connection with this offering.

EXPERTS

The consolidated financial statements as of December 31, 2009 and December 31, 2010 and for each of the three years in the period ended December 31, 2010, included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock we are offering to sell. This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration statement and the exhibits, schedules and amendments to the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and to the exhibits and schedules to the registration statement. Statements contained in this prospectus about the contents of any contract, agreement or other document are not necessarily complete, and, in each instance, we refer you to the copy of the contract, agreement or other document filed as an exhibit to the registration statement. Each of theses statements is qualified in all respects by this reference.

You may read and copy the registration statement of which this prospectus is a part at the SEC’s public reference room, which is located at 100 F Street, N.E., Room 1580, Washington, DC 20549. You can request copies of the registration statement by writing to the Securities and Exchange Commission and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the SEC’s public reference room. In addition, the SEC maintains an Internet website, which is located at http://www.sec.gov, that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may access the registration statement of which this prospectus is a part at the SEC’s Internet website. Upon completion of this offering, we will be subject to the information reporting requirements of the Securities Exchange Act of 1934, and we will file reports, proxy statements and other information with the SEC.

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ARGOS THERAPEUTICS, INC.

(A Development Stage Company)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Accounting Firm		F-2
Consolidated Financial Statements:
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Changes in Stockholders’ Deficit		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Argos Therapeutics, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in stockholders’ deficit and of cash flows present fairly, in all material respects, the financial position of Argos Therapeutics, Inc. and its subsidiaries (a development stage company) at December 31, 2009 and 2010 and the results of their operations and their cash flows for each of the three years ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred operating losses and negative cash flows from operations since inception and will be required to obtain additional financing, alternative means of financial support or both prior to December 31, 2011 in order to fund its operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

July 29, 2011

/s/ PricewaterhouseCoopers LLP

Raleigh, North Carolina

F-2

Argos Therapeutics, Inc.

(A Development Stage Company)

Consolidated Balance Sheets

	December 31,						March  31, 2011
	2009			2010
							(unaudited)
Assets
Current assets
Cash and cash equivalents	$	7,314,499		$	5,141,965		$	3,045,585
Short-term investments		3,270,934			—			—
Prepaid expenses and interest receivable		372,987			371,877			198,969
Other receivables		1,241,445			3,776,151			4,177,492
Total current assets		12,199,865			9,289,993			7,422,046
Furniture, fixtures and equipment, net		2,045,912			1,344,571			1,151,079
Other assets		17,217			7,217			4,717
Total assets	$	14,262,994		$	10,641,781		$	8,577,842
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable	$	1,020,110		$	1,115,040		$	522,889
Accrued expenses		940,418			667,087			670,214
Current portion of notes payable		1,212,155			26,807			—
Convertible term note including accrued interest		—			3,669,858			4,579,655
Warrant liability		—			3,197,626			3,197,626
Derivative liabilities		1,239,744			941,735			941,735
Total current liabilities		4,412,427			9,618,153			9,912,119
Long-term portion of notes payable		4,317			—			—
Commitments
Series A redeemable convertible preferred stock, $0.001 par value; 1,648,253 shares designated; 1,648,253, 1,400,153, and 1,400,153 shares issued and outstanding at December 31, 2009, 2010, and March 31, 2011 (unaudited), respectively; liquidation preference of $1,400,153 at December 31, 2010 and March 31, 2011 (unaudited)		1,648,253			1,400,153			1,400,153
Series B redeemable convertible preferred stock, $0.001 par value; 29,799,083 shares designated; 26,520,010, 24,767,610, and 24,767,610 shares issued and outstanding at December 31, 2009, 2010, and March 31, 2011, (unaudited), respectively; liquidation preference of $43,590,985 at December 31, 2010 and March 31, 2011 (unaudited)		46,675,218			43,590,985			43,590,985
Series B-1 redeemable convertible preferred stock, $0.001 par value; 3,671,086 shares designated; 3,671,086, 1,835,543, and 1,835,543 shares issued and outstanding at December 31, 2009, 2010, and March 31, 2011, (unaudited), respectively; liquidation preference of $3,230,555 at December 31, 2010 and March 31, 2011 (unaudited)		6,461,111			3,230,555			3,230,555
Series C redeemable convertible preferred stock, $0.001 par value; 159,271,445 shares designated; 123,099,041, 114,411,138, and 114,411,138 shares issued and outstanding at December 31, 2009, 2010 and March 31, 2011 (unaudited), respectively; liquidation preference of $33,066,878 at December 31, 2010 and March 31, 2011 (unaudited)		34,096,604			31,738,719			31,764,021
Stockholders’ deficit
Common stock, $0.001 par value; 262,870,000 shares authorized; 196,976, 12,849,491, 12,849,491, and 217,001,737 shares issued and outstanding at December 31, 2009, 2010, and March 31, 2011 (unaudited), respectively		197			12,849			12,849
Accumulated other comprehensive income		77,464			89,494			91,416
Additional paid in capital		17,440,214			26,681,856			26,738,466
Equity attributable to noncontrolling interest		3,203,742			3,030,324			3,016,903
Deficit accumulated during the development stage attributable to Argos Therapeutics, Inc.’s stockholders		(99,756,553	)		(108,751,307	)		(111,179,625	)
Total stockholders’ deficit		(79,034,936	)		(78,936,784	)		(81,319,991	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	14,262,994		$	10,641,781		$	8,577,842

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Argos Therapeutics, Inc.

(A Development Stage Company)

Consolidated Statements of Operations

	Year Ended December 31,									Quarter Ended March 31, 2010			Quarter Ended March 31, 2011			Cumulative Period from Inception (May 8, 1997) to March 31, 2011
	2008			2009			2010
										(unaudited)			(unaudited)			(unaudited)
Revenue	$	4,449,735		$	5,367,989		$	7,272,783		$	1,116,716		$	2,232,225		$	69,955,359
Operating expenses
Research and development		22,042,597			19,543,966			13,927,662			3,843,577			3,054,488			166,035,698
Net reimbursement under collaboration agreement		(8,127,428	)		(6,626,989	)		—			—			—			(47,179,130	)
Net research and development		13,915,169			12,916,977			13,927,662			3,843,577			3,054,488			118,856,568
General and administrative		2,852,375			2,931,599			2,704,231			961,431			710,018			33,415,488
Total operating expenses		16,767,544			15,848,576			16,631,893			4,805,008			3,764,506			152,272,056
Operating income (loss)		(12,317,809	)		(10,480,587	)		(9,359,110	)		(3,688,292	)		(1,532,281	)		(82,316,697	)
Other income (expense)
Interest income		250,698			73,746			4,976			2,861			443			4,092,534
Interest expense		(632,677	)		(283,417	)		(904,233	)		(22,638	)		(909,901	)		(6,472,253	)
Derivative financing expense		(756,789	)		—			298,009			—			—			(981,185	)
Investment tax credits		666,933			103,549			793,006			—			—			2,067,225
Loss on sale of marketable securities		—			—			—			—			—			(10,242,252	)
Other income (expense), net		(471,835	)		(106,122	)		191,758			(19,777	)		(909,458	)		(11,535,931	)
Net income (loss)		(12,789,644	)		(10,586,709	)		(9,167,352	)		(3,708,069	)		(2,441,739	)		(93,852,628	)
Net income (loss) attributable to noncontrolling interest		136,643			(654,760	)		(172,598	)		(79,366	)		(13,421	)		(710,481	)
Net income (loss) attributable to Argos Therapeutics, Inc.		(12,926,287	)		(9,931,949	)		(8,994,754	)		(3,628,703	)		(2,428,318	)		(93,142,147	)
Less: Accretion of redeemable convertible preferred stock		(395,666	)		(101,206	)		(101,206	)		(25,302	)		(25,302	)		(29,147,080	)
Net income (loss) attributable to common stockholders	$	(13,321,953	)	$	(10,033,155	)	$	(9,095,960	)	$	(3,654,005	)	$	(2,453,620	)	$	(122,289,227	)
Basic and diluted net loss attributable to common stockholders per share	$	(153.81	)	$	(62.78	)	$	(2.23	)	$	(18.55	)	$	(0.19	)
Basic and diluted weighted average shares outstanding		86,615			159,825			4,081,649			196,976			12,849,491

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Argos Therapeutics, Inc.

(A Development Stage Company)

Consolidated Statements of Changes in Stockholders’ Deficit

	Common Stock						Additional Paid - In Capital			Stock Subscription Receivable			Deferred Compensation			Accumulated Other Comprehensive Income			Deficit Accumulated during the Development Stage			Noncontrolling Interest			Total
	Shares			Amount
Balance at Inception		—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Exercise of common stock warrants		3,179			3			31,786			—			—			—			—			—			31,789
Exercise of common stock options		1,511			1			31,533			—			—			—			—			—			31,534
Issuance of common stock to founders		20,000			20			1,980			(2,000	)		—			—			—			—			—
Issuance of shares for technology license		5,350			5			56,295			—			—			—			—			—			56,300
Issuance of warrants and options to non-employees		—			—			2,494,925			—			—			—			—			—			2,494,925
Issuance of preferred stock warrants		—			—			7,499,776			—			—			—			—			—			7,499,776
Issuance of restricted stock		22,860			23			329,152			—			(329,175	)		—			—			—			—
Issuance of shares in noncontrolling interest		—			—			—			—			—			—						2,988,048			2,988,048
Vesting of restricted stock		—			—			13,830			—			—			—			—			—			13,830
Repurchase of common stock		(8,112	)		(8	)		(97,509	)		—			—			—			—			—			(97,517	)
Forfeiture of unvested restricted stock		(4,572	)		(4	)		4			—			—			—			—			—			—
Amortization of deferred compensation		—			—			—			—			329,175			—			—			—			329,175
Stock based compensation		—			—			132,547			—			—			—			(8,097	)		—			124,450
Accretion of preferred stock		—			—			(10,494,319	)		—			—			—			(18,029,381	)		—			(28,523,700	)
Payment of stock subscription		—			—			—			2,000			—			—			—			—			2,000
Cumulative translation adjustment		—			—			—			—			—			112,676			—			—			112,676
Net loss		—			—			—			—			—			—			(58,860,839	)		—			(58,860,839	)
Balance at December 31, 2007		40,216			40			—			—			—			112,676			(76,898,317	)		2,988,048			(73,797,553	)
Exercise of common stock options		625			1			49			—			—			—			—			—			50
Issuance of shares to noncontrolling interest		—			—			—			—			—			—			—			714,742			714,742
Stock based compensation		—			—			674,488			—			—			—			—			—			674,488
Repurchase of common stock		(5,682	)		(6	)		5			—			—			—			—			—			(1	)
Accretion of preferred stock		—			—			(395,666	)		—			—			—			—			7,508			(388,158	)
Preferred shares converted to common		67,185			67			16,761,757			—			—			—			—			—			16,761,824
Cumulative translation adjustment		—			—			—			—			—			(216,411	)		—			—			(216,411	)
Net loss		—			—			—			—			—			—			(12,926,287	)		136,643			(12,789,644	)
Balance at December 31, 2008		102,344			102			17,040,633			—			—			(103,735	)		(89,824,604	)		3,846,941			(69,040,663	)
Exercise of common stock options		94,632			95			7,476			—			—			—			—			—			7,571
Stock based compensation		—			—			493,311			—			—			—			—			—			493,311
Accretion of preferred stock		—			—			(101,206	)		—			—			—			—			11,561			(89,645	)
Cumulative translation adjustment		—			—			—			—			—			181,199			—			—			181,199
Net loss		—			—			—			—			—			—			(9,931,949	)		(654,760	)		(10,586,709	)
Balance at December 31, 2009		196,976			197			17,440,214			—			—			77,464			(99,756,553	)		3,203,742			(79,034,936	)
Issuance of restricted stock		128,571			128			8,872			—			—			—			—			—			9,000
Stock based compensation		—			—			324,520			—			—			—			—			—			324,520
Accretion of preferred stock		—			—			(101,206	)		—			—			—			—			(820	)		(102,026	)
Preferred shares converted to common		12,523,944			12,524			9,009,456			—			—			—			—			—			9,021,980
Cumulative translation adjustment		—			—			—			—			—			12,030			—			—			12,030
Net loss		—			—			—			—			—			—			(8,994,754	)		(172,598	)		(9,167,352	)
Balance at December 31, 2010		12,849,491			12,849			26,681,856			—			—			89,494			(108,751,307	)		3,030,324			(78,936,784	)
Stock based compensation (unaudited)		—			—			81,912			—			—			—			—			—			81,912
Accretion of preferred stock (unaudited)		—			—			(25,302	)		—			—			—			—			—			(25,302	)
Cumulative translation adjustment (unaudited)		—			—			—			—			—			1,922			—			—			1,922
Net loss (unaudited)		—			—			—			—			—			—			(2,428,318	)		(13,421	)		(2,441,739	)
Balance at March 31, 2011 (unaudited)		12,849,491		$	12,849		$	26,738,466			—			—		$	91,416		$	(111,179,625	)	$	3,016,903		$	(81,319,991	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Argos Therapeutics, Inc.

(A Development Stage Company)

Consolidated Statement of Cash Flows

	Year Ended December 31,									Quarter Ended March 31, 2010			Quarter Ended March 31, 2011			Cumulative Period from Inception (May 8, 1997) to March 31, 2011
	2008			2009			2010
										(unaudited			(unaudited)			(unaudited)
Cash flows from operating activities
Net income (loss)	$	(12,789,644	)	$	(10,586,709	)	$	(9,167,352	)	$	(3,708,069	)	$	(2,441,739	)	$	(93,852,628	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization		973,947			871,848			818,448			212,618			193,553			7,872,544
Non-cash licensing revenue		—			—			—			—			—			(42,775,697	)
Compensation expense related to stock options and warrants		674,488			493,311			324,520			130,045			81,912			5,191,390
Issuance of warrants recorded as legal expense		—			—			—			—			—			1,703,466
Amortization of debt issuance costs		1,692			1,692			1,692			—			—			1,368,761
Derivative expense		751,521			—			(298,009	)		—			—			941,752
Issuance of common stock for technology license		—			—			—			—			—			56,300
Issuance of restricted stock recorded as consulting expense		—			—			9,000			—			—			9,000
Loss on sale of marketable securities		—			—			—			—			—			10,242,252
Loss on disposal of equipment		—			—			—			—			—			96,289
Changes in operating assets and liabilities
Prepaid expenses and other receivables		(214,186	)		532,091			(2,534,052	)		156,699			(228,433	)		(4,340,925	)
Other assets		15,000			10,000			10,000			2,500			2,500			(4,989	)
Accounts payable		297,642			(1,302,905	)		94,930			(149,347	)		(592,150	)		1,093,300
Accrued expenses		(630,105	)		(426,004	)		594,067			224,152			912,924			3,768,176
Net cash used in operating activities		(10,919,645	)		(10,406,676	)		(10,146,756	)		(3,131,402	)		(2,071,433	)		(108,631,126	)
Cash flows from investing activities
Purchase of furniture, fixtures and equipment		(237,307	)		(85,167	)		(117,005	)		(36,342	)		—			(7,846,786	)
Proceeds from sale of fixed assets		—			—			—			—			—			302,519
Purchases of short-term investments		(106,159,964	)		(8,394,934	)		—			—			—			(246,201,490	)
Proceeds from sale of marketable securities		110,184,964			1,400,000			—			—			—			246,093,409
Proceeds from maturity of short-term investments		—			5,124,000			3,270,934			2,760,893			—			32,509,687
Investment in affiliate		—			—			—			—			—			(6,500	)
Net cash provided by investing activities		3,787,693			(1,956,101	)		3,153,929			2,724,551			—			24,850,839

F-6

Argos Therapeutics, Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows — (Continued)

										Quarter Ended March 31, 2010			Quarter Ended March 31, 2011			Cumulative Period from Inception (May 8, 1997) to March 31, 2011
	Year Ended December 31,
	2008			2009			2010
										(unaudited)			(unaudited)			(unaudited)
Cash flows from financing activities
Proceeds from sale of redeemable convertible preferred stock		29,904,666			—			—			—			—			73,671,416
Stock issuance costs		(502,603	)		—			—			—			—			(812,432	)
Proceeds from bridge loan		—			—			5,999,991			—			—			9,456,937
Proceeds from notes payable		—			—			—			—			—			10,773,532
Payments on notes payable		(2,787,302	)		(2,725,608	)		(1,197,817	)		(691,884	)		(26,807	)		(10,242,414	)
Payments on debentures		—			—			—			—			—			(3,509,947	)
Proceeds from issuance of common stock		50			7,571			—			—			—			72,944
Repurchase of common stock		(1	)		—			—			—			—			(97,518	)
Distributions to noncontrolling interest		—			—			—			—			—			22,413
Consolidation of DC Bio cash and cash equivalents		827,248			—			—			—			—			7,163,141
Net cash provided by financing activities		27,442,058			(2,718,037	)		4,802,174			(691,884	)		(26,807	)		86,498,072
Effect of exchange rates changes on cash		(254,408	)		140,646			18,119			10,572			1,860			327,800
Net increase (decrease) in cash and cash equivalents		20,055,698			(14,940,168	)		(2,172,534	)		(1,088,163	)		(2,096,380	)		3,045,585
Cash and cash equivalents, beginning of year		2,198,969			22,254,667			7,314,499			7,314,499			5,141,965			—
Cash and cash equivalents, end of year	$	22,254,667		$	7,314,499		$	5,141,965		$	6,226,336		$	3,045,585		$	3,045,585
Supplemental disclosure of cash flow information
Cash paid for interest	$	611,610		$	301,101		$	41,278		$	23,672		$	333		$	2,263,362
Supplemental disclosure of non-cash investing and financing activities
Conversion of notes payable and accrued interest into preferred stock	$	4,420,858		$	—		$	—		$	—		$	—		$	6,929,815
Conversion of accounts payable into preferred stock	$	100,000		$	—		$	—		$	—		$	—		$	853,375
Conversion of accounts payable into stock options	$	—		$	—		$	—		$	—		$	—		$	28,333
Conversion of preferred stock into common stock	$	16,761,757		$	—		$	9,021,980		$	—		$	—		$	25,783,737
Preferred stock accretion	$	395,666		$	101,206		$	101,206		$	25,302		$	25,302		$	29,147,080
Issuance of restricted stock	$	—		$	—		$	9,000		$	—		$	—		$	338,175
Marketable securities received under licensing agreement	$	—		$	—		$	—		$	—		$	—		$	(42,775,697	)

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

1. Organization

Argos Therapeutics, Inc. (the “Company”), was incorporated in the State of Delaware on May 8, 1997. The Company is a biopharmaceutical company focused on the development and commercialization of fully personalized immunotherapies for the treatment of cancer and infectious diseases based on its proprietary technology platform called Arcelis™. The Company’s most advanced product candidate is AGS-003 for the treatment of metastatic renal cell carcinoma, or mRCC. The Company is developing a second Arcelis-based product candidate, AGS-004 for the treatment of HIV. In addition to its Arcelis-based product candidates, the Company is also developing two other product candidates: AGS-009, a monoclonal antibody for the treatment of lupus, and AGS-010, a preclinical biologic compound for the treatment of psoriasis and for organ transplantation.

The Company is in its development stage as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s activities since inception have consisted principally of acquiring product and technology rights, raising capital and performing research and development activities. Since inception, the Company has incurred significant losses from operations and expects losses to continue for the foreseeable future during its development phase. The Company’s success depends primarily on the successful development and regulatory approval of its product candidates.

The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. From May 8, 1997 (inception) through December 31, 2010, the Company had a deficit accumulated during the development stage of $108,751,307. Also, at December 31, 2010, the Company’s current assets totaled approximately $9,289,993 compared to current liabilities of $9,618,153 resulting in a lack of sufficient liquidity. These factors raise substantial doubt about its ability to continue as a going concern. The financial statements for the year ended December 31, 2010, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

The Company needs to raise additional funds through equity or debt financings or generate revenues from collaborative partners prior to the commercialization of AGS-003 or any of the Company’s other product candidates. There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate revenues from collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition.

In December 2007, the FASB issued new guidance on accounting for noncontrolling interests in the consolidated financial statements. The Company adopted the provisions of the new guidance effective January 1, 2009. All periods presented in these consolidated financial statements have been reclassified in accordance with this new guidance. The new guidance changes the accounting and reporting standards for the noncontrolling interests in a subsidiary (commonly referred to previously as minority interests). The amount of consolidated net income attributable to both the Company and the noncontrolling interests are shown on the Company’s consolidated statements of operations. The noncontrolling interests related to the Company’s subsidiary DC Bio Corp. (“DC Bio”) were $3,846,941 as of December 31, 2008. In accordance with the guidance, this amount has been reclassified as noncontrolling interests in the equity section of the Company’s consolidated balance sheets. Payments made to acquire non-controlling interests of and distribution to noncontrolling interests from the period of inception through December 31, 2008 have been reclassified to the financing section of the Company’s consolidated statements of cash flows.

F-8

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The Company has evaluated subsequent events through the date that the financial statements were issued on July 29, 2011, based on the accounting guidance for subsequent events. Adjustments and disclosures resulting from this evaluation, if any, are reflected in these consolidated financial statements.

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying consolidated interim balance sheet as of March 31, 2011, the consolidated statements of operations and cash flows for the three months ended March 31, 2010 and 2011 and the consolidated statement of changes in stockholders’ deficit for the three months ended March 31, 2011 are unaudited. The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position at March 31, 2011 and the Company’s results of operations and cash flows for the three months ended March 31, 2010 and 2011. The results for the three months ended March 31, 2011 are not necessarily indicative of the results to be expected for the year ending December 31, 2011 or for any future period. All references to March 31 in these footnotes are also unaudited.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts and results of operations of the Company and DC Bio, formerly Merix Canada Corp., an unlimited liability corporation incorporated in the Province of Nova Scotia, a variable interest entity, for which the Company has been deemed the primary beneficiary. DC Bio was consolidated effective January 1, 2004. All intercompany balances and transactions have been eliminated in consolidation. In prior periods, the Company also consolidated its wholly-owned subsidiaries, Argos Therapeutics B.V. and Argos Therapeutics GmbH, formerly Merix Bioscience B.V. and Merix Germany GmbH, respectively. Argos Therapeutics B.V. and Argos Therapeutics GmbH were dissolved effective November 6, 2006 and October 22, 2008, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash deposits are all in financial institutions in the United States of America or Canada. The Company maintains cash in accounts which are in excess of federally insured limits.

F-9

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Short-term Investments

All marketable investments are classified as available-for-sale and therefore carried at fair market value. All investments with original maturities less than one year from the balance sheet date are considered short-term investments. The Company primarily invests in commercial paper.

Fair Value of Financial Instruments

The carrying values of cash equivalents, short-term investments, accounts receivable, and accounts payable at December 31, 2009, 2010 and for the quarter ended March 31, 2011 (unaudited) approximated their fair values due to the short-term nature of these items.

At December 31, 2009, 2010 and for the quarter ended March 31, 2011 (unaudited), the Company holds certain assets and liabilities that are required to be measured at fair value on a recurring basis. These assets and liabilities include available for sale securities classified as cash equivalents and short-term investments, a derivative liability and a warrant liability. The valuation of these financial instruments uses a three tiered approach, which requires that fair value measurements be classified and disclosed in one of three tiers. These tiers are: Level 1, defined as quoted prices in active markets for identical assets or liabilities; Level 2, defined as valuations based on observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable input data; and Level 3, defined as valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

F-10

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

At December 31, 2009, 2010 and March 31, 2011 (unaudited), theses financial instruments and respective fair values have been classified as follows:

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2009
Assets:
Money Market Funds	$	6,359,401	$	—	$	—	$	6,359,401
Short-term Investments		3,270,934		—		—		3,270,934
Total assets at fair value:	$	9,630,335	$	—	$	—	$	9,630,335
Liabilities:
Derivative	$	—	$	—	$	1,239,744	$	1,239,744
Total Liabilities at Fair Value:	$	—	$	—	$	1,239,744	$	1,239,744
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2010
Assets:
Money Market Funds	$	4,017,701	$	—	$	—	$	4,017,701
Total assets at fair value:	$	4,017,701	$	—	$	—	$	4,017,701
Liabilities:
Derivative	$	—	$	—	$	941,735	$	941,735
Warrants		—		—		3,197,626		3,197,626
Total Liabilities at Fair Value:	$	—	$	—	$	4,139,361	$	4,139,361
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2011
							(unaudited)
Assets:
Money Market Funds	$	2,817,692	$	—	$	—	$	2,817,692
Total assets at fair value:	$	2,817,692	$	—	$	—	$	2,817,692
Liabilities:
Derivative	$	—	$	—	$	941,735	$	941,735
Warrants		—		—		3,197,626		3,197,626
Total Liabilities at Fair Value:	$	—	$	—	$	4,139,361	$	4,139,361

F-11

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The changes in the balances of Level 3 liabilities for the year ended December 31, 2010 were as follows:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Beginning Balance		Net Change in Realized (Gains) Losses			Additions		Ending Balance
Derivative Liability	$	1,239,744	$	(298,009	)	$	—	$	941,735
Warrant Liability		—		—			3,197,626		3,197,626
Totals	$	1,239,744	$	(298,009	)	$	3,197,626	$	4,139,361

For the year ended December 31, 2010, there were no transfers between Levels 1 and 2 assets or liabilities.

Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. Historically, the Company primarily invested in AAA-rated auction rate investments backed by student loan programs. However, effective in 2008 it no longer invests in these securities. Total cash and cash equivalent balances have exceeded insured balances by the Federal Depository Insurance Company (“FDIC”).

Furniture, Fixtures and Equipment

Furniture, fixtures and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Furniture, fixtures and equipment held under capital leases and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repairs and maintenance costs are expensed as incurred.

Impairment of Long-Lived Assets

The Company periodically assesses the impairment of long lived assets in accordance with ASC Topic 360, Property Plant and Equipment. When indicators of impairment are present, the Company evaluates the carrying value of these assets in relation to the operating performance of the business and future undiscounted cash flows expected to result from the use of these assets. No such impairments have been recognized from inception (May 8, 1997) through March 31, 2011 (unaudited).

Revenue Recognition

For all periods prior to January 1, 2011, the Company recognizes revenue in accordance with ASC Topic 605, Revenue Recognition. The Company recognizes revenue when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured.

License fees are earned and recognized in accordance with the provisions of each agreement. License fees with ongoing involvement or performance obligations are deferred and recognized over the performance term of the agreement.

F-12

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The Company has entered into license agreements with collaborators. The terms of these agreements have included nonrefundable signing and licensing fees, as well as milestone payments and royalties on any future product sales developed by the collaborators under such licenses. The Company assesses these multiple elements in accordance with ASC 605, to determine whether particular components of the arrangement represent separate units of accounting.

Upfront license payments are recognized as revenue upon delivery of the license only if the license has stand-alone value and the fair value of the undelivered performance obligations can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations are accounted for separately as the obligations are fulfilled. If the license is considered to either not have stand-alone value or have stand-alone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement is accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

When an arrangement is accounted for as a single unit of accounting, the Company determines the period over which the performance obligations will be performed and revenue will be recognized, to the extent this is determinable. If the timing and the level of effort to complete performance obligations under the arrangement is not estimable, then revenue is recognized under the arrangement on a straight-line basis over the expected period to complete such performance obligations.

Royalty revenue is recognized upon the sale of the related products, provided there are no remaining performance obligations under the arrangement. To date, the Company has not received any royalty payments.

The Company is studying AGS-004 in a phase 2b clinical trial that is funded entirely by the National Institutes of Health (“NIH”). Under the NIH contract, the Company is entitled to receive reimbursement of its direct expenses and allocated overhead and general and administrative expenses and payment of other specified amounts totaling up to $1,395,099 upon its achievement of specified development milestones. These revenues are directly related to the development of novel HIV immunotherapy candidates and are recognized as revenue based on the reimbursable expenses that have accrued in accordance with the contractual terms in the arrangement. The Company recognizes revenues from the achievement of milestones under the NIH contract upon the accomplishment of any such milestone.

Income Taxes

The Company provides for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Segment and Geographic Information

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment and all of the Company operations are in North America.

F-13

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Research and Development

Research and development costs include all direct costs related to the development of the Company’s technology, including salaries and related benefits of research and development (“R&D”) personnel, depreciation of laboratory equipment, fees paid to consultants and contract research organizations, stock-based compensation for R&D personnel, sponsored research payments and license fees. R&D costs are expensed as incurred.

Reimbursements of certain R&D costs have been recorded as a reduction of expense and presented in a separate line item within the statement of operations. These reimbursements are recorded when received. Such reimbursements are related to the collaboration agreement with Kyowa Hakko Kirin Co., Ltd. (“Kirin”), as further described in Note 15.

Redeemable Convertible Preferred Stock

The carrying value of redeemable convertible preferred stock is increased by periodic accretions so that the carrying amount will equal the redemption amount at the redemption date. These increases are affected through charges against additional paid-in capital, to the extent it is available, or the deficit accumulated during the development stage. All of the redeemable convertible preferred stock will be converted to common stock at the time of the initial public offering (“IPO”), assuming the IPO meets certain thresholds as defined under the Certificate of Incorporation as summarized in Note 10.

Preferred Stock Warrant Liability

Warrants to purchase the Company’s convertible preferred stock are classified as liabilities and are recorded at their estimated fair value. At each reporting period, any change in fair value of the freestanding warrants are recorded as interest expense. The preferred stock warrants will be automatically exercised for shares of common stock at the time of the IPO and, accordingly, the preferred stock warrant liability will be converted to common stock and additional paid in capital.

Stock-Based Compensation

Effective January 1, 2006, the Company adopted the provisions of ASC Topic 718, Compensation-Stock Compensation, using the prospective-transition method. Under the prospective-transition method, nonvested awards outstanding at the date of adoption continue to be accounted for in the same manner as they had been accounted for prior to adoption. All awards granted, modified or settled after the date of adoption are recognized in the Company’s statements of operations on a straight-line basis over their requisite service periods based on their grant fair values as calculated using the measurement and recognition provisions of ASC 718.

F-14

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The Company recorded the following stock-based compensation expense as a result of the adoption of ASC Topic 718:

	Years Ended December 31,
	2008		2009		2010
Research and development	$	409,460	$	285,810	$	109,196
General and administrative		265,028		207,501		215,324
Total stock-based compensation expense	$	674,488	$	493,311	$	324,520

	Quarter Ended March 31,				Cumulative Period from Inception (May 8, 1997) to March 31,
	2010		2011		2011
	(unaudited)		(unaudited)		(unaudited)
Research and development	$	69,855	$	27,076	$	866,903
General and administrative		60,190		54,836		831,778
Total stock-based compensation expense	$	130,045	$	81,912	$	1,698,681

Allocations to research and development and general and administrative expense are based upon the department to which the associated employee reported. No related tax benefits of the stock-based compensation expense have been recognized. Share-based payments issued to nonemployees are recorded at their fair values, and are periodically revalued as the equity instruments vest and are recognized as expense over the related service period.

In 2010, the Company revised its previously reported stock based compensation expense for 2008 and 2009 due to an error in the period of expense recognition for employee stock options as required by ASC 718. Amounts related to prior periods are not considered material to the financial statements taken as a whole, but were revised for purposes of comparability. Such amounts for the year ended December 31, 2008 and 2009 were $590,161 and $361,868, respectively.

All employee stock options were granted at an exercise price equal to or above the fair value of the stock at the date of grant in 2008 and 2009. In December 2010, February 2011 (unaudited) and March 2011 (unaudited), options were granted to employees with exercise prices of $0.08 per share, which was less than the deemed fair value of $0.15 per share, resulting an intrinsic value of $0.07 per share. The weighted average fair value at the date of grant for options granted during the years ended December 31, 2008, 2009 and 2010 was $0.05, $0.06 and $0.12, respectively. The weighted average fair value at the date of grant for options during the quarters ended March 31, 2010 and 2011 (unaudited), was $0.06 and $0.12, respectively.

F-15

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Valuation Assumptions for Stock Option Plans

The employee stock-based compensation expense recognized was determined using the Black-Scholes option valuation model. Option valuation models require the input of subjective assumptions and these assumptions can vary over time. The weighted average assumptions used are as follows:

	2008			2009			2010			2011
Risk-free interest rate		3.32	%		3.21	%		2.64	%		2.92	%
Dividend yield		0	%		0	%		0	%		0	%
Expected option term (in years)		7			7			7			7
Volatility		70	%		81	%		82	%		82	%

The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant. The dividend yield percentage is zero because the Company neither currently pays dividends nor intends to do so during the expected option term. The expected option term represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on an average of several peer public companies. For purposes of identifying peer companies, the Company considered characteristics such as industry, length of trading history, similar vesting terms and in-the-money option status. The Company used an average of several peer companies with the characteristics described above to calculate our expected term given our limited history. Upon the adoption of ASC 718, the Company was also required to estimate the level of forfeitures expected to occur and record compensation expense only for those awards that ultimately expect to vest. The Company performed a historical analysis of option awards that were forfeited prior to vesting and recorded total stock option expense that reflected this estimated forfeiture rate.

Investment Tax Credits

Other income was recognized for the Qualifying Therapeutic Discovery Project Program (“QTDP”) in 2010. The QTDP program was created by the United States Congress as part of the Patient Protection and Affordable Care Act and provided for reimbursement of certain costs paid or incurred during 2009 and 2010 directly related to the conduct of a Qualifying Therapeutic Discovery Project, as defined. The Department of Health and Human Services designated such projects based on the potential for them to result in new therapies to treat areas of unmet medical need, the potential to create and sustain jobs in the United States and to advance U.S. competitiveness.

Other income was recognized in 2008 and 2009 for scientific research and experimental development (“SR&ED”) investment tax credits in Canada. Under Canadian and Ontario law, DC Bio is entitled to SR&ED. Because these credits are subject to a claims review, the Company recognizes such credits when received.

Comprehensive Income (Loss)

ASC 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income and its components in a full set of financial statements. The Company’s other comprehensive income (loss) is related to foreign currency translation adjustments.

F-16

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Foreign Currency Translation

Gains and losses from foreign currency transactions are reflected in income currently.

The Company has identified the functional currency of its subsidiaries with foreign operations as the applicable local currency. The translation from the applicable local currency to United States dollars is performed using the exchange rate in effect at the balance sheet date. Revenue and expense accounts are translated using the average exchange rate experienced during the period. Adjustments resulting from the translation of the Company’s subsidiaries’ financial statements from its functional currency to the United States dollar are not included in determining net income (loss), but are reported as accumulated other comprehensive income, a separate component of stockholders’ deficit.

Derivatives

The Company issued freestanding warrants to purchase common stock and a put option to exchange certain shareholders’ stock in DC Bio for stock in the Company. Derivatives are recorded in the balance sheet at fair value at each balance sheet date utilizing pricing models for non-exchange traded contracts (see Note 9). The Company does not use derivative financial instruments for speculative purposes.

Recently Issued Accounting Pronouncements

On January 1, 2010, the Company adopted new accounting and disclosure guidance for the consolidation of variable interest entities (“VIE”), which required enhanced disclosures intended to provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE. The company performed an assessment of its VIE, DC Bio, and determined that continued consolidation under the new guidance is appropriate. Accordingly, there was no impact on the Company’s financial position and results of operations. The impact of this pronouncement on future transactions will be evaluated under the new criteria when and if encountered.

In October 2009, the FASB issued new guidance for revenue recognition with multiple deliverables, which is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, although early adoption is permitted. This guidance eliminates the residual method under the current guidance and replaces it with the “relative selling price” method when allocating revenue in a multiple deliverable arrangement. The selling price for each deliverable shall be determined using vendor specific objective evidence of selling price, if it exists, otherwise third-party evidence of selling price shall be used. If neither exists for a deliverable, the vendor shall use its best estimate of the selling price for that deliverable. After adoption, this guidance will also require expanded qualitative and quantitative disclosures. The Company will assess the impact of adoption on future transactions.

In April 2010, the FASB issued authoritative guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and non substantive milestones, and each milestone should be evaluated individually to determine if it is substantive. The guidance is effective on a prospective basis for

F-17

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010, with early adoption permitted. The Company adopted this guidance on January 1, 2011. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In January 2010, the FASB amended the existing disclosure guidance on fair value measurements, which is effective January 1, 2010, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which is effective January 1, 2011. Among other things, the updated guidance requires additional disclosure for the amounts of significant transfers in and out of Level 1 and Level 2 measurements and requires certain Level 3 disclosures on a gross basis. Additionally, the updates amend existing guidance to require a greater level of disaggregated information and more robust disclosures about valuation techniques and inputs to fair value measurements. Since the amended guidance requires only additional disclosures, the adoption of the provisions effective January 1, 2010 did not, and for the provisions effective in 2011 will not, impact the Company’s financial position or results of operations.

In June 2011, the FASB issued authoritative guidance related to the Presentation of Comprehensive Income. This standard eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The new requirements are effective for public entities for fiscal years beginning after December 15, 2011 and interim and annual periods thereafter, with early adoption permitted. As this accounting standard only requires enhanced disclosure, the adoption of this standard will not impact the Company’s financial position or results of operations.

In May 2011, the FASB issued amended guidance on fair value measurements. This newly issued accounting standard clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This accounting standard is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011. The Company does not expect that adoption of this standard will have a material impact on its financial position or results of operations.

3. Furniture, Fixtures and Equipment

Furniture, fixtures and equipment consist of the following:

	Useful  Life (Years)		December 31,
			2009			2010
Office furniture and equipment		7	$	436,617		$	435,333
Computer equipment		3		659,613			693,570
Laboratory equipment		7		5,153,844			5,206,924
Leasehold improvements		5		2,178,227			2,178,227
				8,428,301			8,514,054
Less: Accumulated depreciation and amortization				(6,382,389	)		(7,169,483	)
Furniture, fixtures and equipment, net			$	2,045,912		$	1,344,571

F-18

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Depreciation and amortization expense was as follows:

December 31, 2008	$	973,947
December 31, 2009		871,848
December 31, 2010		818,448
March 31, 2010 (unaudited)		212,618
March 31, 2011 (unaudited)		193,553
Cumulative from Inception to March 31, 2011 (unaudited)		7,872,544

4. Noncontrolling Interest

In December 2002, the Company invested $6,500 in DC Bio. This investment was made in anticipation of an additional future financing by the Company into this newly formed entity. In December 2002, DC Bio sold approximately $5,200,000 of convertible subordinated debentures to certain of the other shareholders of DC Bio. In December 2004, these debentures were cancelled in exchange for 360,000 Class A preferred shares of DC Bio, warrants to purchase 72,000 Class A preferred shares of DC Bio and new nonconvertible debentures of DC Bio with an aggregate initial principal amount of approximately $3,652,000 (see Note 7). Also in December 2004, the Company licensed to DC Bio certain intellectual property rights in exchange for 360,000 Class A preferred shares of DC Bio and warrants to purchase 72,000 Class A preferred shares of DC Bio. These warrants were cancelled in conjunction with the issuance of Class B preferred shares of DC Bio.

In 2007, DC Bio issued a note to the Company for CDN $500,000 that bore interest at 7%. In March 2008 and November 2008, DC Bio issued and sold 75,446 Class B preferred shares to a shareholder for a purchase price of $754,460. In connection with this issuance and sale, DC Bio issued and sold 75,446 Class B preferred shares to the Company for a combination of cash in the amount of $257,254 and the cancellation of the 2007 note payable of CDN$500,000 including accrued interest.

The Company owns 49.95% of the total capital stock of DC Bio, and initially accounted for its investment in DC Bio using the equity method of accounting in 2002 and 2003. DC Bio did not have any operating activities in 2002 or 2003. Effective January 1, 2004, the Company consolidated the operations of DC Bio based on the determination that DC Bio is a VIE. The other shareholders’ ownership interests in DC Bio are represented on the accompanying consolidated balance sheets by noncontrolling interest as a separate component of stockholders’ deficit.

F-19

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

5. Income Taxes

No provision for U.S. Federal, state or foreign income taxes has been recorded as the Company has incurred net operating losses since inception.

Significant components of the Company’s deferred tax assets and liabilities consist of the following:

	December 31, 2009			December 31, 2010
U.S. Federal and state net operating loss carryforwards	$	22,157,457		$	25,456,702
Foreign net operating loss carryforwards		1,138,177			1,057,400
Capital loss carryforward		3,246,049			3,246,049
Contribution carryforwards		—			65,790
Research and development credits		2,781,065			2,970,996
Investment tax credits		—			40,832
Stock-based compensation		714			714
Patents and other intangibles		47,886			13,464
Deferred rent		8,168			4,111
Fixed assets		176,958			309,380
Other accruals		(21,428	)		64,813
Total deferred tax assets		29,535,046			33,230,251
Valuation allowance for deferred assets		(29,535,046	)		(33,230,251	)
Net deferred tax assets	$	—		$	—

At December 31, 2010 and 2009, the Company provided a full valuation allowance against its net deferred tax assets since at that time, the Company could not assert that it was more likely than not that these deferred tax assets would be realized. There was an increase in the valuation allowance in the current year in the amount of $3,695,205, all of which was allocable to current operating activities.

As of December 31, 2010, the Company had U.S. Federal and state, and Canadian federal and provincial net operating loss carryforwards of approximately $63,691,063, $83,554,755, $4,229,601, and $4,229,601, respectively. These net operating loss carryforwards begin to expire in 2012, 2017, 2014 and 2014, respectively. As of December 31, 2010, the Company had U.S. Federal and state tax credit carryforwards of approximately $2,746,350 and $340,372, respectively. These credit carryforwards begin to expire in 2020 and 2019, respectively. The utilization of the net operating loss and tax credit carryforwards may be subject to limitation under the rules regarding a change in stock ownership as determined by the Internal Revenue Code, and state and foreign tax laws. As of December 31, 2010, the Company had Canadian investment tax credit carryforwards of approximately $40,832 that begin to expire in 2024. These carryforwards may be subject to limitations at the time of an IPO or other future private placements.

For the year ended December 31, 2010, the Company maintains that all Canadian earnings from DC Bio have been indefinitely re-invested and, as such, a deferred tax liability with respect to the unremitted earnings has not been recognized.

F-20

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Taxes computed at the statutory U.S. Federal income tax rate of 34.0% are reconciled to the provision for income taxes as follows:

	December  31, 2008						December  31, 2009						December  31, 2010
	Amount			% of Pretax Earnings			Amount			% of Pretax Earnings			Amount			% of Pretax Earnings
U.S. Federal tax at statutory rate	$	(4,147,824	)		34.0	%	$	(3,476,445	)		34.0	%	$	(3,438,328	)		34.0	%
State taxes (net of Federal benefit)		(497,660	)		4.1	%		(429,152	)		4.2	%		(444,438	)		4.4	%
U.S. Federal tax credits		(442,728	)		3.6	%		(197,629	)		1.9	%		(204,394	)		2.0	%
Expiration of capital loss carryforward		—			(0.0	%)		3,482,366			(34.1	%)		—			(0.0	%)
Change in valuation reserves		4,708,988			(38.6	%)		(1,051,796	)		10.3	%		3,695,205			(36.5	%)
Deferred tax asset true-ups		—			(0.0	%)		1,388,171			(13.5	%)		171,123			(1.7	%)
Other nondeductible expenses		379,224			(3.1	%)		284,485			(2.8	%)		130,460			(1.3	%)
Other		—			(0.0	%)		—			(0.0	%)		90,372			(0.9	%)
Provision for income taxes	$	—			0.0	%	$	—			0.0	%	$	—			0.0	%

Effective January 1, 2007, the Company adopted the provisions of the FASB guidance on accounting for uncertainty in income taxes. These provisions provide a comprehensive model for the recognition, measurement and disclosure in financial statements of uncertain income tax positions that a company has taken or expects to take on a tax return. Under these provisions, a company can recognize the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit can be recognized. Assessing an uncertain tax position begins with the initial determination of the sustainability of the position and is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed. Additionally, companies are required to accrue interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The cumulative effect of this adoption is recorded as an adjustment to the opening balance of its retained deficit on the adoption date.

As a result of adopting this guidance, the Company reduced its deferred tax assets by approximately $645,000 and reduced its valuation allowance against the deferred tax assets by the same amount. Accordingly, the Company did not record a contingent tax liability as a result of the implementation of these provisions. At the adoption date of January 1, 2007 and as of December 31, 2010, the Company had no accrued interest or penalties related to the tax contingencies. The Company’s policy for recording interest and penalties is to record them as a component of provision for income taxes.

The Company had gross unrecognized tax benefits of approximately $1,089,400 as of January 1, 2010. As of December 31, 2010, the total gross unrecognized tax benefits were approximately $1,177,000 and of this total amount, none would affect the Company’s effective tax rate if recognized. The Company does not anticipate a significant change in total unrecognized tax benefits or the Company’s effective tax rate due to the settlement of audits or the expiration of statutes of limitations within the next 12 months.

The Company has analyzed its filing positions in all significant federal and state jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the

F-21

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Company is no longer subject to United States Federal, state, and local tax examinations by tax authorities for years before 2007, although carryforward attributes that were generated prior to 2007 may still be adjusted upon examination by the Internal Revenue Service if they either have been or will be used in a future period. No income tax returns are currently under examination by taxing authorities.

The following is a tabular reconciliation of the Company’s change in gross unrecognized tax positions:

	2008		2009		2010
Beginning balance	$	821,200	$	1,010,900	$	1,089,400
Gross increase for tax positions related to current periods		189,700		78,500		87,600
Ending balance	$	1,010,900	$	1,089,400	$	1,177,000

6. Convertible Term Notes

On February 27, 2004, the Company entered into a convertible term note and warrant purchase agreement with a group of existing preferred stockholders, which provided for up to $12,000,000 in borrowings to the Company. On February 27, 2004, the Company received aggregate proceeds under the first of the convertible term notes in the amount of $3,456,946. The convertible term notes bore interest at a rate of 7% and provided for conversion into equity securities of the Company. The agreement also provided for warrant coverage, with such warrants also exercisable for redeemable convertible preferred stock of the Company (see Note 11). On March 31, 2008, the principal and interest on the convertible term notes totaling $4,420,858 converted into an aggregate of 19,283,135 shares of Series C Preferred Stock of the Company (see Note 10).

On September 9, 2010, the Company entered into a convertible note and warrant purchase agreement with a group of existing preferred stockholders, which provided for a total of up to $6,000,000 in borrowing by the Company. On September 9, 2010 and December 15, 2010, the Company received the proceeds under the agreement in two separate tranches of $4,872,066 and $1,127,925, respectively. The convertible notes issued pursuant to the agreement bear interest at a rate of 10% and provide for conversion into Series C Preferred Stock of the Company. The note purchasers were also issued warrants to purchase Series C Preferred Stock of the Company (see Note 11). The proceeds from the convertible note were allocated among the notes and the associated warrants based on the fair value of the warrants with the residual balance assigned to the convertible notes. The value assigned to the convertible notes is increased through interest expense using the effective interest method such that the value of the convertible notes will equal the accrued principal and interest of $6,603,333 at maturity. The Company recognized $867,484 and $913,130, respectively, of interest expense related to the convertible notes during the year ended December 31, 2010 and the quarter ended March 31, 2011 (unaudited).

7. Non-Controlling Debentures

In connection with the financing transactions described in Note 4, DC Bio issued approximately $3,652,000 of debentures. Approximately $2,708,000 of debentures were paid in 2005 leaving a balance of approximately $943,000. The remaining debentures and accrued interest were paid in January 2007.

F-22

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

8. Notes Payable

During December 2000 (and amended in November 2002, November 2004, and November 2005), the Company entered into a loan agreement with a lending institution, which provides for the Company to borrow funds for the acquisition of furniture, fixtures and equipment. The lending institution’s commitment under this line of credit expired in April 2007. Through December 31, 2010, the Company has borrowed $5,129,782 under this agreement, of which $551,497, $26,807 and $0 was outstanding at December 31, 2009, 2010 and March 31, 2011 (unaudited), respectively. Borrowings for the acquisition of furniture, fixtures and equipment are collateralized by substantially all of the tangible assets of the Company, bear interest at rates between 9.76% and 11.00% and are to be repaid in 42 or 48 equal monthly installments commencing on the date of borrowing. In connection with the loan agreement, warrants to purchase 727 shares of common stock were issued at an exercise price of $176 per share. The warrants expire seven or ten years from the date of issuance (see Note 11).

The Company entered into a Loan and Security Agreement with two lending institutions in April 2007 for the purpose of borrowing $5,000,000 to be used for working capital. As of December 31, 2009, 2010 and March 31, 2011 (unaudited), $666,667, $0, and $0, respectively was outstanding on the loan. The loan term was six months of interest only followed by 30 months of principal and interest at 11.25%. The Company is required to pay a success fee of $200,000 upon consummation of a liquidity event, including an IPO.

9. Derivatives

The Company has issued the following derivative instruments: (a) freestanding warrants to purchase 3,500 shares of the Company’s common stock (see Note 11) and (b) a put option to exchange certain shareholders’ stock in DC Bio for cash or stock in the Company. The Company does not use derivative financial instruments for speculative or trading purposes.

The freestanding warrants to purchase 3,500 shares of the Company’s common stock were issued with an exercise price of $18.00 to an academic institution and allow the institution to choose to receive cash upon exercise under a net cash settlement feature. No quoted price is available for the Company’s freestanding warrants and, as such, the Company uses the Black-Scholes option-pricing model to value the warrants. Factors affecting the valuation include the current price of the underlying asset, exercise price, expiration date, estimated price volatility of the underlying asset over the life of the warrants and restrictions on the transferability or ability to exercise the warrants. As of December 31, 2009, 2010, and March 31, 2011 (unaudited) a liability of $0 was recorded to reflect the estimated fair value of the warrants. These warrants expired unexercised on July 3, 2011.

In conjunction with the DC Bio transaction on December 7, 2004 (see Note 4), the Company issued a put option whereby in the event DC Bio has not been acquired or has not completed an IPO by December 7, 2007, the other shareholders of DC Bio will have the right to put their DC Bio Class A preferred shares, and Class B preferred shares to the Company for shares of the Company’s stock. The Company has reserved 1,305,216 shares of Series C Preferred Stock, 839,536 shares of Series B Preferred Stock and 2,145,682 shares of common stock for the conversion of Class A and Class B preferred shares of DC Bio should such put option be exercised. A liability of $1,239,744, $941,735, and $941,735, respectively, was recorded as of December 31, 2009, December 31, 2010 and March 31, 2011 (unaudited) based on the fair market value of the Company’s stock issuable upon exercise of the put options, less the value associated with the DC Bio stock held by such shareholders, as described above.

F-23

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

10. Stockholders’ Deficit and Redeemable Convertible Preferred Stock

At December 31, 2010, the Company was authorized to issue 250,760,000 shares of common stock and 182,279,894 of shares of preferred stock.

Common Stock

In July 1997, the Company issued 20,000 shares of common stock to its founders for subscription receivable of $2,000 or $0.001 per share. The receivable, including interest, was repaid in December 1999. In January 2000, the Company issued 5,000 shares of common stock to Duke University in exchange for a technology license. As a result, the Company recorded $50,000 of expense in 2000. In October 2002, the Company issued 350 shares of common stock to Duke University in exchange for technology licenses. As a result, the Company recorded $6,300 of expense in 2002.

In connection with the filing of the Company’s Fourth Amended and Restated Certificate of Incorporation in March 2008, the outstanding shares of common stock were subject to a 100:1 reverse stock split. All references to common stock have been retroactively restated to reflect the stock split. Also in March 2008, an aggregate of 1,412,224 shares of Series A Preferred Stock and an aggregate of 5,306,068 shares of Series B Preferred Stock converted into an aggregate of 67,185 shares of common stock in connection with the election not to participate in the Series C Preferred Stock financing.

In connection with the issuance of the convertible term notes in September 2010, an aggregate of 248,100 shares of Series A Preferred Stock, an aggregate of 1,752,400 shares of Series B Preferred Stock, an aggregate of 1,835,543 shares of Series B-1 Preferred Stock and an aggregate of 8,687,903 Series C Preferred Stock, converted into an aggregate of 12,523,944 shares of common stock as a result of the failure of certain shareholders to participate in the financing.

Dividends

The holders of common stock shall be entitled to receive dividends from time to time as may be declared by the Board of Directors. No cash dividend may be declared or paid to common stockholders until paid on each series of outstanding preferred stock in accordance with its terms.

Voting

The holders of shares of common stock are entitled to one vote for each share held with respect to all matters voted on by the stockholders of the Company.

Liquidation

After payment to the preferred stockholders of their liquidation preferences, holders of common stock shall be entitled, together with holders of preferred stock, to share ratably in all remaining assets of the Company.

F-24

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

Restricted Stock

During September 2002, the Company issued 22,860 shares of restricted common stock to one of its officers, of which 18,288 shares vested based on continuous service to the Company. The shares had an estimated fair value of $18.00 per share, which was recorded as deferred compensation and was being amortized over the vesting period. The Company recorded $140,585 of expense during 2005. During August 2005, all of the 18,288 time-vested shares became vested upon the officer’s departure from the Company. Of these, 8,112 shares were surrendered to the Company as a partial settlement of certain promissory notes issued by the officer in favor of the Company. The 4,572 non time-vested shares were forfeited upon the officer’s departure.

During December 2010, the Company issued 128,571 share of restricted stock to a consultant. The shares had an estimated fair value of $0.07 per share, which was recorded as consulting expense during the year ended December 31, 2010.

Redeemable Convertible Preferred Stock

During January 2000, the Company issued 1,893,874 shares of Series A Preferred Stock of the Company for cash proceeds of $1,500,000 or $1.00 per share, less related issuance costs of $65,741, and conversion of convertible notes payable of $374,998 and related accrued interest of $18,876. In addition, the Company issued warrants to purchase 70,833 shares of Series A Preferred Stock for $1.00 per share (see Note 11). These warrants were cancelled on March 31, 2008.

During January 2001, the Company issued 514,875 shares of Series A Preferred Stock for payment of accounts payable of $514,875 representing a price of $1.00 per share.

During April, July and August 2001, the Company issued 22,376,045 shares of Series B Preferred Stock of the Company at $1.76 per share for cash proceeds of $37,266,756, less related issuance costs of $157,594, and conversion of convertible notes payable of $2,000,000 and related accrued interest of $115,083. Also during July 2001, the Company issued 135,511 shares of Series B Preferred Stock for payment of accounts payable of $238,500 representing a price of $1.76 per share. In addition, the Company issued warrants to purchase 4,331,856 shares of Series B Preferred Stock at $1.76 per share (see Note 11). These warrants were cancelled on March 31, 2008 in connection with the Series C Preferred Stock financing.

During June 2004, the Company issued 2,840,909 shares of Series B-1 Preferred Stock of the Company at $1.76 per share for cash proceeds of $5,000,000, less related issuance costs of $86,494. In addition, the Company issued warrants to purchase 1,704,546 shares of Series B-1 Preferred Stock at $1.76 per share (see Note 11). These warrants were cancelled on March 31, 2008 in connection with the Series C Preferred Stock financing.

During March, April and November 2008, the Company issued 122,753,041 shares of Series C Preferred Stock at $0.289018 per share for cash proceeds of $29,904,666, less related issuance costs of $502,603, and conversion of convertible term notes of $3,456,946 and related accrued interest of $963,912. Also during March and November 2008, the Company issued 346,000 shares of Series C Preferred Stock for settlement of accrued expenses of $100,000 or $0.289018 per share.

During March 2008, holders of shares of Series A and B Preferred Stock that failed to purchase their respective pro rata share of Series C Preferred Stock had 1,412,224 shares of Series A Preferred and 5,306,068 shares of Series B Preferred Stock converted into an aggregate of 67,185 shares of common stock and also forfeited their

F-25

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

right to receive any accrued but unpaid dividends thereon. Holders of Series A, B and B-1 Preferred Stock that purchased their pro rata share of Series C Preferred Stock were issued an aggregate of 651,728 shares of Series A Preferred Stock, 9,314,522 shares of Series B Preferred Stock and 830,177 shares of Series B-1 Preferred Stock, respectively, in exchange for, in part, the cancellation of accrued but unpaid dividends on their shares of Preferred Stock. In 2010, the Company revised its previously reported additional paid in capital and deficit accumulated during the development stage for 2008 and 2009 with respect to the March 2008 Preferred Stock conversion into common stock. These revisions are not considered material to the financial statements.

The Company’s Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock and Series C Preferred Stock have the following characteristics:

Voting

The holders of the Preferred Stock are entitled to vote, together with the holders of common stock, on all matters submitted to stockholders for a vote. Each preferred stockholder is entitled to the number of votes equal to the number of shares of common stock into which each preferred share is convertible at the time of such vote.

Dividends

The holders of the Preferred Stock are entitled to receive, when and as declared by the Board of Directors and out of funds legally available, noncumulative dividends at the rate of 8% per annum, payable in preference and priority to any payment of any dividend on common stock. No dividends or other distributions shall be made with respect to the common stock, until all declared dividends on the Preferred Stock have been paid. Since inception (May 8, 1997) through December 31, 2010 no dividends have been declared or paid by the Company. As part of the recapitalization in March 2008, the Company amended its Certificate of Incorporation to remove the cumulative feature of dividends on Preferred Stock. In 2008, holders of Series A, B and B-1 Preferred Stock that purchased their pro-rata share of Series C Preferred Stock were issued additional shares of Series A, B and B-1 Preferred Stock, as applicable in exchange for, in part, the cancellation of accrued but unpaid dividends on their shares of Preferred Stock, which had been accrued based on the cumulative dividend feature, prior to the removal of such feature.

Liquidation

In the event of liquidation, dissolution, or winding up of the Company, holders of Preferred Stock shall be entitled, before any distribution is made to the holders of common stock, to be paid an amount equal to $1.00 per share of Series A Preferred Stock, $1.76 per share of Series B Preferred Stock, $1.76 per share of Series B-1 Preferred Stock and $0.289018 per share of Series C Preferred Stock plus any declared but unpaid dividends. In the event that assets of the Company are insufficient to permit payment of the above mentioned amounts, holders shall share ratably in any distribution of the remaining assets and funds of the Company in proportion to the respective amounts which would otherwise be payable under these circumstances in the order of liquidation preference.

Conversion

Each share of Preferred Stock, at the option of the holder, is convertible into a number of fully paid shares of common stock as determined by dividing the respective Preferred Stock issue price by the conversion price in

F-26

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

effect at the time. The initial conversion price of Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock and Series C Preferred Stock are $1.00, $1.76, $1.76 and $0.289018 per share, respectively, and is subject to adjustment in accordance with antidilution provisions contained in the Company’s Amended and Restated Certificate of Incorporation, as amended. Conversion is automatic immediately upon the closing of a firm commitment underwritten public offering in which the public offering price equals or exceeds $0.867054 per share (adjusted to reflect subsequent stock dividends, stock splits or recapitalization) and the aggregate proceeds raised equal or exceed $30,000,000.

Participation Rights

After payment to the preferred stockholders of their liquidation preferences, holders of Preferred Stock shall be entitled, together with holders of common stock to share ratably in all remaining assets of the Company.

Redemption

The holders of the outstanding Preferred Stock may, by written request delivered five years after the initial closing of the Series C Preferred Stock, require the Company to redeem the outstanding shares of the Preferred Stock by paying in cash a sum equal to the original purchase price of the Preferred Stock plus any declared but unpaid dividends. If the Company does not have sufficient funds legally available to redeem all shares of Preferred Stock to be redeemed at the redemption date, then the Company shall redeem such shares ratably to the extent possible and shall redeem the remaining shares as soon as sufficient funds are legally available.

Carrying Value

The Preferred Stock shares were initially recorded at the total net proceeds received by the Company upon issuance, after reduction for the value of detachable warrants and issuance costs. The difference between the total net proceeds at issuance and the total redemption price at the redemption date (March 31, 2013) will be charged to additional paid-in capital, to the extent it is available, or the deficit accumulated during the development stage over the period from issuance until redemption first becomes available. The amount of accretion recognized during each period is determined by using the effective interest rate method.

F-27

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The table below represents a rollforward of the Preferred Stock:

	Series A Preferred						Series B Preferred						Series B-1 Preferred						Series C Preferred
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Balance at Inception		—		$	—			—		$	—			—		$	—			—		$	—
Issuance of shares		1,893,874			1,942,179			21,174,293			33,295,602			2,840,909			5,000,000			—			—
Conversion of notes payable		—			—			1,201,752			2,115,083			—			—			—			—
Stock issuance costs		—			—			—			(157,594	)		—			—			—			—
Issuance of shares as payment for accounts payable		514,875			514,875			135,511			238,500			—			—			—			—
Accretion		—			1,782,345			—			25,085,105			—			1,493,617			—			—
Stock issuance costs		—			—			—			—			—			(86,494	)		—			—
Balance at December 31, 2007		2,408,749			4,239,399			22,511,556			60,576,696			2,840,909			6,407,123			—			—
Issuance of shares		—			—			—			—			—			—			103,469,906			29,904,666
Conversion of bridge note		—			—			—			—			—			—			19,283,135			4,420,858
Conversion of accrued services		—			—			—			—			—			—			346,000			100,000
Stock issuance costs		—			—			—			—			—			—			—			(502,603	)
Reversal of accrued dividends					(651,728	)		—			(16,393,559	)		—			(1,461,111	)		—			—
Accrued dividends converted into preferred		651,728			651,728			9,314,522			16,393,559			830,177			1,461,111			—			—
Shares converted to Common		(1,412,224	)		(1,412,224	)		(5,306,068	)		(9,338,680	)		—			—			—			—
Unconverted accrued dividends		—			(1,178,922	)		—			(4,831,999	)		—			—			—			—
Accretion		—			—			—			269,201			—			53,988			—			72,477
Balance at December 31, 2008		1,648,253			1,648,253			26,520,010			46,675,218			3,671,086			6,461,111			123,099,041			33,995,398
Accretion		—			—			—			—			—			—			—			101,206
Balance at December 31, 2009		1,648,253			1,648,253			26,520,010			46,675,218			3,671,086			6,461,111			123,099,041			34,096,604
Shares converted to Common		(248,100	)		(248,100	)		(1,752,400	)		(3,084,233	)		(1,835,543	)		(3,230,556	)		(8,687,903	)		(2,459,091	)
Accretion		—			—			—			—			—			—			—			101,206
Balance at December 31, 2010		1,400,153			1,400,153			24,767,610			43,590,985			1,835,543			3,230,555			114,411,138			31,738,719
Accretion (unaudited)		—			—			—			—			—			—			—			25,302
Balance at March 31, 2011 (unaudited)		1,400,153		$	1,400,153			24,767,610		$	43,590,985			1,835,543		$	3,230,555			114,411,138		$	31,764,021
Redemption value				$	1,400,153					$	43,590,985					$	3,230,555					$	33,066,878

11. Warrants

Series A Preferred

In conjunction with the sale of Series A Preferred Stock during January 2000, the Company issued fully vested warrants to purchase 70,833 shares of Series A Preferred Stock at $1.00 per share. The estimated fair value of these warrants, as determined using the Black-Scholes valuation model, was $49,866. The Company allocated $45,587 of the total proceeds from the sale of Series A Preferred Stock to the warrants based on their fair value. These warrants were cancelled on March 31, 2008 in conjunction with the issuance of Series C Preferred Stock.

Series B Preferred

In conjunction with the issuance of convertible promissory notes in October and December 2000, the Company issued fully vested warrants to purchase 240,000 shares of Series B Preferred Stock at $1.25 per share. The estimated fair value of these warrants, as determined using the Black-Scholes valuation model, was $281,760. The Company

F-28

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

allocated $246,967 of the proceeds from the issuance of the convertible notes to the warrants based on the fair value of the warrants. These warrants were cancelled on March 31, 2008 in conjunction with the issuance of Series C Preferred Stock.

In conjunction with the sale of Series B Preferred Stock in 2001, the Company issued warrants to purchase 4,331,856 shares of Series B Preferred Stock at $1.76 per share. The warrants were exercisable immediately and expired seven years from the date of issuance. The estimated fair value of these warrants, as determined using the Black-Scholes valuation model, was $4,414,161. The Company allocated $3,971,148 of the proceeds from the sale of Series B Preferred Stock to the warrants based on their fair value. These warrants were cancelled on March 31, 2008 in conjunction with the issuance of Series C Preferred Stock.

Series B-1 Preferred

At the time of the sale of Series B-1 Preferred Stock in June 2004, the Company issued warrants to purchase 1,704,546 shares of Series B-1 Preferred Stock at $1.76 per share. The warrants were exercisable immediately and expired seven years from the date of issuance. The estimated fair value of these warrants, as determined using the Black-Scholes valuation model, was $1,703,466 which the Company recognized as legal expense during 2004. These warrants were cancelled on March 31, 2008 in conjunction with the issuance of Series C Preferred Stock.

Convertible Term Notes

In conjunction with the issuance of convertible term notes, the Company entered into a note and warrant purchase agreement with the note purchasers on February 27, 2004. The agreement authorized the purchase of an aggregate amount of warrant securities equal to 40% of the note principal divided by the applicable price in the event of a future preferred stock financing, or into common stock at $18.00 per share. The purchase price for the bridge notes and associated warrants was the principal amount of the bridge note. The warrants had a term of seven years from the date of issuance and permitted exercise on a net exercise basis. The Company allocated $1,112,909 of the proceeds from the issuance of the convertible term notes to the warrants. The warrants were cancelled on March 31, 2008 in conjunction with the issuance of Series C Preferred Stock.

The Company entered into a convertible note and warrant purchase agreement with the note purchasers on September 9, 2010. The warrants issued under the agreement entitle the purchasers of the convertible term notes to purchase an aggregate of 20,759,953 shares of Series C Preferred Stock with an exercise price of $0.01 per share. The warrants have a term of seven years and will be automatically exercised upon the closing of the IPO by net exercise. The Company allocated $3,197,626 of the proceeds from the issuance of the convertible term notes to the warrants based on their fair value. The warrants have been recorded as a liability at December 31, 2010 and March 31, 2011 (unaudited) and are marked to market at each reporting period based on any underlying change in the fair market value of such warrants. The change in fair market value from December 31, 2010 to March 31, 2011 (unaudited), was not material.

In conjunction with entering into research and development agreements with two universities in June and August 2001 (see Note 14), the Company issued warrants to purchase 9,000 shares of common stock at $18.00 per share. The warrants are exercisable immediately and expire ten years from the date of issuance. The estimated fair value of these warrants, as determined using the Black-Scholes valuation model, was $106,560. The Company recognized the fair value of the warrants as research and development expense when the warrants were issued.

F-29

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

In conjunction with entering into license, research and development agreements with a German university in July 2001 (see Note 14), the Company issued fully vested warrants to purchase 3,500 shares of common stock at $18 per share. The warrants are considered a derivative instrument since the warrants contain a net cash settlement feature. As a result, the warrants are measured at each balance sheet date and any increase or decrease in the fair value is recorded as research and development expense or a reduction in research and development expense, respectively. As of December 31, 2009 and December 31, 2010, a liability of $0 was recorded to reflect the estimated fair value of the warrants.

In conjunction with entering into a loan agreement with a bank in December 2000 (and amended in November 2002, November 2004, and November 2005), the Company issued fully vested warrants to purchase 225 shares of common stock at $100 per share, which had expired as of December 31, 2008, and 727 shares of common stock at $176 per share, of which 209 had expired as of December 31, 2009. The Company determines the estimated fair value of the warrants using the Black-Scholes valuation model and recognizes the value of the warrants as interest expense over the loan agreement term. During the years ended December 31, 2009, 2010 and the quarter ended March 31, 2011 (unaudited), the Company recognized $1,692, $1,692 and $0, respectively, of expense related to these warrants.

In conjunction with entering into consulting agreements with scientists and other advisors, the Company has issued warrants to purchase 47,398 shares of common stock of the Company, of which 30,600 remain outstanding as of December 31, 2010. During 2000, the Company issued warrants to purchase 12,596 shares of common stock with an exercise price of $10.00 per share, of which 3,179 were exercised in June 2001 and 9,417 terminated in January 2010. In 2001, warrants to purchase 25,500 shares of common stock with exercise prices ranging from $10.00 to $18.00 per share were issued of which 1,250 were cancelled in March 2011. During 2002, the Company issued warrants to purchase 1,302 shares of common stock with exercise prices ranging from $1.00 to $18.00 per share of which 1,002 were cancelled in March 2008. During 2003, the Company issued warrants to purchase 8,000 shares of common stock with an exercise price of $18.00 per share of which 3,200 were later terminated in 2005. As of December 31, 2010, the warrants are fully vested. The Company determines the estimated fair value of the warrants using the Black-Scholes valuation model and recognizes the compensation expense over the vesting period.

Outstanding warrants to purchase the Company’s preferred and common stock at December 31, 2010 are as follows:

Type of Warrant	Number of Warrants		Exercise Price		Expiration Date(s)
Series C Preferred		20,759,953	$	0.01	9/9/17; 12/15/17
Series B Preferred		16,000	$	176.00	4/10/11
Common		250	$	10.00	2/1/11
Common		37,750	$	17.60	3/5/11–8/31/11
Common		5,100	$	18.00	10/31/12; 2/5/13
Common		518	$	176.00	11/8/11–3/30/17

12. Stock Options

During December 1999, the Company adopted the Argos Therapeutics, Inc. 1999 Stock Option Plan (the “1999 Plan”), which provides for the granting of up to 23,712 stock options to employees, directors and consultants of the Company. During April 2001, the 1999 Plan was amended to allow for the granting of up to

F-30

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

34,703 options and during August 2001, the 1999 Plan was further amended to allow for the granting of up to 67,737 options. Effective January 2007, the 1999 Plan was amended once more to allow for the granting of up to 102,000 options. During February 2008, the Company adopted the Argos Therapeutics, Inc. 2008 Stock Incentive Plan (the “2008 Plan”) which provides for the granting of up to 27,326,263 stock options to employees, directors and consultants of the Company. All options held by employees and directors of the Company under the 1999 Plan were cancelled upon issuance of options to those same employees and directors under the 2008 Plan. Under the 1999 Plan, 9,489 and 8,202 options remain outstanding as of December 31, 2009 and 2010, respectively. During December 2008, the 2008 Plan was amended to allow for the granting of up to 37,612,814 options. Under the 2008 Plan, both incentive and non-qualified stock options may be granted. The Board of Directors shall determine the exercise price, term and dates of the exercise of all options at their grant date. The Board of Directors, after consideration of an independent appraisal, determines the estimated fair value of the common stock. During 2008 and 2009 all options granted to employees were granted with exercise prices equal to or above the deemed fair value of the common stock on the date of grant. During 2010, certain options were granted to employees with exercise prices of $.08 per share, which was less than the deemed fair value of $0.15 per share. Under the 2008 Plan, some options vested immediately upon grant and some become vested over variable periods, generally ranging from two to four years, and expire not more than ten years after the date of grant.

The following table summarizes the Company’s stock option activity:

	December 31, 2010
	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term		Aggregate Intrinsic Value(a)
Outstanding — December 31, 2007		94,016		$	27.00
Granted		29,186,179		$	0.08
Exercised		(625	)	$	0.08
Cancelled		(101,719	)	$	22.38
Outstanding — December 31, 2008		29,177,851		$	0.09
Granted		1,480,203		$	0.08
Exercised		(94,632	)	$	0.08
Cancelled		(3,517,194	)	$	0.08
Outstanding — December 31, 2009		27,046,228		$	0.09
Granted		9,997,007		$	0.08
Exercised		—		$	—
Cancelled		(14,168,982	)	$	0.08
Outstanding — December 31, 2010		22,874,253		$	0.09		8.64	$	1,372,455
Exercisable — December 31, 2010		12,716,061		$	0.10		6.23	$	635,803
Vested and expected to vest at December 31, 2010(b)		21,507,554		$	0.08		9.13	$	1,505,529

(a) Intrinsic value is the excess of the fair value of the underlying common stock over the weighted average exercise price.

(b) The number of stock options expected to vest takes into account an estimate of expected forfeitures.

F-31

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The following table summarizes information about the Company’s stock options at December 31, 2010:

Exercise Price	Options Outstanding		Weighted Average Contractual Life (Years)		Options Exercisable
$0.08		22,866,051		8.64		12,707,979
$1.00		162		4.17		162
$10.00		86		0.04		26
$18.00		5,448		1.17		5,448
$34.00		786		4.95		786
$50.00		1,720		1.15		1,660
		22,874,253		8.64		12,716,061

As of December 31, 2010, the Company had a total of $1,428,730 in unrecognized compensation expense from non-vested stock option awards, of which $357,439 is expected to be recognized in 2011, $362,378 in 2012, $359,695 in 2013, $340,210 in 2014, and $9,008 in 2015.

13. Revenue

In March 2004, the Company entered into a license agreement with Geron Corporation (“Geron”) under which the Company licensed to Geron co-exclusive rights with the Company to the use of the Company’s platform technology with a defined antigen in exchange for 5,000,000 shares of Geron common stock which were valued at $42,775,697. As part of the licensing transaction, the Company granted to Geron rights to both the Company’s existing intellectual property as well as certain improvements to the intellectual property during the first three years following the effective date of the agreement. The licensing revenue was recognized on a straight-line basis over the period of performance, which was three years.

During 2005, the Company was awarded a grant of $499,918 from the Alliance for Lupus Research. The Company received notification during 2006 that this grant was extended for an additional $499,527. Revenue under this contract was recognized as the Company performed the related services.

In February 2006, the Company entered into a license agreement with Novo Nordisk A/S (“Novo”) under which Novo acquired antibody technology for the research and development of a treatment for systemic immune disorders, including systemic lupus erythematosus. The Company was paid and recorded revenue of $4,000,000 during 2006 and received an additional $1,000,000 and $2,000,000 in 2008 and 2009, respectively. Novo terminated the license agreement effective June 2010. As a result, the Company regained the rights to the acquired antibody technology.

In September 2006, the Company entered into a multi-year research contract with the NIH and the National Institute of Allergy and Infectious Diseases (“NIAID”) to design, develop and clinically test an autologous HIV immunotherapy capable of eliciting therapeutic immune responses. Under this contract, as it has been amended, the NIH and NIAID have committed to fund up to a total of $29,862,329, including reimbursement of direct expenses and allocated overhead and general and administrative expenses of up to $28,467,230 and payment of other specified amounts totaling up to $1,395,099 upon achievement of specified development milestones. This commitment extends until May 2013. In September 2010, the NIH agreed to make a $1,985,104 one-time

F-32

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

payment to us as a true-up in connection with an agreement as to the Company’s indirect cost rates for allocated overhead and general and administrative expenses. The true-up reflects the difference between the provisional indirect cost rates originally provided for in the NIH contract and the negotiated indirect cost rates agreed upon in September 2010 for the years 2006 through 2009 and the eight-month period ended August 31, 2010. The $1,985,104 true-up is included in the $29,862,329 commitment.

For the years ended December 31, 2008, 2009, 2010 and the quarters ended March 31, 2010 and 2011 (unaudited), the Company recorded revenue under this agreement of $3,449,735, $3,278,849, $7,219,838, $1,116,716 and $2,192,280, respectively. As of December 31, 2009, 2010, and March 31, 2011 (unaudited), the Company recorded a receivable from the NIH of $985,902, $3,776,043 and $4,177,384, respectively, and a payable to subcontractors of $316,767, $459,036 and $130,705, respectively.

The Company entered into an exclusive option agreement with Therakos, Inc. in December 2006 granting Therakos the option to explore the use and development of certain intellectual property. On September 18, 2007, the Company granted to Therakos, Inc. an exclusive license to this intellectual property pursuant to a license agreement. For the years ended December 31, 2006 and 2007, the Company recorded revenue of $200,000 and $800,000, respectively, under the option agreement and license agreement.

The Company entered into a manufacturing agreement in November 2009 with Yale University’s School of Medicine to manufacture autologous mature dendritic cells. Under the terms of the agreement, the Company has the potential to earn $281,740. For the years ended December 31, 2009, 2010, and the quarter ended March 31, 2011 (unaudited), the Company recorded revenue under this agreement of $89,140, $51,945 and $39,945, respectively. As of April 2011, the Company is no longer providing manufacturing services under this agreement.

14. Research and Development Agreements

The Company has entered into certain research support and option agreements with certain universities. These agreements were for varying terms through 2009. Additionally, these agreements name various scientists as the principal investigator. The separation of the principal investigator from the research project for any reason could cause the early termination of an agreement.

Under these agreements, the Company is required to fund certain research and development projects performed at such university or research institution. The Company receives an option to obtain an exclusive license for any intellectual property resulting from the research. If the Company exercises its option, it must also fund all costs related to obtaining and maintaining patents related to the research. During the years ended December 31, 2009, 2010 and the quarter ended March 31, 2011 (unaudited) the Company paid $175,576, $0 and $0, respectively, in costs related to these research agreements. As of December 31, 2009, 2010 and March 31, 2011 (unaudited), the Company has $40,000 of accrued costs related to these agreements.

Under certain circumstances, the Company may terminate these research and development agreements with 90 days written notice. Either party may terminate the agreements under conditions of default.

F-33

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

15. Collaboration Agreements

The Company entered into a Collaboration and License Agreement with Kirin in June 2004 for the development of therapies using the Company’s monocyte-derived dendritic cell technology. The Company recognized a net reimbursement of $6,626,989, $0, and $47,179,130 of research and development costs for the years ended December 31, 2009, 2010 and for the cumulative period from May 8, 1997 (date of inception) to March 31, 2011 (unaudited), respectively. Simultaneous with entering into the agreement, Kirin invested $5,000,000 in Series B-1 Preferred Stock of the Company. In addition, the Company issued a warrant to Kirin to purchase 1,704,546 shares of Series B-1 Preferred Stock at $1.76 per share (see Note 11). These warrants were cancelled on March 31, 2008. The Company recognized a receivable from Kirin of $255,543, $108, and $108, as of December 31, 2009, 2010, and March 31, 2011 (unaudited), respectively, which is included in other receivables on the balance sheet. The agreement was terminated effective December 31, 2009. The Company elected to continue the programs independently.

16. Commitments

The Company rents laboratory and office space and equipment under operating leases that expire in various years through 2012. Future minimum lease payments under non-cancelable operating leases as of December 31, 2010 are as follows:

Year Ending December 31,	Operating Leases
2011	$	211,493
2012		2,996
Total minimum lease payments	$	214,489

Rent expense related to operating leases for the years ended December 31, 2008, 2009, 2010, the quarter ended March 31, 2011 (unaudited) and the period from inception (May 8, 1997) through March 31, 2011 (unaudited) was $312,677, $370,817, $362,619, $86,223 and $2,851,398, respectively.

The Company has entered into various licensing agreements with universities and other research institutions under which the Company receives substantially all rights of the inventors or co-assignee to produce and market technology protected by certain patents and patent applications. The Company also entered into various assignment agreements with a scientist under which the Company receives exclusive rights to produce and market technology protected by certain patents and patent applications.

The Company is generally required to make royalty payments ranging from 1 - 4 % of future sales of products employing the technology or falling under claims of a patent. If future sales require the use of technology licensed from multiple different sources, the total royalty rates could be higher. As royalty payments are directly related to future sales volume, future commitments cannot be determined.

In connection with the Loan and Security Agreement with two lending institutions in April 2007, the Company is required to pay a success fee of $200,000 upon consummation of a liquidity event, including an IPO.

F-34

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

17. Concentration of Credit Risk

The Company’s grant revenue is earned under a contract with NIH. The concentration of credit risk is equal to the outstanding accounts receivable and unbilled balances and such risk is subject to the credit worthiness of the NIH. There have been no credit losses under this arrangement.

18. Employee Benefit Plan

The Company provides a retirement plan qualified under section 401(k) of the Internal Revenue Code of 1986, as amended (“IRC”). Participants may elect to contribute a portion of their annual compensation to the plan, after complying with certain limitations set by the IRC. All employees are eligible to participate in the plan after attaining the age of 21. The Company matched 25% of the first 6% contributed by eligible participants in the plan during the years ended December 31, 2009, 2010, and the quarters ended March 31, 2010 (unaudited) and 2011 (unaudited), or $74,409, $59,073, $0 and $0, respectively, for a total of $390,095 for the period from inception (May 8, 1997) through December 31, 2010.

19. Net Loss Per Share

Basic and diluted net loss per common share was determined by dividing net loss by the weighted average common shares outstanding during the period. The Company’s potentially dilutive shares, which include redeemable convertible preferred stock, common stock options and warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be antidilutive.

The following table presents the computation of basic and diluted net loss per share of common stock:

	Year Ended December 31,									Quarter Ended March 31,
	2008			2009			2010			2010			2011
										(unaudited)
As Reported:
Net loss attributable to Argos Therapeutics, Inc.	$	(12,926,287	)	$	(9,931,949	)	$	(8,994,754	)	$	(3,628,703	)	$	(2,428,318	)
Accretion of redeemable convertible preferred stock		(395,666	)		(101,206	)		(101,206	)		(25,302	)		(25,302	)
Net loss attributable to common stockholders	$	(13,321,953	)	$	(10,033,155	)	$	(9,095,960	)	$	(3,654,005	)	$	(2,453,620	)
Weighted average common shares outstanding, basic and diluted		86,615			159,825			4,081,649			196,976			12,849,491
Net loss per share attributable to common stockholders, basic and diluted	$	(153.81	)	$	(62.78	)	$	(2.23	)	$	(18.55	)	$	(0.19	)

F-35

Argos Therapeutics, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements — (Continued)

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive.

	Year Ended December 31,						Quarter Ended March 31,
	2008		2009		2010		2010		2011
							(unaudited)
Redeemable convertible preferred stock		88,778,536		154,938,390		151,061,113		154,938,390		142,414,444
Stock options outstanding		10,573,607		26,518,989		24,220,208		6,528,375		23,398,206
Warrants outstanding		58,368		59,361		5,449,539		59,618		20,819,571

20. Subsequent Events

On June 21, 2011, the Company signed a lease agreement to renew its rented laboratory and office space through 2016. The amount of obligation associated with this agreement over the term of the lease is $1,488,116.

On July 27, 2011, the Company sold convertible notes in the aggregate principal amount of $3,500,000 in a private placement. The convertible notes accrue interest at a rate equal to 10% per year, and have a maturity date of December 31, 2011, unless converted prior thereto. All principal and accrued interest on these convertible notes will automatically convert into shares of the Company’s common stock, at a conversion price per share equal to the price per share at which the Company’s common stock is sold to the public in the IPO, if investors holding at least a majority-in-interest of the aggregate principal amount of the then outstanding July 2011 convertible notes so elect.

In connection with the issuance and sale of the convertible notes, the Company issued warrants to the purchasers of the July 2011 convertible notes to purchase an aggregate of 12,109,972 shares of Series C Preferred Stock with an exercise price of $0.01 per share. The warrants have a term of seven years and will be automatically exercised upon the closing of the IPO by net exercise.

F-36

             Shares

Common Stock

Lazard Capital Markets

Canaccord Genuity

Needham & Company, LLC

BMO Capital Markets

                     , 2011

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the expenses to be incurred in connection with the offering described in this Registration Statement, other than underwriting discounts and commissions, all of which will be paid by us. All amounts are estimates except the Securities and Exchange Commission, or SEC, registration fee and the Financial Industry Regulatory Authority, Inc. filing fee.

	Amount
Securities and Exchange Commission registration fee	$	10,014
Financial Industry Regulatory Authority, Inc. filing fee		9,125
NASDAQ listing fee		*
Accountants’ fees and expenses		*
Legal fees and expenses		*
Blue sky fees and expenses		*
Transfer agent’s fees and expenses		*
Printing and engraving expenses		*
Miscellaneous		*
Total expenses	$	*

* To be filed by amendment.

Item 14. Indemnification of Directors and Officers

Section 102 of the Delaware General Corporation Law permits a corporation to eliminate the personal liability of its directors or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his or her duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our certificate of incorporation provides that no director shall be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the Delaware General Corporation Law prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.

Section 145 of the Delaware General Corporation Law provides that a corporation has the power to indemnify a director, officer, employee or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he or she is or is threatened to be made a party by reason of such position, if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery or such other court shall deem proper.

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Our certificate of incorporation that will be effective upon the closing of the offering our charter provides that we will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, our director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful.

Our charter also provides that we will indemnify any such indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, our director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee or, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if such indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any such indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith. If we don’t assume the defense, expenses must be advanced to an Indemnitee under certain circumstances.

We plan to enter into indemnification agreements with our directors and executive officers. In general, these agreements will provide that we will indemnify the director or executive officer to the fullest extent permitted by law for claims arising in his or her capacity as a director or officer of our company or in connection with their service at our request for another corporation or entity. The indemnification agreements will also provide for procedures that will apply in the event that a director or executive officer makes a claim for indemnification and establish certain presumptions that are favorable to the director or executive officer.

We maintain a general liability insurance policy which covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers.

The underwriting agreement we will enter into in connection with the offering of common stock being registered hereby provides that the underwriters will indemnify, under certain conditions, our directors and officers (as well as certain other persons) against certain liabilities arising in connection with such offering.

Item 15. Recent Sales of Unregistered Securities

Set forth below is information regarding shares of capital stock, and options and warrants granted, issued by us within the past three years that were not registered under the Securities Act of 1933, as amended or Securities Act. Also included is the consideration, if any, received by us for such shares, options and warrants and information relating to the section of the Securities Act or rule of the SEC under which exemption from registration was claimed.

(a) Issuance of Capital Stock

During March, April and November 2008, we issued and sold an aggregate of 123,099,041 shares of our series C preferred stock for an aggregate purchase price of $30,004,666. We issued and sold these shares at a

II-2

price per share of $0.289018 to existing stockholders that were accredited investors in the case of shares of our series C preferred stock issued and sold for cash or upon the cancellation of interest then outstanding on our then outstanding convertible promissory notes, and at a price per share of $0.2167635 in the case of shares of our series C preferred stock sold upon the cancellation of principal on our then outstanding convertible promissory notes. Holders of our preferred stock that purchased their pro rata share of our series C preferred stock in the series C preferred stock financing also received an aggregate of 651,728 shares of our series A preferred stock, 9,314,522 shares of our series B preferred stock and 830,177 shares of our series B-1 preferred stock, in exchange for, in part, the cancellation of accrued but unpaid dividends on such shares of preferred stock.

On December 10, 2010, we issued and sold 128,571 shares of restricted common stock to a consultant pursuant to a restricted stock purchase agreement under our 2008 stock incentive plan. The restricted common stock had an estimated fair value of $0.07 per share and was fully vested upon the purchase date.

No underwriters were involved in the foregoing sales of securities. The securities described in this section (a) of Item 15 were issued to investors in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required. All purchasers of shares of convertible preferred stock described above represented to us in connection with their purchase that they were accredited investors and were acquiring the shares for their own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The purchasers received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration statement or an available exemption from such registration.

(b) Stock Option Grants

Between January 1, 2008 and June 30, 2011, we issued to certain employees, directors and consultants options to purchase an aggregate of 42,387,335 shares of common stock. As of June 30, 2011, options to purchase 95,257 shares of common stock had been exercised and options to purchase 24,190,022 shares of common stock remained outstanding at a weighted average exercise price of $0.09 per share.

The issuance of stock options and the common stock issuable upon the exercise of such options as described in this section (b) of Item 15 were issued pursuant to written compensatory plans or arrangements with our employees, directors and consultants, in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 701 promulgated under the Securities Act or the exemption set forth in Section 4(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.

(c) Warrants

In September and December 2010, in connection with the issuance and sale of the 2010 convertible notes, we issued warrants to the purchasers of the 2010 convertible notes to purchase an aggregate of 20,759,953 shares of our series C preferred stock with an exercise price of $0.01 per share.

In July 2011, in connection with the issuance and sale of the July 2011 convertible notes, we issued warrants to the purchasers of the 2011 convertible notes to purchase an aggregate of 12,109,972 shares of our series C preferred stock with an exercise price of $0.01 per share.

The sale and issuance of these warrants were made in reliance on the exemption provided by Section 4(2) of the Securities Act and Regulation D promulgated thereunder. The recipients of warrants in the transaction described above represented that they were accredited investors and were acquiring the warrants for their own

II-3

account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment and could hold the warrants for an indefinite period of time and appropriate legends were affixed to the instruments representing such warrants issued in such transactions. Such recipients either received adequate information about us or had, through its relationship with us, access to such information.

All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares of capital stock described in this Item 15 included appropriate legends setting forth that the securities had not been registered and the applicable restrictions on transfer.

Item 16. Exhibits and Financial Statement Schedules

The exhibits to the registration statement are listed in the Exhibit Index attached hereto and incorporated by reference herein.

Item 17. Undertakings

(a) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Durham, State of North Carolina, on this 29^th day of July, 2011.

ARGOS THERAPEUTICS, INC.
By:	/s/ Jeffrey D. Abbey
	Jeffrey D. Abbey President and Chief Executive Officer

SIGNATURES AND POWER OF ATTORNEY

We, the undersigned officers and directors of Argos Therapeutics, Inc., hereby severally constitute and appoint Jeffrey D. Abbey and Lori Harrelson, and each of them singly (with full power to each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them for him and in his name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any other registration statement for the same offering pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated.

Signature	Title	Date
/s/ Jeffrey D. Abbey Jeffrey D. Abbey	President, Chief Executive Officer and Director (Principal executive officer)	July 29, 2011
/s/ Lori Harrelson Lori Harrelson	Vice President of Finance (Principal financial and accounting officer)	July 29, 2011
/s/ Hubert Birner Hubert Birner	Director	July 29, 2011
/s/ B. Jefferson Clark B. Jefferson Clark	Director	July 29, 2011
/s/ Michel Gréco Michel Gréco	Director	July 29, 2011
/s/ Monique Laliberté Monique Laliberté	Director	July 29, 2011
/s/ Philip R. Tracy Philip R. Tracy	Director	July 29, 2011
/s/ Brian J. Underdown Brian J. Underdown	Director	July 29, 2011
/s/ Sander van Deventer Sander van Deventer	Director	July 29, 2011

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EXHIBIT INDEX

Exhibit number	Description of exhibit
1.1*	Underwriting Agreement
3.1	Third Amended and Restated Certificate of Incorporation of the Registrant, as amended
3.2*	Restated Certificate of Incorporation of the Registrant to be effective upon the closing of this offering
3.3	Bylaws of the Registrant
3.4*	Amended and Restated Bylaws of the Registrant to be effective upon the closing of this offering
4.1*	Specimen certificate evidencing shares of common stock
5.1*	Opinion of Wilmer Cutler Pickering Hale and Dorr LLP
10.1	Second Amended and Restated Registration Rights Agreement, dated as of March 31, 2008, as amended
10.2	Warrant to purchase shares of Common Stock issued by the Registrant to Eckhart Kämpgen expiring on October 31, 2012
10.3	Warrant to purchase shares of Common Stock issued by the Registrant to Johannes W.G. Vieweg, M.D. expiring on February 5, 2013
10.4	1999 Stock Option Plan
10.5	2008 Stock Incentive Plan
10.6	Form of Incentive Stock Option Agreement under 2008 Stock Incentive Plan
10.7	Form of Nonstatutory Stock Option Agreement under 2008 Stock Incentive Plan
10.8*	2011 Stock Incentive Plan
10.9*	Form of Incentive Stock Option Agreement under 2011 stock incentive plan
10.10*	Form of Nonstatutory Stock Option Agreement under 2011 stock incentive plan
10.11	Offer letter, dated as of July 18, 2003, by and between the Registrant and Charles A. Nicolette, as amended
10.12	Offer letter, dated as of August 19, 2002, by and between the Registrant and Jeffrey D. Abbey, as amended
10.13	Offer letter, dated as of March 24, 2003, by and between the Registrant and Frederick M. Miesowicz, as amended
10.14	Offer letter, dated as of August 11, 2004, by and between the Registrant and Lori R. Harrelson
10.15*	Form of Indemnification Agreement between the Registrant and each director and executive officer
10.16	Lease Agreement, dated as of January 16, 2001, by and between the Registrant and HCP MOP, as amended on July 31, 2005, August 7, 2006 and June 21, 2011
10.17†	License Agreement, dated as of January 10, 2000, by and between the Registrant and Duke University, as amended on July 28, 2003
10.18†	Exclusive License Agreement, dated as of January 15, 2002, by and between the Registrant and Baylor Research Institute

Exhibit number			Description of exhibit
	10.19	†	Exclusive License Agreement, dated as of November 17, 2005, by and between the Registrant and Baylor Research Institute
	10.20	†	License Agreement, dated as of March 6, 2004, by and between the Registrant and Geron Corporation
	21.1		Subsidiaries of the Registrant
	23.1		Consent of PricewaterhouseCoopers LLP
	23.2*		Consent of Wilmer Cutler Pickering Hale and Dorr LLP (included in Exhibit 5.1)
	24.1		Power of Attorney (included on signature page)

* To be filed by amendment.

† Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and Exchange Commission.

EX-3.1

Exhibit 3.1

THIRD AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

ARGOS THERAPEUTICS, INC.

ARGOS THERAPEUTICS, INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The name of the Company is ARGOS THERAPEUTICS, INC. The Company’s original Certificate of Incorporation was filed on May 8, 1997 under the name “Dendritix, Inc.”. The Company’s Amended and Restated Certificate of Incorporation was filed on April 11, 2001 and was subsequently amended (the Company’s Amended and Restated Certificate of incorporation as so amended, the “Old Restated Certificate”).

2. Pursuant to Section 242 and 245 of the General Corporation Law of the State of Delaware, this Third Amended and Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Old Restated Certificate.

3. The terms and provisions of this Third Amended and Restated Certificate of Incorporation have been duly approved by vote of the required number of shares of each outstanding class of stock of this Company pursuant to Subsection 242 of the General Corporation Law of the State of Delaware (the “General Corporation Law”).

4. The text of the Old Restated Certificate is as hereby restated and further amended to read in its entirety as follows:

1. NAME

The name of the Company shall be ARGOS THERAPEUTICS, Inc.

2. ADDRESS

The address of the registered office of the Company in the State of Delaware is 2711 Centerville Road Suite 400, Wilmington, New Castle County, Delaware, 19808 and the name of the registered agent is Corporation Service Company.

3. PURPOSE

The purpose for which the Company is organized is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

4. STOCK

4.1 Authorization of Stock. The total number of shares of all classes of stock which the Company shall have authority to issue pursuant to this Third Amended and Restated Certificate of Incorporation (this “Restated Certificate”) is 377,591,089, of which (i) 220,000,000 shares are of a class designated “Common Stock”, $0.001 par value (the “Common”), and (ii) 157,591,089 shares are of a class designated “Preferred Stock”, $0.001 par value (the “Preferred”), of which 1,648,253 shares are of a series of such class designated “Series A Preferred Stock” (the “Series A Preferred”), 31,060,286 shares are of a series of such class designated “Series B Preferred Stock” (the “Series B Preferred”), 3,671,086 shares are of a series of such class designated “Series B-1 Preferred Stock” (the “Series B-1 Preferred”), and 121,211,464 shares are of a series of such class designated “Series C Preferred Stock” (the “Series C Preferred”).

Upon the filing of this Restated Certificate (the time of such filing the “Effective Time” and the date of such filing the “Filing Date”), each share of the Company’s Common Stock, par value $0.001 per share, outstanding at the Effective Time (the “Old Common Stock”), shall be combined, reclassified and changed into 0.01 fully paid and nonassessable share of Common without any action on the part of the holder thereof (the “Recapitalization”). All shares of Common issued to any holder of Old Common Stock as a result of the Recapitalization shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with the Recapitalization. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of the Recapitalization shall receive in lieu thereof cash in an amount equal to such fraction multiplied by $0.289018. At and after the Effective Time, each outstanding certificate that prior thereto represented shares of Old Common Stock shall be deemed for all purposes to evidence ownership of and to represent that whole number of shares of Common into which the shares represented by such certificate shall have been combined, reclassified and changed as herein provided, plus the right to receive cash in lieu of, any fractional share as described above. Until any such outstanding stock certificate shall have been surrendered for transfer or otherwise accounted for to the Company, the registered owner thereof on the books and records of the Company shall have and be entitled to exercise any voting and other rights with respect to, and to receive any dividend and other distributions upon, the shares of Common issuable to the holder thereof upon surrender of such certificate. No cash in lieu of any fractional share shall be paid to any stockholder until such stockholder shall have surrendered for transfer or otherwise accounted to the Company for the outstanding stock certificates entitling such stockholder to such cash.

4.2 Powers and Qualifications of Common Stock. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein, and are as follows:

4.2.1 Voting Rights. Except as otherwise required by law or expressly provided in this Restated Certificate, each share of Common (including any fractional share) shall entitle the holder thereof to vote on each matter submitted to a vote of the shareholders of the Company and to have one vote for each full share of Common (or the applicable fraction of one vote, for a fraction of a share); provided, however, that, except as otherwise required by law, holders of Common, as such, shall not be entitled to vote on any amendment to the Restated Certificate that relates solely to the terms of one or more outstanding series of Preferred if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Restated Certificate or pursuant to the General Corporation Law. The number of authorized shares of Common may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred that may be required by the terms of the Restated Certificate) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Company entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law. Except as otherwise required by law or expressly provided in this Restated Certificate, the holders of shares of Common and Preferred shall vote together and not as separate classes or series.

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4.2.2 Dividends. Subject to the rights of holders of Preferred set forth in Sections 4.3.2, 4.4.2, 4.5.2 and 4.6.2 of this Restated Certificate and except as otherwise provided herein, the holders of Common shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board of Directors may determine in its sole discretion; provided, however, that no dividends may be declared on outstanding shares of Common unless such dividends also shall have been declared on all outstanding Preferred.

4.2.3 Liquidation. Upon the dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, including but not limited to any transaction under Section 4.3.3.4, 4.4.3.4, 4.5.3.4 and 4.6.3.4, the assets of the Company available for distribution to shareholders after and in addition to the distribution of the preferential amounts pursuant to Sections 4.3.3.1, 4.4.3.1, 4.5.3.1 and 4.6,3.1 of this Restated Certificate, shall be distributed ratably to all holders of Common and Preferred in accordance with the provisions of Sections 4.3.3.3, 4.4.3.3, 4.5.3.3 and 4.6.3.3 of this Restated Certificate.

4.3 Powers and Qualifications of Series A Preferred Stock. The powers, preferences and rights, and the qualifications, restrictions or limitations, of the Series A Preferred are as follows:

4.3.1 Voting Rights. Except as otherwise required by law or expressly provided in this Restated Certificate, each share of Series A Preferred (including any fractional share) shall entitle the holder thereof to vote on each matter submitted to a vote of the shareholders of the Company and to have the number of votes equal to the number (including any fraction) of shares of Common into which such share of Series A Preferred is then convertible pursuant to the provisions hereof at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders becomes effective. Except as otherwise required by law or expressly provided in this Restated Certificate, the holders of shares of Common and Preferred of all classes shall vote together and not as separate classes or series.

4.3.2 Dividends.

4.3.2.1 Subject to the rights of holders of Series B Preferred pursuant to the provisions of Section 4.4.2, holders of Series B-1 Preferred pursuant to the provisions of Section 4.5.2 and holders of Series C Preferred pursuant to the provisions of Section 4.6.2, the holders of Series A Preferred shall be entitled to receive dividends at the rate of 8% of the Series A Original Purchase Price (as hereafter defined) (such amount to be adjusted proportionately in the event the shares of Series A Preferred are subdivided into a greater number or combined into a lesser number) per annum, payable out of funds legally available therefor. Such dividends shall be payable only when, as and if declared by the Board of Directors and shall be non-cumulative. The “Series A Original Purchase Price” shall be $1.00.

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4.3.2.2 No dividends (other than those payable on Common solely in shares of Common) shall be paid on any shares of Common during any fiscal year of the Company until dividends in the total amount determined in accordance with Section 4,3.2.1 (adjusted in accordance therewith, if applicable) on the Series A Preferred, shall have been paid or declared and set apart during that fiscal year, and no dividends (other than those payable on Common solely in shares of Common) shall be paid on any share of Common, unless a dividend is paid with respect to all outstanding shares of Series A Preferred in an amount for each such share of Series A Preferred equal to or greater than the aggregate amount of such dividends for all shares of Common into which each such share of Series A Preferred could then be converted.

4.3.2.3 In the event any dividend or other distribution payable in cash or other property (other than securities of the Company the issuance of which gives rise to adjustments pursuant to Section 4.3.4.4 of this Restated Certificate) is declared on any Common, each holder of shares of Series A Preferred on the record date for such dividend or distribution shall be entitled to receive, in addition to any dividend under Section 4.3.2.1, on the date of payment or distribution of such dividend or other distribution the same cash or other property which such holder would have received on such record date if such holder were the holder of record of the number (including any fraction) of shares of Common into which the shares of Series A Preferred then held . by such holder are then convertible.

4.3.2.4 In the event a holder of Series A Preferred, (i) executes the Series C . Preferred Stock Purchase Agreement by and among the Company and the Purchasers named therein dated on or about the Filing Date (the “Series C Purchase Agreement”) and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement (such holder’s “Pro Rata Share”), and (ii) at the Initial Closing (as defined in the Series C Purchase Agreement; hereafter, the “Initial Closing”) purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement, then at the Initial Closing such holder shall be issued a number of additional shares of Series A Preferred equal to the greatest whole number obtained by dividing the aggregate amount of the dividends that have accrued on such holder’s shares of Series A Preferred through January 31, 2008 under the Old Restated Certificate but have not been paid, whether or not declared, by the Series A Original Purchase Price. All other dividends that have accrued on such holder’s shares of Series A Preferred through the Effective Time under the Old Restated Certificate but have not been paid shall be cancelled. In determining whether any holder of Series A Preferred has satisfied the criteria set forth in clause (i) of this Section 4.3.2.4, any purchases of Series C Preferred under the Series C Purchase Agreement by a Related Party (as defined below) of such holder that are in excess of the Pro Rata Share of such Related Party shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred. The term “Related Party” means with respect to a Company stockholder (a) such stockholder’s affiliate, (b) if such stockholder is a venture capital or other investment fund, such stockholder’s exclusive provider of investment management or investment advisory services (a “Manager”), such Manager’s affiliates, any other venture capital or investment fund to which such Manager or its affiliates provide exclusive investment management or investment advisory services, and any other venture capital or investment fund in the same fund family and (c) a venture capital or other investment fund in respect of which such stockholder, or an affiliate of such stockholder, is a Manager.

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4.3.3 Liquidation Rights.

4.3.3.1 Subject to the rights of holders of Series B Preferred pursuant to the provisions of Section 4.4.3, holders of Series B-1 Preferred pursuant to the provisions of Section 4,5.3 and holders of Series C Preferred pursuant to the provisions of Section 4.6.3, if the Company shall be voluntarily or involuntarily liquidated, dissolved or wound up, the holder of each share of Series A Preferred then outstanding (including any fractional shares) shall be entitled to receive out of the assets of the Company available for distribution to shareholders, and before any payment or declaration and setting apart for payment of any amount shall be made with respect to the Common, an amount equal to (i) 100% of the Series A Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series A Preferred are subdivided into a greater number or combined into a lesser number), plus (ii) an amount equal to any dividends on such share which are declared but unpaid as of such liquidation, dissolution or winding up of the Company.

4.3.3.2 If, upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, and subject to payment to holders of Series B Preferred of the full preferential amount pursuant to Section 4.4.3.1, holders of Series B-1 Preferred of the full preferential amount pursuant to Section 4.5.3.1 and holders of Series C Preferred of the full preferential amount pursuant to Section 4.6.3.1, the assets to be distributed to the holders of Series A Preferred shall be insufficient to permit the payment of the full preferential amount pursuant to Section 4.3.3.1 of this Restated Certificate, then all of the then-remaining assets of the Company to be distributed shall be distributed ratably to the holders of Series A Preferred.

4.3.3.3 Upon the dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the assets of the Company available for distribution to shareholders after and in addition to the distribution of the preferential amounts pursuant to Sections 4.6.3.1, 4.5.3.1, 4.4.3.1 and 4.3.3.1 of this Restated Certificate, shall be distributed ratably to all holders of Common and Preferred on an “as-converted basis”.

4.3.3.4 For purposes of this Restated Certificate, including without limitation Sections 4.6.3, 4.5.3, 4.4.3 and 4.3.3, unless waived by the holders of at least 60% of the outstanding shares of Series C Preferred, each of the following events shall be treated as a liquidation, dissolution or winding up of the Company and shall entitle the holders of shares of all series of Preferred and Common to receive at the closing in cash, securities or other property (valued as provided in Sections 4.3.3.5, 4.4.3.5, 4.5.3.5 and 4.6.3.5) the amounts specified in Sections 4.3.3.1 through 4.3.3.5, 4.4.3.1 through 4.4.3.5, 4.5.3.1 through 4.5.3.5 and 4.6.3.1 through 4.6.3.5: (i) any acquisition of the Company by means of merger or other form of corporate reorganization in which outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a transaction resulting in ownership of more than 50% of the equity of the acquiring corporation by shareholders of the Company) or (ii) a sale of the voting control of the Company or (iii) a sale of all or substantially all of the assets of the Company. The sale of shares of Series C Preferred pursuant to the Series C Purchase Agreement shall not be treated as a liquidation, dissolution or winding up of the Company.

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4.3.3.5 Whenever the distribution provided for in this Section 4.3.3 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors.

4.3.4 Conversion.

4.3.4.1 Terms of Conversion.

4.3.4.1.1 Optional Conversion. The holder of each share of Series A Preferred shall have the right (the “Series A Conversion Right”), at such holder’s option, to convert such share at any time, without cost and otherwise on the terms of this Section 4.3.4, into the number of fully paid and non-assessable shares of Common that results from dividing:

(A) $1.00,

by:

(B) the Series A Conversion Price in effect at the time of conversion.

The “Series A Conversion Price” shall initially be $1.00 and shall be subject to adjustment from time to time as provided in this Section 4.3.4.

4.3.4.1.2 Mandatory Conversion. All of the outstanding Series A Preferred shall, without any further action by a holder thereof, convert into Common (a “Series A Mandatory Conversion”) upon the first to occur of the following (each a “Series A Mandatory Conversion Event”): (A) the Company’s Qualified Public Offering, (B) at such time as at least two-thirds of the aggregate number of shares of Series A Preferred issued prior to such time have been voluntarily converted into Common by the holders thereof, (C) at such time as is specified in a vote or written consent of the holders of a majority of the outstanding shares of Series A Preferred, or (D) at such time as is specified in a vote or written consent of the holders of at least 60% of the outstanding shares of Series C Preferred with respect to the conversion of all Preferred into Common. In each case each share of Series A Preferred shall be automatically converted, without cost, on the terms of this Section 4.3.4, into the number of shares of Common into which such share of Series A Preferred would be convertible under Section 4.3.4.1.1 immediately prior to such conversion. As used in this Restated Certificate, “Qualified Public Offering” means the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, covering the offer and sale of Common for the account of the Company to the public at a price per share of not less than three times the Series C Original Purchase Price (as adjusted for stock splits, dividends and the like) with aggregate proceeds to the Company of not less than $30,000,000 (before deduction of underwriters commissions and expenses).

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4.3.4.1.3 Pay to Play Conversion.

(a) Concurrently with the Initial Closing, each share of Series A Preferred outstanding at the time of the Initial Closing shall automatically convert into 0.01 share of Common except as expressly provided under this paragraph (a). Each share of Series A Preferred issued after the Initial Closing upon the exercise of a warrant outstanding at the time of the Initial Closing shall immediately upon issuance convert into 0.01 share of Common except as expressly provided under this paragraph (a). The foregoing conversion to Common shall not occur with respect to any share of Series A Preferred if the holder of such share of Series A Preferred or warrant to purchase Series A Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement. Following the conversion of such shares of Series A Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series A Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series A Preferred are converted pursuant to this Section 4.3.4.1.3(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Initial Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series A Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series A Preferred so converted pursuant to this Section 4.3.4.1.3(a), whether declared or not, shall be cancelled. In determining whether any holder of Series A Preferred has satisfied the criteria set forth in clause (i) of this Section 4.3.4.1.3(a), any purchases of Series C Preferred under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Pro Rata Share of such Related Party shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

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(b) If the Milestone Closing (as defined in the Series C Purchase, Agreement; hereafter, the “Milestone Closing”) occurs and a holder of Series A Preferred does not purchase the number of Milestone Shares (as defined in the Series C Purchase Agreement; hereafter, the “Milestone Shares”) allocated to such holder under the Series C Purchase Agreement, then concurrently with the Milestone Closing (i) each share of Series A Preferred issued to such holder pursuant to Section 4.3.2.4 shall automatically be redeemed pursuant to the terms of Section 4.5 of the Series C Purchase Agreement and (ii) each other share of Series A Preferred held by such holder, or held by such holder at the time of the initial Closing and subsequently transferred, shall automatically convert into 0.01 share of Common. Promptly following the Milestone Closing, the holder of shares so redeemed or converted shall surrender the certificates therefor at the office of the Company or any transfer agent for the Series A Preferred. In the case of converted shares, upon such surrender the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series A Preferred are redeemed or converted pursuant to this Section 4.3.4.1.3(b), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Milestone Closing, except only the right of the holder upon surrender of the certificates evidencing such converted shares to receive certificates evidencing the shares of Common issued upon such conversion. In determining whether any holder of Series A Preferred has purchased the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, any purchases of Milestone Shares under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Milestone Shares allocated to such Related Party under the Series C Purchase Agreement shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

(c) All shares of Common issued to any holder of Series A Preferred as a result of conversion pursuant to this Section 4.3.4.1.3 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

4.3.4.2 Mechanics of Conversion.

4.3.4.2.1 Optional Conversion. A holder of any share of Series A Preferred may exercise the Series A Conversion Right of such share by surrendering the certificate therefor, duly endorsed, at the office of the Company or of any transfer agent for the Series A Preferred, together with a written notice to the Company which states:

(A) that such holder elects to convert the same,

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(B) the number of shares of Series A Preferred being converted, and

(C) the name or names in which such holder wishes the certificate or certificates for shares of Common to be issued.

Thereupon the Company shall promptly issue and deliver to the holder of such shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder shall be entitled. If the certificate evidencing the shares of Series A Preferred being converted shall also evidence shares of Series A Preferred not being converted, then the Company shall also deliver to the holder of such certificate, or to the nominee or nominees of such holder, a new stock certificate evidencing the Series A Preferred not converted. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series A Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion.

4.3.4.2.2 Mandatory Conversion. The Company shall give written notice to each holder of a share of Series A Preferred (A) not more than forty (40) nor less than twenty (20) days before the anticipated effective date of the registration statement with respect to any Qualified Public Offering, and shall also give written notice to each such holder upon the occurrence of any Qualified Public Offering; and (B) upon the occurrence of any other Series A Mandatory Conversion Event. Following the conversion of such shares, each holder of shares so converted may surrender the certificate therefor at the office of the Company or any transfer agent for the Series A Preferred. Upon such surrender, the Company shall issue and deliver to each holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series A Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion.

4.3.4.3 Effective Date of Conversion.

4.3.4.3.1 Optional Conversion. The conversion of any shares of Series A Preferred shall be deemed to have been made immediately prior to the close of business on the date that the shares to be converted are surrendered to the Company together with the notice required by Section 4.3.4,2.1, and the person or persons entitled to receive the shares of Common issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common on such date.

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4.3.4.3.2 Mandatory Conversion. The conversion of shares of Series A Preferred shall take place upon the first to occur of the Series A Mandatory Conversion Events, whether or not the certificates representing such shares of Series A Preferred shall have been surrendered or new certificates representing the shares of Common into which such shares have been converted shall have been issued.

4.3.4.4 Adjustment of Conversion Price.

4.3.4.4.1 Subdivision or Combination of Shares. If the Company at any time subdivides or combines the outstanding Common after the Filing Date, the Series A Conversion Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportions as the Common is subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

4.3.4.4.2 Stock Dividends. If the Company at any time pays a dividend, or makes any other distribution, to holders of Common payable in shares of Common, or fixes a record date for the determination of holders of Common entitled to receive a dividend or other distribution payable in shares of Common, the Series A Conversion Price shall be decreased by multiplying it by a fraction:

(A) the numerator of which shall be the total number of shares of Common outstanding immediately prior to such dividend or distribution, and

(B) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution (plus, if the Company paid cash instead of fractional shares otherwise issuable in such dividend or distribution, the number of additional shares which would have been outstanding had the Company issued fractional shares instead of cash),

effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of receiving such dividend or distribution (or if no such record is taken, as of the effectiveness of such dividend or distribution).

4.3.4.4.3 Reclassification, Consolidation or Merger. If at any time, as a result of:

(A) a capital reorganization or reclassification (other than a subdivision, combination or dividend which gives rise to adjustment of the Series A Conversion Price pursuant to Sections 4.3.4.4.1 or 4.3.4.4.2), or

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(B) a merger or consolidation of the Company with another corporation (whether or not the Company is the surviving corporation),

the Common issuable upon the conversion of the Series A Preferred shall be changed into or exchanged for the same or a different number of shares of any class or classes of stock of the Company or any other corporation, or other securities convertible into such shares, then, as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of the Series A Preferred (or of any securities into which the Series A Preferred is changed or for which the Series A Preferred is exchanged), so that:

(X) the holders of Series A Preferred or of such substitute securities shall thereafter be entitled to receive, upon conversion of the Series A Preferred or of such substitute securities, the kind and amount of shares of stock, other securities, money and property which such holders would have received at the time of such capital reorganization, reclassification, merger, or consolidation, if such holders had converted their Series A Preferred into Common immediately prior to such capital reorganization, reclassification, merger, or consolidation, and

(Y) the Series A Preferred or such substitute securities shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments theretofore provided in this Section 4.3.4.4.

The provisions of this Section 4.3.4.4.3 shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

4.3.4.4.4 Additional Shares of Common.

(A) As used in this Restated Certificate, the term “Additional Shares of Common” means all shares of Common issued by the Company, or deemed to be issued pursuant to Section 4.3.4.4.5, after the Filing Date, whether or not subsequently reacquired or retired by the Company, other than:

(1) shares of Common issued in transactions giving rise to adjustments under Sections 4.3.4.4.1, 4.3.4.4.2, 4.3.4.4.3, 4.4.4.4.1, 4.4.4.4.2, 4.4.4.4.3, 4.5.4.4.1, 4.5.4.4.2, 4.5.4.4.3, 4.6.4.4.1, 4.6.4.4.2 or 4.6.4.4.3

(2) shares of Common issued upon conversion of shares of Series A Preferred, Series B Preferred, Series B-1 Preferred or Series C Preferred,

(3) up to 36,833,374 shares of Common issued upon the exercise of any options granted to employees or directors of, or consultants to, the Company as compensation for services rendered to the Company pursuant to one or more option plans approved by the affirmative vote or written consent of the Board of Directors, (such amount to be adjusted proportionately in the event shares of Common are subdivided into a greater number or combined into a lesser number),

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(4) shares of Series A Preferred, Series B Preferred, or Series B-1 Preferred issued pursuant to Section 4.3.2.4, 4.4.2.4 or 4.5.2.4, (and the shares of Common issued upon the conversion thereof),

(5) up to 118,601,031 shares of Series C Preferred issued pursuant to the Series C Purchase Agreement,

(6) up to 54,469 shares of Common and 2,694,594 shares of Series B Preferred issued upon the exercise of warrants described in the Disclosure Schedule to the Series C Purchase Agreement (such amounts to be adjusted proportionately in the event shares of Common are subdivided in to a greater number or combined into a lesser number),

(7) securities issuable to The Rockefeller University, Baylor Research Institute, Friedrich Alexander Universitat Erlangen or their respective affiliates as milestone payments in connection

with FDA or similar filings relating to products utilizing intellectual property licensed from any such person by the Company, so long as such issuance is approved by the Company’s Board of Directors, which approval shall include the approval of at least four directors designated pursuant to Sections 9.1.1 through 9.1.6 of the Third Amended and Restated Stockholders’ Agreement by and among the Company and the other parties thereto dated on or about the Filing Date,

(8) up to 1,679,073 shares of Series B Preferred and up to 2,610,433 shares of Series C Preferred, each issued as consideration for the exchange of shares of DC Bio Corp. pursuant to that certain Amended and Restated Put Agreement, by and among the Company, DC Bio Corp., and the other parties thereto dated on or about the Filing Date.

(B) If at any time the Company issues (or is deemed by the express provisions of Section 4.3.4.4.5 to have issued or sold) Additional Shares of Common without consideration or for a consideration per share less than the lower of (i) the Series A Conversion Price in effect at such issuance or (ii) the Series C Conversion Price in effect at such issuance, then the Series A Conversion Price shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) equal to the price determined by multiplying the Series A Conversion Price by a fraction:

(1) the numerator of which shall be the number of shares of Common Outstanding immediately prior to the issuance of such Additional Shares of Common plus the number of shares of Common which the aggregate consideration received (or by the express provisions hereof deemed to have been received) by the Company for the total number of such Additional Shares of Common so issued would purchase at the Series A Conversion Price, and

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(2) the denominator of which shall be the number of shares of Common Outstanding immediately after the issuance of such Additional Shares of Common;

provided, however, that in no event shall the Series A Conversion Price be reduced below $.01.

(C) The term “Common Outstanding” shall include all Common issued and outstanding and issuable upon exercise or conversion of all outstanding Convertible Securities. In the case of Convertible Securities which are, by their terms, convertible into securities that have not yet been authorized or designated or which are convertible into, or exercisable for, securities at a conversion rate or exercise price (or into or for a corresponding number of shares of Common) which may not be determined at the time of the determination under Section 4.3.4.4.4(B), such Convertible Securities shall be deemed to be converted or exercised based upon a rate or price (and for a number of shares of Common) reflecting: (i) if such Convertible Securities have a provision which contains a price or rate which is fixed or can be fixed as of the date of the determination under Section 4.3.4.4.4(B), then such price or rate or (ii) otherwise, at the price of securities issued in the Company’s most recent equity financing.

4.3.4.4.5 Convertible Securities.

(A) As used in this Restated Certificate, the term “Convertible Securities” means all rights or options for the purchase of, or stock or other securities convertible Into or exchangeable for, Additional Shares of Common or other Convertible Securities.

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(B) For the purpose of the adjustment required under Section 4.3.4.4.4 with respect to Series A Preferred, Section 4.4.4.4.4 with respect to Series B Preferred, Section 4.5.4.4.4 with respect to Series B-1 Preferred or Section 4.6.4.4.4 with respect to Series C Preferred, if at any time or from time to time after the first date of issuance of any Series A Preferred, Series B Preferred, Series B-1 Preferred or Series C Preferred, as applicable, the Company issues or sells Convertible Securities (other than options or rights exercisable for or convertible into shares of Common referred to in clauses (3), (6) and (8) of the definition of Additional Shares of Common Stock), then in each case the Company shall be deemed to have issued at the time of the issuance of such Convertible Securities the maximum number of Additional Shares of Common Stock (as set forth in the instruments relating thereto, giving effect to any provision contained therein for a subsequent upward adjustment of such number) issuable upon exercise or conversion thereof and to have received as consideration therefor an amount equal to the total amount of the consideration, if any, received by the Company for the issuance of such Convertible Securities plus the minimum amounts of consideration, if any (as set forth in the instruments relating thereto, giving effect to any provision contained therein for a subsequent downward adjustment of such consideration), payable to the Company upon the exercise or conversion of such Convertible Securities and the minimum amounts of consideration, if any, payable to the Company (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities which were deemed to have been received by the Company on issuance of such Convertible Securities) upon the exercise of any Convertible Securities issuable upon the exercise or conversion of such Convertible Securities. No further adjustment of the Conversion Price for Series A Preferred, Series B Preferred, Series B-1 Preferred or Series C Preferred, as applicable, adjusted upon the issuance of such Convertible Securities, shall be made as a result of the actual issuance of Additional Shares of Common Stock on the exercise or the conversion of any such Convertible Securities; provided, however, that if the Convertible Securities or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, or are exercised for a lesser number of Additional Shares of Common Stock or with a greater consideration paid to the Company than was previously deemed to be issued or received by the Company, the Conversion Price for Series A Preferred, Series B Preferred, Series B-1 Preferred or Series C Preferred, as applicable, adjusted upon the issuance of such Convertible Securities shall be readjusted to the Conversion Price for Series A Preferred, Series B Preferred, Series B-1 Preferred or Series C Preferred, as applicable, which would have been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued were the Additional Shares of Common Stock, if any, actually issued or sold on the exercise or conversion of such Convertible Securities, and such Additional Shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise, plus the consideration, if any, actually received by the Company for the granting of all such Convertible Securities constituting warrants or options, whether or not exercised, plus the consideration received for issuing or selling the Convertible Securities actually converted plus the consideration, if any, actually received by the Company (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities which were deemed to have been received by the Company on issuance of such Convertible Securities) on the conversion of such Convertible Securities.

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4.3.4.4.6 Valuation of Consideration. For purposes of the operation of Sections 4.3.4.4.4, 4.3.4.4.5, 4.4.4.4.4, 4.4.4.4.5, 4.5.4.4.4, 4.5.4.4.5, 4.6.4.4.4 and 4.6.4.4.5, the consideration received by the Company for any issue or sale of securities shall:

(A) to the extent it consists of cash, be computed as the aggregate amount of cash received by the Company;

(B) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board of Directors of the Company; and

(C) if Additional Shares of Common or Convertible Securities are issued or sold together with other stock or securities or other assets of the Company for a consideration that covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors of the Company to be allocable to such Additional Shares of Common or Convertible Securities.

4.3.4.4.7 Liquidating Dividends. Subject to the preferential rights of holders of Series B Preferred pursuant to the provisions of Section 4.4.4.4.7, holders of Series B-1 Preferred pursuant to the provisions of Section 4.5.4.4.7 and holders of Series C Preferred pursuant to the provisions of Section 4.6.4.4.7, if the Company, at any time while any of the Series A Preferred is outstanding, shall make a distribution of its assets to the holders of its Common as a dividend in liquidation or partial liquidation or by way of return of capital or other than as a dividend payable out of funds legally available for dividends under the laws of the State of Delaware, the holders of the Series A Preferred shall be entitled to receive, without payment of any consideration therefor, the assets that would have been payable to them as owners of that number of shares of Common receivable by exercise of such Series A Conversion Rights, had they been the holders of record of such Common on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the preferential provisions of Section 4.3.3 of this Restated Certificate.

4.3.4.5 Reservation of Shares. The Company will take such corporate action as may be necessary from time to time so that at all times it will have authorized, and reserved out of its authorized but unissued Common for the sole purpose of issuance upon conversion of shares of Series A Preferred, a sufficient number of shares of Common to permit the conversion in full of all outstanding shares of Series A Preferred.

4.3.4.6 Full Consideration. All shares of Common which shall be issued upon the conversion of any Series A Preferred will, upon issuance, be fully paid and non- assessable. The Company will pay such amounts and will take such other action as may be necessary from time to time so that all shares of Common which shall be issued upon the exercise of the Series A Conversion Right of any Series A Preferred will, upon issuance and without cost to the recipient, be free from all preemptive rights, taxes, liens and charges with respect to the issue thereof.

4.3.4.7 Notice of Adjustment Events. Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under Section 4.3.4.4, the Company shall mail to each holder of Series A Preferred, at least 20 days prior to the record date with respect to such event or, if no record date shall be established, at least 20 days prior to such event, a notice specifying (i) the nature of the contemplated event, and (ii) the date on which any such record is to be taken for the purpose of such event, and (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Common (or other securities) shall be entitled to exchange their shares of Common (or other securities) for securities or other property deliverable in connection with such event.

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4.3.4.8 Notice of Adjustments. Whenever the Series A Conversion Price or the kind of securities issuable upon the conversion of Series A Preferred, or both, shall be adjusted pursuant to Section 4.3.4.4, the Company shall mail to each holder of Series A Preferred, by first class mail postage prepaid, promptly after each adjustment, a certificate signed by its President or a Vice President and by its Chief Financial Officer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company made any determination hereunder), and the Series A Conversion Price and the kind of securities issuable upon the conversion of Series A Preferred after giving effect to such adjustment.

4.3.5 Redemption.

4.3.5.1 For purposes of this Restated Certificate, the “Redemption Trigger Date” means the fifth anniversary of the Initial Closing.

4.3.5.2 No share of Series A Preferred shall be redeemed under the provisions of this Section 4.3.5 if there are shares of Series B Preferred, Series B-1 Preferred or Series C Preferred outstanding at such time unless funds required to satisfy the Series B Redemption Price, Series B-1 Redemption Price and Series C Redemption Price of all such shares of Series B Preferred, Series B-1 Preferred and Series C Preferred have been set apart by the Company for payment as described in Sections 4.4.5.6, 4.5.5.6 and 4.6.5.5.

4.3.5.3 Subject to the limitation set forth in Section 4.3.5.2, at any time on or after the Redemption Trigger Date, the holders of at least 60% of the outstanding Series A Preferred shall have the right to elect to require the Company to redeem all outstanding shares of Series A Preferred. Within not more than fifteen (15) business days after receipt of written notice of such election (“Series A Redemption Election”), the Company will provide a written notice (“Series A Redemption Notice”) advising each holder of Series A Preferred of the proposed redemption in the form required under Section 4.3.5.3.1. The Board of Directors shall establish the date on which the Series A Preferred will be redeemed (“Series A Redemption Date”), which date will be not less than thirty (30) nor more than ninety (90) days after the date the Company receives the Series A Redemption Election. On the Series A Redemption Date, the Company will redeem for cash, out of funds legally available for such purpose, all shares of Series A Preferred at a price per share equal to the Series A Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series A Preferred are subdivided into a greater number or combined into a lesser number) plus all declared but unpaid dividends on such shares (the “Series A Redemption Price”).

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4.3.5.3.1 The Series A Redemption Notice shall state:

(a) that the holders of at least 60% of the outstanding Series A Preferred have elected to require the Company to redeem all outstanding shares of Series A Preferred,

(b) the amount of funds legally available for such redemption and the maximum number of shares of Series A Preferred the Company can redeem,

(c) the Series A Redemption Date, and

(d) that each holder is to surrender to the Company in the manner designated at the Company’s principal place of business, its certificate or certificates representing the shares of Series A Preferred to be redeemed.

4.3.5.4 Each holder of shares of Series A Preferred being redeemed shall surrender the certificate or certificates representing such shares to the Company, at the Company’s principal place of business. Upon such surrender (but not earlier than the Series A Redemption Date) the Series A Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be cancelled

and retired. If a certificate is surrendered and all the shares evidenced thereby cannot be redeemed, the Company shall cause certificates evidencing the shares not being redeemed to be issued in the name of the registered owner of such shares and to be delivered to such person.

4.3.5.5 If the Series A Redemption Price is either paid or made available for payment through the deposit arrangement specified in Section 4.3.5.6 with respect to any shares of Series A Preferred, then notwithstanding that the certificates evidencing any of the shares to be redeemed shall not have been surrendered, all rights with respect to such shares shall terminate as of the Series A Redemption Date, except only the right of the holder to receive the Series A Redemption Price upon surrender of the certificate evidencing such shares.

4.3.5.6 Subject to Section 4.3.5.2, within 10 business days of the Company’s receipt of the Series A Redemption Election, the Company shall deposit with any bank or trust company having a capital and surplus of at least $50,000,000 as a trust fund, a sum equal to the aggregate Series A Redemption Price of all outstanding shares of Series A Preferred with irrevocable instructions and authority to the bank or trust company to pay, on or after the Series A Redemption Date, the Series A Redemption Price to the respective holders of Series A Preferred upon the surrender of their share certificates. From and after the date of such deposit, the shares so called for redemption shall be redeemed. The deposit shall constitute full payment of the shares to their holders, and from and after the Series A Redemption Date, the shares shall be deemed to be no longer outstanding, and the holders thereof shall cease to be shareholders with respect thereto and shall have no rights with respect thereto except the rights to receive from the bank or trust company payment of the Series A Redemption Price of the shares, without interest, upon surrender of their certificates therefor (and a certificate for those shares, if any, evidenced by such certificates which are not being redeemed on such Series A Redemption Date). Any funds so deposited and unclaimed at the end of one year from such Series A Redemption Date shall be released or repaid to the Company, after which the former holders of the shares called for redemption shall be entitled to receive payment of the Series A Redemption Price with respect to such shares only from the Company.

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4.3.5.7 Subject to Section 4.3.5.2 hereof, if the funds of the Company legally available therefor shall be insufficient to discharge the Series A Preferred redemption requirement in full, funds to the extent legally available for such purpose shall be set aside upon the Company’s receipt of a Series A Redemption Election in accordance with Section 4.3.5.6. The maximum number of full shares of Series A Preferred that can be redeemed with such funds shall be redeemed from the holders of shares of Series A Preferred as of the date of such Series A Redemption Election ratably in accordance with the full amounts otherwise payable to them. Thereafter, the Company shall redeem shares of Series A Preferred ratably from the holders thereof as funds legally available therefor become available.

4.3.5.8 Nothing in this Section 4.3.5 shall prevent any holder of shares of Series A Preferred from exercising the Series A Conversion Right of such shares at any time prior to the actual redemption of such shares.

4.3.6 No Reissuance of Series A Preferred. No share or shares of Series A Preferred acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Company shall be authorized to issue.

4.4 Powers and Qualifications of Series B Preferred Stock. The powers, preferences and rights, and the qualifications, restrictions or limitations, of the Series B Preferred are as follows:

4.4.1 Voting Rights. Except as otherwise required by law or expressly provided in this Restated Certificate, each share of Series B Preferred (including any fractional share) shall entitle the holder thereof to vote on each matter submitted to a vote of the shareholders of the Company and to have the number of votes equal to the number (including any fraction) of shares of Common into which such share of Series B Preferred is then convertible pursuant to the provisions hereof at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders becomes effective. Except as otherwise required by law or expressly provided in this Restated Certificate, the holders of shares of Common and Preferred of all classes shall vote together and not as separate classes or series.

4.4.2 Dividends.

4.4.2.1 Subject to the rights of holders of Series C Preferred pursuant to the provisions of Section 4.6.2, the holders of the Series B Preferred shall be entitled to receive dividends at the rate of 8% of the Series B Original Purchase Price (as hereafter defined) (such amount to be adjusted proportionately in the event the shares of Series B Preferred are subdivided into a greater number or combined into a lesser number) per annum, payable out of funds legally available therefor. Such dividends shall be (i) payable only when, as and if declared by the Board of Directors, (ii) non-cumulative and (iii) pari passu with dividends payable to the holders of the Series B-1 Preferred pursuant to Section 4.5.2.1. The “Series B Original Purchase Price” shall be $1.76.

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4.4.2.2 No dividends (other than those payable on Common solely in shares of Common) shall be paid on any shares of Series A Preferred or Common during any fiscal year of the Company until dividends in the total amount determined in accordance with Section 4.4.2.1 (adjusted in accordance therewith, if applicable) on the Series B Preferred shall have been paid or declared and set apart during that fiscal year, and no dividends (other than those payable on Common solely in shares of Common) shall be paid on any share of Series B-1 Preferred, Series A Preferred or Common, unless a dividend is paid with respect to all outstanding shares of Series B Preferred in an amount for each such share of Series B Preferred equal to or greater than the aggregate amount of such dividends for all shares of Common into which each such share of Series B Preferred could then be converted (assuming, for the purposes of calculating the amount of dividends to be paid under this section, in the case of dividends declared on shares of Series B-1 Preferred or Series A Preferred, that such shares of Series B-1 Preferred or Series A Preferred, as applicable, had been converted into shares of Common and such dividends had been declared on the shares of Common issued upon conversion thereof).

4.4.2.3 In the event any dividend or other distribution payable in cash or other property (other than securities of the Company the issuance of which gives rise to adjustments pursuant to Section 4.4.4.4 of this Restated Certificate) is declared on any Common, each holder of shares of Series B Preferred on the record date for such dividend or distribution shall be entitled to receive, pari passu with the dividends payable to the holders of Series B-1 Preferred pursuant to Section 4.5.2.3, in addition to any dividend under 4.4.2.1, on the date of payment or distribution of such dividend or other distribution the same cash or other property which such holder would have received on such record date if such holder were the holder of record of the number (including any fraction) of shares of Common into which the shares of Series B Preferred then held by such holder are then convertible.

4.4.2.4 In the event a holder of Series B Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement, then at the Initial Closing such holder shall be issued a number of additional shares of Series B Preferred equal to the greatest whole number obtained by dividing the aggregate amount of the dividends that have accrued on such holder’s shares of Series B Preferred through January 31, 2008 under the Old Restated Certificate but have not been paid, whether or not declared, by the Series B Original Purchase Price. All other dividends that have accrued on such holder’s shares of Series B Preferred through the Effective Time under the Old Restated Certificate but have not been paid shall be cancelled. In determining whether any holder of Series B Preferred has satisfied the criteria set forth in clause (i) of this Section 4.4.2.4, any purchases of Series C Preferred under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Pro Rata Share of such Related Party shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

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4.4.3 Liquidation Rights.

4.4.3.1 Subject to the rights of holders of Series C Preferred pursuant to the provisions of Section 4.6.3, if the Company shall be voluntarily or involuntarily liquidated, dissolved or wound up, the holder of each share of Series B Preferred then outstanding (including any fractional shares) shall be entitled to receive out of the assets of the Company available for distribution to shareholders, pari passu with the distribution payable to the holders of Series B-1 Preferred pursuant to Section 4.5.3.1, and before any payment or declaration and setting apart for payment of any amount shall be made with respect to the Series A Preferred or Common, an amount equal to (i) 100% of the Series B Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series B Preferred are subdivided into a greater number or combined into a lesser number), plus (ii) an amount equal to any dividends on such share which are declared but unpaid as of such liquidation, dissolution or winding up of the Company.

4.4.3.2 If, upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, and subject to payment to holders of Series C Preferred of the full preferential amount pursuant to Section 4.6.3.1, the assets to be distributed to the holders of Series B Preferred and the holders of Series B-1 Preferred shall be insufficient to permit the payment of the full preferential amount pursuant to Sections 4.4.3.1 and 4.5.3.1 of this Restated Certificate, then all of the then-remaining assets of the Company to be distributed shall be distributed ratably to the holders of Series B Preferred and Series B-1 Preferred, based upon the amounts which would otherwise payable to such holders pursuant to Section 4.4.3.1 or 4.5.3.1, as the case may be.

4.4.3.3 Upon the dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the assets of the Company available for distribution to shareholders after and in addition to the distribution of the preferential amounts pursuant to Sections 4.6.3.1, 4.5.3.1, 4.4.3.1 and 4.3.3.1 of this Restated Certificate, shall be distributed ratably to all holders of Common and Preferred on an “as-converted basis”.

4.4.3.4 For purposes of this Restated Certificate, including without limitation Sections 4.6.3, 4.5.3, 4.4.3 and 4.3.3, unless waived by the holders of at least 60% of the outstanding shares of Series C Preferred, each of the following events shall be treated as a liquidation, dissolution or winding up of the Company and shall entitle the holders of shares of all series of Preferred and Common to receive at the closing in cash, securities or other property (valued as provided in Sections 4.3.3.5, 4.4.3.5, 4.5.3.5 and 4.6.3.5) the amounts specified in Sections 4.3.3.1 through 4.3.3.5, 4.4.3.1 through 4.4.3.5, 4.5.3.1 through 4.5.3.5 and 4.6.3.1 through 4.6.3.5: (i) any acquisition of the Company by means of merger or other form of corporate reorganization in which outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a transaction resulting in ownership of more than 50% of the equity of the acquiring corporation by shareholders of the Company) or (ii) a sale of the voting control of the Company or (iii) a sale of all or substantially all of the assets of the Company. The sale of shares of Series C Preferred pursuant to the Series C Purchase Agreement shall not be treated as a liquidation, dissolution or winding up of the Company.

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4.4.3.5 Whenever the distribution provided for in this Section 4.4.3 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors.

4.4.4 Conversion.

4.4.4.1 Terms of Conversion.

4.4.4.1.1 Optional Conversion. The holder of each share of Series B Preferred shall have the right (the “Series B Conversion Right”), at such holder’s option, to convert such share at any time, without cost and otherwise on the terms of this Section 4.4.4, into the number of fully paid and non-assessable shares of Common that results from dividing:

(A) $1.76,

by:

(B) the Series B Conversion Price in effect at the time of conversion.

The “Series B Conversion Price” shall initially be $1.00 and shall be subject to adjustment from time to time as provided in this Section 4.4.4.

4.4.4.1.2 Mandatory Conversion. All of the outstanding Series B Preferred shall, without any further action by a holder thereof, convert into Common (a “Series B Mandatory Conversion”) upon the first to occur of the following (each a “Series B Mandatory Conversion Event”): (A) the Company’s Qualified Public Offering, (B) at such time as at least two-thirds of the aggregate number of shares of Series B Preferred and Series B-1 Preferred, collectively, issued prior to such time have been voluntarily converted into Common by the holders thereof, (C) at such time as is specified in a vote or written consent of the holders of at least a majority of the outstanding shares of Series B Preferred and Series B-1 Preferred, voting together as a single class on an as-converted basis, or (D) at such time as is specified in a vote or written consent of the holders of at least 60% of the outstanding shares of Series C Preferred with respect to the conversion of all Preferred into Common. In each case each share of Series B Preferred shall be automatically converted, without cost, on the terms of this Section 4.4.4, into the number of shares of Common into which such share of Series B Preferred would be convertible under Section 4.4.4.1.1 immediately prior to such conversion.

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4.4.4.1.3 Pay to Play Conversion.

(a) Concurrently with the Initial Closing, each share of Series B Preferred outstanding at the time of the Initial Closing shall automatically convert into 0.01 share of Common except as expressly provided under this paragraph (a). Each share of Series B Preferred issued after the Initial Closing upon the exercise of a warrant outstanding at the time of the Initial Closing shall immediately upon issuance convert into 0.01 share of Common except as expressly provided under this paragraph (a). The foregoing conversion to Common shall not occur with respect to any share of Series B Preferred if the holder of such share of Series B Preferred or warrant to purchase Series B Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement Following the conversion of such shares of Series B Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series B Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series B Preferred are converted pursuant to this Section 4.4.4.1.3(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Initial Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series B Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series B Preferred so converted pursuant to this Section 4.4.4.1.3(a), whether declared or not, shall be cancelled. In determining whether any holder of Series B Preferred has satisfied the criteria set forth in clause (i) of this Section 4.4.4.1.3(a), any purchases of Series C Preferred under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Pro Rata Share of such Related Party shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

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(b) If the Milestone Closing occurs and a holder of Series B Preferred does not purchase the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, then concurrently with the Milestone Closing, (i) each share of Series B Preferred issued to such holder pursuant to Section 4.4.2.4 shall automatically be redeemed pursuant to the terms of Section 4.5 of the Series C Purchase Agreement and (ii) each other share of Series B Preferred held by such holder, or held by such holder at the time of the Initial Closing and subsequently transferred, shall automatically convert into 0.01 share of Common. Promptly following the Milestone Closing, the holder of shares so redeemed or converted shall surrender the certificates therefor at the office of the Company or any transfer agent for the Series B Preferred. In the case of converted shares, upon such surrender the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series B Preferred are redeemed or converted pursuant to this Section 4.4.4.1.3(b), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Milestone Closing, except only the right of the holder upon surrender of the certificates evidencing such converted shares to receive certificates evidencing the shares of Common issued upon such conversion. In determining whether any holder of Series B Preferred has purchased the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, any purchases of Milestone Shares under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Milestone Shares allocated to such Related Party under the Series C Purchase Agreement shall, to the. extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

(c) All shares of Common issued to any holder of Series B Preferred as a result of conversion pursuant to this Section 4.4.4.1.3 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

4.4.4.2 Mechanics of Conversion.

4.4.4.2.1 Optional Conversion. A holder of any share of Series B Preferred may exercise the Series B Conversion Right of such share by surrendering the certificate therefor, duly endorsed, at the office of the Company or of any transfer agent for the Series B Preferred, together with a written notice to the Company which states:

(A) that such holder elects to convert the same,

(B) the number of shares of Series B Preferred being converted, and

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(C) the name or names in which such holder wishes the certificate or certificates for shares of Common to be issued.

Thereupon the Company shall promptly issue and deliver to the holder of such shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder shall be entitled. If the certificate evidencing the shares of Series B Preferred being converted shall also evidence shares of Series B Preferred not being converted, then the Company shall also deliver to the holder of such certificate, or to the nominee or nominees of such holder, a new stock certificate evidencing the Series B Preferred not converted. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series B Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion, pari passu with the payment of such dividends or distributions payable pursuant to Section 4.5.4.2.1.

4.4.4.2.2 Mandatory Conversion. The Company shall give written notice to each holder of a share of Series B Preferred (A) not more than forty (40) nor less than twenty (20) days before the anticipated effective date of the registration statement with respect to any Qualified Public Offering, and shall also give written notice to each such holder upon the occurrence of any Qualified Public Offering; and (B) upon the occurrence of any other Series B Mandatory Conversion Event. Following the conversion of such shares, each holder of shares so converted may surrender the certificate therefor at the office of the Company or any transfer agent for the Series B Preferred. Upon such surrender, the Company shall issue and deliver to each holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series B Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion, pari passu with the payment of such dividends or distributions payable pursuant to Section 4.5.4.2.2.

4.4.4.3 Effective Date of Conversion.

4.4.4.3.1 Optional Conversion. The conversion of any shares of Series B Preferred shall be deemed to have been made immediately prior to the close of business on the date that the shares to be converted are surrendered to the Company together with the notice required by Section 4.4.4.2.1, and the person or persons entitled to receive the shares of Common issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common on such date.

4.4.4.3.2 Mandatory Conversion. The conversion of shares of Series B Preferred shall take place upon the first to occur of the Series B Mandatory Conversion Events, whether or not the certificates representing such shares of Series B Preferred shall have been surrendered, or new certificates representing the shares of Common into which such shares have been converted shall have been issued.

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4.4.4.4 Adjustment of Conversion Price.

4.4.4.4.1 Subdivision or Combination of Shares. If the Company at any time subdivides or combines the outstanding Common after the Filing Date, the Series B Conversion Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportions as the Common is subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

4.4.4.4.2 Stock Dividends. If the Company at any time pays a dividend, or makes any other distribution, to holders of Common payable in shares of Common, or fixes a record date for the determination of holders of Common entitled to receive a dividend or other distribution payable in shares of Common, the Series B Conversion Price shall be decreased by multiplying it by a fraction:

(A) the numerator of which shall be the total number of shares of Common outstanding, immediately prior to such dividend or distribution, and

(B) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution (plus, if the Company paid cash instead of fractional shares otherwise issuable in such dividend or distribution, the number of additional shares which would have been outstanding had the Company issued fractional shares instead of cash),

effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of receiving such dividend or distribution (or if no such record is taken, as of the effectiveness of such dividend or distribution).

4.4.4.4.3 Reclassification, Consolidation or Merger. If at any time, as a result of:

(A) a capital reorganization or reclassification (other than a subdivision, combination or dividend which gives rise to adjustment of the Series B Conversion Price pursuant to Sections 4.4.4.4.1 or 4.4.4.4.2), or

(B) a merger or consolidation of the Company with another corporation (whether or not the Company is the surviving corporation),

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the Common issuable upon the conversion of the Series B Preferred shall be changed into or exchanged for the same or a different number of shares of any class or classes of stock of the Company or any other corporation, or other securities convertible into such shares, then, as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of the Series B Preferred (or of any securities into which the Series B Preferred is changed or for which the Series B Preferred is exchanged), so that:

(X) the holders of Series B Preferred or of such substitute securities shall thereafter be entitled to receive, upon conversion of the Series B Preferred or of such substitute securities, the kind and amount of shares of stock, other securities, money and property which such holders would have received at the time of such capital reorganization, reclassification, merger, or consolidation, if such holders had converted their Series B Preferred into Common immediately prior to such capital reorganization, reclassification, merger, or consolidation, and

(Y) the Series B Preferred or such substitute securities shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments theretofore provided in Section 4.4.4.4.

The provisions of this Section 4.4.4.4.3 shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

4.4.4.4.4 Additional Shares of Common. If at any time the Company issues (or is deemed by the express provisions of Section 4.3.4.4.5 to have issued or sold) Additional Shares of Common without consideration or for a consideration per share less than the lower of (i) the Series B Conversion Price in effect at such issuance or (ii) the Series C Conversion Price in effect at such issuance, then the Series B Conversion Price shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) equal to the price determined by multiplying the Series B Conversion Price by a fraction:

(A) the numerator of which shall be the number of shares of Common Outstanding immediately prior to the issuance of such Additional Shares of Common plus the number of shares of Common which the aggregate consideration received (or by the express provisions hereof deemed to have been received) by the Company for the total number of such Additional Shares of Common so issued would purchase at the Series B Conversion Price, and

(B) the denominator of which shall be the number of shares of Common Outstanding immediately after the issuance of such Additional Shares of Common;

provided, however, that in no event shall the Series B Conversion Price be reduced below $.01.

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4.4.4.4.5 Convertible Securities. For purposes of the adjustment required under Section 4.4.4.4.4, Convertible Securities shall be treated as described in Section 4.3.4.4.5.

4.4.4.4.6 Valuation of Consideration. The value of consideration received by the Company for any issue or sale of securities shall be determined as set forth in Section 4.3.4.4.6.

4.4.4.4.7 Liquidating Dividends. Subject to the preferential rights of holders of Series C Preferred pursuant to the provisions of Section 4.6.4.4.7, if the Company, at any time while any of the Series B Preferred is outstanding, shall make a distribution of its assets to the holders of its Common as a dividend in liquidation or partial liquidation or by way of return of capital or other than as a dividend payable out of funds legally available for dividends under the laws of the State of Delaware, the holders of the Series B Preferred shall be entitled to receive, without payment of any consideration therefor, the assets that would have been payable to them as owners of that number of shares of Common receivable by exercise of such Series B Conversion Rights, had they been the holders of record of such Common on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the preferential provisions of Section 4.4.3 of this Restated Certificate.

4.4.4.5 Reservation of Shares. The Company will take such corporate action as may be necessary from time to time so that at all times it will have authorized, and reserved out of its authorized but unissued Common for the sole purpose of issuance upon conversion of shares of Series B Preferred, a sufficient number of shares of Common to permit the conversion in full of all outstanding shares of Series B Preferred.

4.4.4.6 Full Consideration. All shares of Common which shall be issued upon the conversion of any Series B Preferred will, upon issuance, be fully paid and non- assessable. The Company will pay such amounts and will take such other action as may be necessary from time to time so that all shares of Common which shall be issued upon the exercise of the Series B Conversion Right of any Series B Preferred will, upon issuance and without cost to the recipient, be free from all preemptive rights, taxes, liens and charges with respect to the issue thereof.

4.4.4.7 Notice of Adjustment Events. Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under Section 4.4.4.4, the Company shall mail to each holder of Series B Preferred, at least 20 days prior to the record date with respect to such event or, if no record date shall be established, at least 20 days prior to such event, a notice specifying (i) the nature of the contemplated event, and (ii) the date on which any such record is to be taken for the purpose of such event, and (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Common (or other securities) shall be entitled to exchange their shares of Common (or other securities) for securities or other property deliverable in connection with such event.

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4.4.4.8 Notice of Adjustments. Whenever the Series B Conversion Price or the kind of securities issuable upon the conversion of Series B Preferred, or both, shall be adjusted pursuant to Section 4.4.4.4, the Company shall mail to each holder of Series B Preferred, by first class mail postage prepaid, promptly after each adjustment, a certificate signed by its President or a Vice President and by its Chief Financial Officer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company made any determination hereunder), and the Series B Conversion Price and the kind of securities issuable upon the conversion of Series B Preferred after giving effect to such adjustment.

4.4.5 Redemption.

4.4.5.1 “Redemption Trigger Date” has the meaning ascribed thereto in Section 4.3.5.1 above.

4.4.5.2 No share of Series B Preferred or Series B-1 Preferred shall be redeemed under the provisions of this Section 4.4.5 or of Section 4.5.5 if there are shares of Series C Preferred outstanding at such time unless funds required to satisfy the Series C Redemption Price of all such shares of Series C Preferred have been set apart by the Company for payment as described in Sections 4.6.5.5.

4.4.5.3 Subject to the limitation set forth in Section 4.4.5.2, at any time on or after the Redemption Trigger Date, the holders of at least 60% of the outstanding Series B Preferred and Series B-1 Preferred, voting together as a single class on an as- converted basis, shall have the right to elect to require the Company to redeem all outstanding shares of Series B Preferred and Series B-1 Preferred. Within not more than fifteen (15) business days after receipt of written notice of such election (“Series B/B-1 Redemption Election”), the Company will provide a written notice (“Series B/B-1 Redemption Notice”) advising each holder of Series B Preferred and/or Series B-1 Preferred of the proposed redemption in the form required under Section 4.4.5.3.1. The Board of Directors shall establish the date on which the Series B Preferred and Series B-1 Preferred will be redeemed (“Series B/B-1 Redemption Date”), which date will be not less than thirty (30) nor more than ninety (90) days after the date the Company receives the Series B/B-1 Redemption Election. On the Series B/B-1 Redemption Date, the Company will redeem for cash, out of funds legally available for such purpose, all shares of Series B Preferred at a price per share equal to the Series B Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series B Preferred are subdivided into a greater number or combined into a lesser number) plus all declared but unpaid dividends on such shares (the “Series B Redemption Price”) and all shares of Series B-1 Preferred at a price per share equal to the Series B-1 Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series B-1 Preferred are subdivided into a greater number or combined into a lesser number) plus all declared but unpaid dividends on such shares (the “Series B-1 Redemption Price”)

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4.4.5.3.1 The Series B/B-1 Redemption Notice shall state:

(a) that the holders of at least 60% of the outstanding Series B Preferred and Series B-1 Preferred, voting together as a single class on an as- converted basis, have elected to require the Company to redeem all outstanding shares of Series B Preferred and Series B-1 Preferred,

(b) the amount of funds legally available for such redemption and the maximum number of shares of Series B Preferred and Series B-1 Preferred the Company can redeem,

(c) the Series B/B-1 Redemption Date, and

(d) that each holder is to surrender to the Company in the manner designated at the Company’s principal place of business, its certificate or certificates representing the shares of Series B Preferred and Series B-1 Preferred to be redeemed.

4.4.5.4 Each holder of shares of Series B Preferred and Series B-1 Preferred being redeemed shall surrender the certificate or certificates representing such shares to the Company, at the Company’s principal place of business. Upon such surrender (but not earlier than the Series B/B-1 Redemption Date) the Series B Redemption Price for such shares of Series B Preferred and the Series B-1 Redemption Price for such shares of Series B-1 Preferred shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be cancelled and retired. If a certificate is surrendered and all the shares evidenced thereby cannot be redeemed, the Company shall cause certificates evidencing the shares not being redeemed to be issued in the name of the registered owner of such shares and to be delivered to such person.

4.4.5.5 If the Series B Redemption Price and Series B-1 Redemption Price is either paid or made available for payment through the deposit arrangement specified in Section 4.4.5.6 with respect to any shares of Series B Preferred and Series B-1 Preferred, then notwithstanding that the certificates evidencing any of the shares to be redeemed shall not have been surrendered, all rights with respect to such shares shall terminate as of the Series B/B-1 Redemption Date, except only the right of the holder to receive the Series B Redemption Price or Series B-1 Redemption Price, as the case may be, upon surrender of the certificate evidencing such shares.

4.4.5.6 Subject to Section 4.4.5.2, within 10 business days of the Company’s receipt of the Series B/B-1 Redemption Election, the Company shall deposit with any bank or trust company having a capital and surplus of at least $50,000,000 as a trust fund, a sum equal to the aggregate Series B Redemption Price of all outstanding shares of Series B Preferred plus the aggregate Series B-1 Redemption Price of all outstanding shares of Series B-1 Preferred with irrevocable instructions and authority to the bank or trust company to pay, on or after the Series B/B-1 Redemption Date, the Series B Redemption Price to the respective holders of Series B Preferred and the Series B-1 Redemption Price to the respective holders of Series B-1 Preferred upon the surrender of their share certificates. From and after the date of such deposit, the shares so called for redemption shall be redeemed. The deposit shall constitute full payment of the shares to their holders, and from and after the Series B/B-1 Redemption Date, the shares shall be deemed to be no longer outstanding, and the holders thereof shall cease to be shareholders with respect thereto and shall have no rights with respect thereto except the rights to receive from the bank or trust company payment of the Series B Redemption Price or Series B-1 Redemption Price of the shares, as the case may be, without interest, upon surrender of their certificates therefor (and a certificate for those shares, if any, evidenced by such certificates which are not being redeemed on such Series B/B-1 Redemption Date). Any funds so deposited and unclaimed at the end of one year from such Series B/B-1 Redemption Date shall be released or repaid to the Company, after which the former holders of the shares called for redemption shall be entitled to receive payment of the Series B Redemption Price or Series B-1 Redemption Price with respect to such shares, as the case may be, only from the Company.

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4.4.5.7 Subject to Section 4.4.5.2 hereof, if the funds of the Company legally available therefor shall be insufficient to discharge the Series B Preferred and Series B-1 Preferred redemption requirements in full, funds to the extent legally available for such purpose shall be set aside upon the Company’s receipt of a Series B/B-1 Redemption Election in accordance with Sections 4.4.5.6. The maximum number of full shares of Series B Preferred and Series B-1 Preferred that can be redeemed with such funds shall be redeemed from the holders of shares of Series B-Preferred and Series B-1 Preferred as of the date of such Series B/B-1 Redemption Election ratably in accordance with the full amounts otherwise payable to them. Thereafter, the Company shall redeem shares of Series B Preferred and Series B-1 Preferred ratably from the holders thereof as funds legally available therefor become available.

4.4.5.8 Nothing in this Section 4.4.5 shall prevent any holder of shares of Series B Preferred or Series B-1 Preferred from exercising the Series B Conversion Right or Series B-1 Conversion right of such shares, as the case may be, at any time prior to the actual redemption of such shares.

4.4.6 No Reissuance of Series B Preferred. No share or shares of Series B Preferred acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Company shall be authorized to issue.

4.5 Powers and Qualifications of Series B-1 Preferred Stock. The powers, preferences and rights, and the qualifications, restrictions or limitations, of the Series B-1 Preferred are as follows:

4.5.1 Voting Rights. Except as otherwise required by law or expressly provided in this Restated Certificate, each share of Series B-1 Preferred (including any fractional share) shall entitle the holder thereof to vote on each matter submitted to a vote of the shareholders of the Company and to have the number of votes equal to the number (including any fraction) of shares of Common into which such share of Series B-1 Preferred is then convertible pursuant to the provisions hereof at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders becomes effective. Except as otherwise required by law or expressly provided in this Restated Certificate, the holders of shares of Common and Preferred of all classes shall vote together and not as separate classes or series.

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4.5.2 Dividends.

4.5.2.1 Subject to the rights of holders of Series C Preferred pursuant to the provisions of Section 4.6.2 hereof, the holders of the Series B-1 Preferred shall be entitled to receive dividends at the rate of 8% of the Series B-1 Original Purchase Price (as hereafter defined) (such amount to be adjusted proportionately in the event the shares of Series B-1 Preferred are subdivided into a greater number or combined into a lesser number) per annum, payable out of funds legally available therefor. Such dividends shall be (i) payable only when, as and if declared by the Board of Directors, (ii) non-cumulative and (iii) pari passu with dividends payable to the holders of the Series B Preferred pursuant to Section 4.4.2.1. The “Series B-1 Original Purchase Price” shall be $1.76.

4.5.2.2 No dividends (other than those payable on Common solely in shares of Common) shall be paid on any shares of Series A Preferred or Common during any fiscal year of the Company until dividends in the total amount determined in accordance with Section 4.5.2.1 (adjusted in accordance therewith, if applicable) on the Series B-1 Preferred shall have been paid or declared and set apart during that fiscal year, and no dividends (other than those payable on Common solely in shares of Common) shall be paid on any share of Series B Preferred, Series A Preferred or Common, unless a dividend is paid with respect to all outstanding shares of Series B-1 Preferred in an amount for each such share of Series B-1 Preferred equal to or greater than the aggregate amount of such dividends for all shares of Common into which each such share of Series B-1 Preferred could then be converted (assuming, for the purposes of calculating the amount of dividends to be paid under this section, in the case of dividends declared on shares of Series B Preferred or Series A Preferred, that such shares of Series B Preferred or Series A Preferred, as applicable, had been converted into shares of Common and such dividends had been declared on the shares of Common issued upon conversion thereof).

4.5.2.3 In the event any dividend or other distribution payable in cash or other property (other than securities of the Company the issuance of which gives rise to adjustments pursuant to Section 4.5.4.4 of this Restated Certificate) is declared on any Common, each holder of shares of Series B-1 Preferred on the record date for such dividend or distribution shall be entitled to receive, pari passu with the dividends payable to the holders of Series B Preferred pursuant to Section 4.4.2.3, in addition to any dividend under 4.5.2.1, on the date of payment or distribution of such dividend or other distribution the same cash or other property which such holder would have received on such record date if such holder were the holder of record of the number (including any fraction) of shares of Common into which the shares of Series B-1 Preferred then held by such holder are then convertible.

4.5.2.4 In the event a holder of Series B-1 Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement, then at the Initial Closing such holder shall be issued a number of additional shares of Series B-1 Preferred equal to the greatest whole number obtained by dividing the aggregate amount of the dividends that have accrued on such holder’s shares of Series B-1 Preferred through January 31, 2008 under the Old Restated Certificate but have not been paid, whether or not declared, by the Series B-1 Original Purchase Price. All other dividends that have accrued on such holder’s shares of Series B-1 Preferred through the Effective Time under the Old Restated Certificate but have not been paid shall be cancelled. In determining whether any holder of Series B-1 Preferred has satisfied the criteria set forth in clause (i) of this Section 4.5.2.4, any purchases of Series C Preferred under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Pro Rata Share of such Related Party shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

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4.5.3 Liquidation Rights.

4.5.3.1 Subject to the rights of holders of Series C Preferred pursuant to the provisions of Section 4.6.3, if the Company shall be voluntarily or involuntarily liquidated, dissolved or wound up, the holder of each share of Series B-1 Preferred then outstanding (including any fractional shares) shall be entitled to receive out of the assets of the Company available for distribution to shareholders, pari passu with the distribution payable to the holders of Series B Preferred pursuant to Section 4.4.3.1, and before any payment or declaration and setting apart for payment of any amount shall be made with respect to the Series A Preferred or Common, an amount equal to (i) 100% of the Series B-1 Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series B-1 Preferred are subdivided into a greater number or combined into a lesser number), plus (ii) an amount equal to any dividends on such share which are declared but unpaid as of such liquidation, dissolution or winding up of the Company.

4.5.3.2 If, upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, and subject to payment to holders of Series C Preferred of the full preferential amount pursuant to Section 4.6.3.1, the assets to be distributed to the holders of Series B Preferred and the holders of Series B-1 Preferred shall be insufficient to permit the payment of the full preferential amount pursuant to Sections 4.4.3.1 and 4.5.3.1 of this Restated Certificate, then all of the then-remaining assets of the Company to be distributed shall be distributed ratably to the holders of Series B Preferred and Series B-1 Preferred, based upon the amounts which would otherwise by payable to such holders pursuant to Section 4.4.3.1 or 4.5.3.1, as the case may be.

4.5.3.3 Upon the dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the assets of the Company available for distribution to shareholders after and in addition to the distribution of the preferential amounts pursuant to Sections 4.6.3.1, 4.5.3.1, 4.4.3.1 and 4.3.3.1 of this Restated Certificate, shall be distributed ratably to all holders of Common and Preferred on an “as-converted basis”.

4.5.3.4 For purposes of this Restated Certificate, including without limitation Sections 4.6.3, 4.5.3, 4.4.3 and 4.3.3, unless waived by the holders of at least 60% of the outstanding shares of Series C Preferred, each of the following events shall be treated as a liquidation, dissolution or winding up of the Company and shall entitle the holders of shares of all series of Preferred and Common to receive at the closing in cash, securities or other property (valued as provided in Sections 4.3.3.5, 4.4.3.5, 4.5.3.5 and 4.6.3.5) the amounts specified in Sections 4.3.3.1 through 4.3.3.5, 4.4.3.1 through 4.4.3.5, 4.5.3.1 through 4.5.3.5 and 4.6.3.1 through 4.6.3.5: (i) any acquisition of the Company by means of merger or other form of corporate reorganization in which outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a transaction resulting in ownership of more than 50% of the equity of the acquiring corporation by shareholders of the Company) or (ii) a sale of the voting control of the Company or (iii) a sale of all or substantially all of the assets of the Company. The sale of shares of Series C Preferred pursuant to the Series C Purchase Agreement shall not be treated as a liquidation, dissolution or winding up of the Company.

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4.5.3.5 Whenever the distribution provided for in this Section 4.5.3 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors

4.5.4 Conversion.

4.5.4.1 Terms of Conversion.

4.5.4.1.1 Optional Conversion. The holder of each share of Series B-1 Preferred shall have the right (the “Series B-1 Conversion Right”), at such holder’s option, to convert such share at any time, without cost and otherwise on the terms of this Section 4.5.4, into the number of fully paid and non-assessable shares of Common that results from dividing:

(A) $1.76,

by:

(B) the Series B-1 Conversion Price in effect at the time of conversion.

The “Series B-1 Conversion Price” shall initially be $1.00 and shall be subject to adjustment from time to time as provided in this Section 4.5.4.

4.5.4.1.2 Mandatory Conversion. All of the outstanding Series B-1 Preferred shall, without any further action by a holder thereof, convert into Common (a “Series B-1 Mandatory Conversion”) upon the first to occur of the following (each a “Series B-1 Mandatory Conversion Event”): (A) the Company’s Qualified Public Offering, (B) at such time as at least two-thirds of the aggregate number of shares of Series B Preferred and Series B-1 Preferred, collectively, issued prior to such time have been voluntarily converted into Common by the holders thereof, (C) at such time as is specified in a vote or written consent of the holders of at least a majority of the outstanding shares of Series B Preferred and Series B-1 Preferred, voting together as a single class on an as-converted basis, or (D) at such time as is specified in a vote or written consent of the holders of at least 60% of the outstanding shares of Series C Preferred with respect to the conversion of all Preferred into Common. In each case each share of Series B-1 Preferred shall be automatically converted, without cost, on the terms of this Section 4.5.4, into the number of shares of Common into which such share of Series B-1 Preferred would be convertible under Section 4.5.4.1.1 immediately prior to such conversion.

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4.5.4.1.3 Pay to Play Conversion.

(a) Concurrently with the Initial Closing, each share of Series B-1 Preferred outstanding at the time of the Initial Closing shall automatically convert into 0.01 share of Common except as expressly provided under this paragraph (a). Each share of Series B-1 Preferred issued after the Initial Closing upon the exercise of a warrant outstanding at the time of the Initial Closing shall immediately upon issuance convert into 0.01 share of Common except as expressly provided under this paragraph (a). The foregoing conversion to Common shall not occur with respect to any share of Series B-1 Preferred if the holder of such share of Series B-1 Preferred or warrant to purchase Series B-1 Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement. Following the conversion of such shares of Series B-1 Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series B-1 Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series B-1 Preferred are converted pursuant to this Section 4.5.4.1.3(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Initial Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series B-1 Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series B-1 Preferred so converted pursuant to this Section 4.5.4.1.3(a), whether declared or not, shall be cancelled. In determining whether any holder of Series B-1 Preferred has satisfied the criteria set forth in clause (i) of this Section 4.5.4.1.3(a), any purchases of Series C Preferred under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Pro Rata Share of such Related Party shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

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(b) If the Milestone Closing occurs and a holder of Series B-1 Preferred does not purchase the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, then concurrently with the Milestone Closing (i) each share of Series B-1 Preferred issued to such holder pursuant to Section 4.5.2.4 shall automatically be redeemed pursuant to the terms of Section 4.5 of the Series C Purchase Agreement and (ii) each other share of Series B-1 Preferred held by such holder, or held by such holder at the time of the Initial Closing and subsequently transferred, shall automatically convert into 0.01 share of Common. Promptly following the Milestone Closing, the holder of shares so redeemed or converted shall surrender the certificates therefor at the office of the Company or any transfer agent for the Series B-1 Preferred. In the case of converted shares, upon such surrender the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series B-1 Preferred are redeemed or converted pursuant to this Section 4.5.4.1.3(b), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Milestone Closing, except only the right of the holder upon surrender of the certificates evidencing such converted shares to receive certificates evidencing the shares of Common issued upon such conversion. In determining whether any holder of Series B-1 Preferred has purchased the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, any purchases of Milestone Shares under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Milestone Shares allocated to such Related Party under the Series C Purchase Agreement shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred.

(c) All shares of Common issued to any holder of Series B-1 Preferred as a result of conversion pursuant to this Section 4.5.4.1.3 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

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4.5.4.2 Mechanics of Conversion.

4.5.4.2.1 Optional Conversion. A holder of any share of Series B-1 Preferred may exercise the Series B-1 Conversion Right of such share by surrendering the certificate therefor, duly endorsed, at the office of the Company or of any transfer agent for the Series B-1 Preferred, together with a written notice to the Company which states:

(A) that such holder elects to convert the same,

(B) the number of shares of Series B-1 Preferred being converted, and

(C) the name or names in which such holder wishes the certificate or certificates for shares of Common to be issued.

Thereupon the Company shall promptly issue and deliver to the holder of such shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder shall be entitled. If the certificate evidencing the shares of Series B-1 Preferred being converted shall also evidence shares of Series B-1 Preferred not being converted, then the Company shall also deliver to the holder of such certificate, or to the nominee or nominees of such holder, a new stock certificate evidencing the Series B-1 Preferred not converted. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series B-1 Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion, pari passu with the payment of such dividends or distributions payable pursuant to Section 4.4.4.2.1.

4.5.4.2.2 Mandatory Conversion. The Company shall give written notice to each holder of a share of Series B-1 Preferred (A) not more than forty (40) nor less than twenty (20) days before the anticipated effective date of the registration statement with respect to any Qualified Public Offering, and shall also give written notice to each such holder upon the occurrence of any Qualified Public Offering; and (B) upon the occurrence of any other Series B-1 Mandatory Conversion Event. Following the conversion of such shares, each holder of shares so converted may surrender the certificate therefor at the office of the Company or any transfer agent for the Series B-1 Preferred. Upon such surrender, the Company shall issue and deliver to each holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series B-1 Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion, pari passu with the payment of such dividends or distributions payable pursuant to Section 4.4.4.2.2.

4.5.4.3 Effective Date of Conversion.

4.5.4.3.1 Optional Conversion. The conversion of any shares of Series B-1 Preferred shall be deemed to have been made immediately prior to the close of business on the date that the shares to be converted are surrendered to the Company together with the notice required by Section 4.5.4.2.1, and the person or persons entitled to receive the shares of Common issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common on such date.

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4.5.4.3.2 Mandatory Conversion. The conversion of shares of Series B-1 Preferred shall take place upon the first to occur of the Series B-1 Mandatory Conversion Events, whether or not the certificates representing such shares of Series B-1 Preferred shall have been surrendered, or new certificates representing the shares of Common into which such shares have been converted shall have been issued.

4.5.4.4 Adjustment of Conversion Price.

4.5.4.4.1 Subdivision or Combination of Shares. If the Company at any time subdivides or combines the outstanding Common after the Filing Date, the Series B-1 Conversion Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportions as the Common is subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness, of the subdivision or combination).

4.5.4.4.2 Stock Dividends. If the Company at any time pays a dividend, or makes any other distribution, to holders of Common payable in shares of Common, or fixes a record date for the determination of holders of Common entitled to receive a dividend or other distribution payable in shares of Common, the Series B-1 Conversion Price shall be decreased by multiplying it by a fraction:

(A) the numerator of which shall be the total number of shares of Common outstanding immediately prior to such dividend or distribution, and

(B) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution (plus, if the Company paid cash instead of fractional shares otherwise issuable in such dividend or distribution, the number of additional shares which would have been outstanding had the Company issued fractional shares instead of cash),

effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of receiving such dividend or distribution (or if no such record is taken, as of the effectiveness of such dividend or distribution).

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4.5.4.4.3 Reclassification, Consolidation or Merger. If at any time, as a result of:

(A) a capital reorganization or reclassification (other than a subdivision, combination or dividend which gives rise to adjustment of the Series B-1 Conversion Price pursuant to Sections 4.5.4.4.1 or 4.5.4.4.2), or

(B) a merger or consolidation of the Company with another corporation (whether or not the Company is the surviving corporation),

the Common issuable upon the conversion of the Series B-1 Preferred shall be changed into or exchanged for the same or a different number of shares of any class or classes of stock of the Company or any other corporation, or other securities convertible into such shares, then, as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of the Series B-1 Preferred (or of any securities into which the Series B-1 Preferred is changed or for which the Series B-1 Preferred is exchanged), so that:

(X) the holders of Series B-1 Preferred or of such substitute securities shall thereafter be entitled to receive, upon conversion of the Series B-1 Preferred or of such substitute securities, the kind and amount of shares of stock, other securities, money and property which such holders would have received at the time of such capital reorganization, reclassification, merger, or consolidation, if such holders had converted their Series B-1 Preferred into Common immediately prior to such capital reorganization, reclassification, merger, or consolidation, and

(Y) the Series B-1 Preferred or such substitute securities shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments theretofore provided in Section 4.5.4.4.

The provisions of this Section 4.5.4.4.3 shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

4.5.4.4.4 Additional Shares of Common. If at any time the Company issues (or is deemed by the express provisions of Section 4.3.4.4.5 to have issued or sold) Additional Shares of Common without consideration or for a consideration per share less than the lower of (i) the Series B-1 Conversion Price in effect at such issuance or (ii) the Series C Conversion Price in effect at such issuance, then the Series B-1 Conversion Price shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) equal to the price determined by multiplying the Series B-1 Conversion Price by a fraction:

(A) the numerator of which shall be the number of shares of Common Outstanding immediately prior to the issuance of such Additional Shares of Common plus the number of shares of Common which the aggregate consideration received (or by the express provisions hereof deemed to have been received) by the Company for the total number of such Additional Shares of Common so issued would purchase at the Series B-1 Conversion Price, and

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(B) the denominator of which shall be the number of shares of Common Outstanding immediately after the issuance of such Additional Shares of Common;

provided, however, that in no event shall the Series B-1 Conversion Price be reduced below $.01.

4.5.4.4.5 Convertible Securities. For purposes of the adjustment required under Section 4.5.4.4.4, Convertible Securities shall be treated as described in Section 4.3.4.4.5.

4.5.4.4.6 Valuation of Consideration. The value of consideration received by the Company for any issue or sale of securities shall be determined as set forth in Section 4.3.4.4.6.

4.5.4.4.7 Liquidating Dividends. Subject to the preferential rights of holders of Series C Preferred pursuant to the provisions of Section 4.6.4.4.7, if the Company, at any time while any of the Series B-1 Preferred is outstanding, shall make a distribution of its assets to the holders of its Common as a dividend in liquidation or partial liquidation or by way of return of capital or other than as a dividend payable out of funds legally available for dividends under the laws of the State of Delaware, the holders of the Series B-1 Preferred shall be entitled to receive, without payment of any consideration therefor, the assets that would have been payable to them as owners of that number of shares of Common receivable by exercise of such Series B-1 Conversion Rights, had they been the holders of record of such Common on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the preferential provisions of Section 4.5.3 of this Restated Certificate.

4.5.4.5 Reservation of Shares. The Company will take such corporate action as may be necessary from time to time so that at all times it will have authorized, and reserved out of its authorized but unissued Common for the sole purpose of issuance upon conversion of shares of Series B-1 Preferred, a sufficient number of shares of Common to permit the conversion in full of all outstanding shares of Series B-1 Preferred.

4.5.4.6 Full Consideration. All shares of Common which shall be issued upon the conversion of any Series B-1 Preferred will, upon issuance, be fully paid and non assessable. The Company will pay such amounts and will take such other action as may be necessary from time to time so that all shares of Common which shall be issued upon the exercise of the Series B-1 Conversion Right of any Series B-1 Preferred will, upon issuance and without cost to the recipient, be free from all preemptive rights, taxes, liens and charges with respect to the issue thereof.

4.5.4.7 Notice of Adjustment Events. Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under Section 4.5.4.4, the Company shall mail to each holder of Series B-1 Preferred, at least 20 days prior to the record date with respect to such event or, if no record date shall be established, at least 20 days prior to such event, a notice specifying (i) the nature of the contemplated event, and (ii) the date on which any such record is to be taken for the purpose of such event, and (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Common (or other securities) shall be entitled to exchange their shares of Common (or other securities) for securities or other property deliverable in connection with such event.

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4.5.4.8 Notice of Adjustments. Whenever the Series B-1 Conversion Price or the kind of securities issuable upon the conversion of Series B-1 Preferred, or both, shall be adjusted pursuant to Section 4.5.4.4, the Company shall mail to each holder of Series B-1 Preferred, by first class mail postage prepaid, promptly after each adjustment, a certificate signed by its President or a Vice President and by its Chief Financial Officer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company made any determination hereunder), and the Series B-1 Conversion Price and the kind of securities issuable upon the conversion of Series B-1 Preferred after giving effect to such adjustment.

4.5.5 Redemptions. The Series B-1 Preferred shall be redeemed simultaneously with the Series B Preferred in accordance with the provision of Section 4.4.5.

4.5.6 No Reissuance of Series B-1 Preferred. No share or shares of Series B-1 Preferred acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Company shall be authorized to issue.

4.6 Powers and Qualifications of Series C Preferred Stock. The powers, preferences and rights, and the qualifications, restrictions or limitations, of the Series C Preferred are as follows:

4.6.1 Voting Rights. Except as otherwise required by law or expressly provided in this Restated Certificate, each share of Series C Preferred (including any fractional share) shall entitle the holder thereof to vote on each matter submitted to a vote of the shareholders of the Company and to have the number of votes equal to the number (including any fraction) of shares of Common into which such share of Series C Preferred is then convertible pursuant to the provisions hereof at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders becomes effective. Except as otherwise required by law or expressly provided in this Restated Certificate, the holders of shares of Common and Preferred of all classes shall vote together and not as separate classes or series.

4.6.2 Dividends.

4.6.2.1 The holders of Series C Preferred shall be entitled to receive dividends at the rate of 8% of the Series C Original Purchase Price (as hereafter defined) (such amount to be adjusted proportionately in the event the shares of Series C Preferred are subdivided into a greater number or combined into a lesser number) per annum, payable out of funds legally available therefor. Such dividends shall be payable only when, as and if declared by the Board of Directors and shall be non-cumulative. The “Series C Original Purchase Price” shall be $0.289018.

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4.6.2.2 No dividends (other than those payable on Common solely in shares of Common) shall be paid on any shares of Series B-1 Preferred, Series B Preferred, Series A Preferred or Common during any fiscal year of the Company until dividends in the total amount determined in accordance with Section 4.6.2.1 (adjusted in accordance therewith, if applicable) on the Series C Preferred shall have been paid or declared and set apart during that fiscal year, and no dividends (other than those payable on Common solely in shares of Common) shall be paid on any share of Series B-1 Preferred, Series B Preferred, Series A Preferred or Common, unless a dividend is paid with respect to all outstanding shares of Series C Preferred in an amount for each such share of Series C Preferred equal to or greater than the aggregate amount of such dividends for all shares of Common into which each such share of Series C Preferred could then be converted (assuming, for the purposes of calculating the amount of dividends to be paid under this section, in the case of dividends declared on shares of Series B-1 Preferred, Series B Preferred or Series A Preferred, that such shares of Series B-1 Preferred, Series B Preferred or Series A Preferred, as applicable, had been converted into shares of Common and such dividends had been declared on the shares of Common issued upon conversion thereof).

4.6.2.3 In the event any dividend or other distribution payable in cash or other property (other than securities of the Company the issuance of which gives rise, to adjustments pursuant to Section 4.6.4.4 of this Restated Certificate) is declared on any Common, each holder of shares of Series C Preferred on the record date for such dividend or distribution shall be entitled to receive, in addition to any dividend under 4.6.2.1, on the date of payment or distribution of such dividend or other distribution the same cash or other property which such holder would have received on such record date if such holder were the holder of record of the number (including any fraction) of shares of Common into which the shares of Series C Preferred then held by such holder are then convertible.

4.6.3 Liquidation Rights.

4.6.3.1 If the Company shall be voluntarily or involuntarily liquidated, dissolved or wound up, the holder of each share of Series C Preferred then outstanding (including any fractional shares) shall be entitled to receive out of the assets of the Company available for distribution to shareholders, and before any payment or declaration and setting apart for payment of any amount shall be made with respect to the Series B-1 Preferred, Series B Preferred, Series A Preferred or Common, an amount equal to (i) 100% of the Series C Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series C Preferred are subdivided into a greater number or combined into a lesser number), plus (ii) an amount equal to any dividends on such share which are declared but unpaid as of such liquidation, dissolution or winding up of the Company.

4.6.3.2 If, upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the holders of Series C Preferred shall be insufficient to permit the payment of the full preferential amount pursuant to Section 4.6.3.1 of this Restated Certificate, then all of the assets of the Company to be distributed shall be distributed ratably to the holders of Series C Preferred.

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4.6.3.3 Upon the dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the assets of the Company available for distribution to shareholders after and in addition to the distribution of the preferential amounts pursuant to Sections 4.6.3.1, 4.5.3.1, 4.4.3.1 and 4.3.3.1 of this Restated Certificate, shall be distributed ratably to all holders of Common and Preferred on an “as- converted basis”.

4.6.3.4 For purposes of this Restated Certificate, including without limitation Sections 4.6.3, 4.5.3, 4.4.3 and 4.3.3, unless waived by the holders of at least 60% of the outstanding shares of Series C Preferred, each of the following events shall be treated as a liquidation, dissolution or winding up of the Company and shall entitle the holders of shares of all series of Preferred and Common to receive at the closing in cash, securities or other property (valued as provided in Sections 4.3.3.5, 4.4.3.5, 4.5.3.5 and 4.6.3.5) the amounts specified in Sections 4.3.3.1 through 4.3.3.5, 4.4.3.1 through 4.4.3.5, 4.5.3.1 through 4.5.3.5 and 4.6.3.1 through 4.6.3.5: (i) any acquisition of the Company by means of merger or other form of corporate reorganization in which outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a transaction resulting in ownership of more than 50% of the equity of the acquiring corporation by shareholders of the Company) or (ii) a sale of the voting control of the Company or (iii) a sale of all on substantially all of the assets of the Company. The sale of shares of Series C Preferred pursuant to the Series C Purchase Agreement shall not be treated as a liquidation, dissolution or winding up of the Company.

4.6.3.5 Whenever the distribution provided for in this Section 4.6.3 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors.

4.6.4 Conversion.

4.6.4.1 Terms of Conversion.

4.6.4.1.1 Optional Conversion. The holder of each share of Series C Preferred shall have the right (the “Series C Conversion Right”), at such holder’s option, to convert such share at any time, without cost and otherwise on the terms of this Section 4.6.4, into the number of fully paid and non-assessable shares of Common that results from dividing:

(A) $0.289018,

by:

(B) the Series C Conversion Price in effect at the time of conversion.

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The “Series C Conversion Price” shall initially be $0.289018 and shall be subject to adjustment from time to time as provided in this Section 4.6.4.

4.6.4.12 Mandatory Conversion. All of the outstanding Series C Preferred shall, without any further action by a holder thereof, convert into Common (a “Series C Mandatory Conversion”) upon the first to occur of the following (each a “Series C Mandatory Conversion Event”): (A) the Company’s Qualified Public Offering, (B) at such time as at least 60% of the aggregate number of shares of Series C Preferred issued prior to such time have been voluntarily converted into Common by the holders thereof, (C) at such time as is specified in a vote or written consent of the holders of at least 60% of the outstanding shares of Series C Preferred, or (D) at such time as is specified in vote or written consent of the holders of at least 60% of the outstanding shares of Series C Preferred with respect to the conversion of all Preferred into Common. In each case each share of Series C Preferred shall be automatically converted, without cost, on the terms of this Section 4.6.4, into the number of shares of Common into which such share of Series C Preferred would be convertible under 4.6.4.1.1 immediately prior to such conversion.

4.6.4.1.3 Pay to Play Conversion.

(a) If the Milestone Closing occurs and a holder of Series C. Preferred does not purchase the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, then concurrently with the Milestone Closing each share of Series C Preferred held by such holder, or issued to such holder under the Series C Purchase Agreement and subsequently transferred, shall automatically convert into the number of shares of Common into which such share of Series C Preferred would be convertible under 4.6.4.1.1 immediately prior to such conversion. Promptly following the Milestone Closing, the holder of shares so converted shall surrender the certificates therefor at the office of the Company or any transfer agent for the Series C Preferred. Upon such surrender the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If a holder’s shares of Series C Preferred are converted pursuant to this Section 4.6.4.1.3(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the Milestone Closing, except only the right of the holder upon surrender of the certificates evidencing such converted shares to receive certificates evidencing the shares of Common issued upon such conversion. In determining whether any holder of Series C Preferred has purchased the number of Milestone Shares allocated to such holder under the Series C Purchase Agreement, any purchases of Milestone Shares under the Series C Purchase Agreement by a Related Party of such holder that are in excess of the Milestone Shares allocated to such Related Party under the Series C Purchase Agreement shall, to the extent requested by such holder, be attributed to such holder; provided that no shares constituting part of such excess shall be attributed to more than one holder of Preferred. Notwithstanding the foregoing and for avoidance of doubt, the terms of this Section 4.6.4.1.3(a) shall not apply to the reduction in the number of Milestone Shares allocated to Mizuho Corp. under the Series C Purchase Agreement if such reduction is made solely to comply with Section 4.5 of the Series C Purchase Agreement.

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(b) All shares of Common issued to any holder of Series C Preferred as a result of conversion pursuant to this Section 4.6.4.1.3 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price.

4.6.4.2 Mechanics of Conversion.

4.6.4.2.1 Optional Conversion. A holder of any share of Series. C Preferred may exercise the Series C Conversion Right of such share by surrendering the certificate therefor duly endorsed, at the office of the Company or of any transfer agent for the Series C Preferred, together with a written notice to the Company which states:

(A) that such holder elects to convert the same,

(B) the number of shares of Series C Preferred being converted, and

(C) the name or names in which such holder wishes the certificate or certificates for shares of Common to be issued.

Thereupon the Company shall promptly issue and deliver to the holder of such shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder shall be entitled. If the certificate evidencing the shares of Series C Preferred being converted shall also evidence shares of Series C Preferred not being converted, then the Company shall also deliver to the holder of such certificate, or to the nominee or nominees of such holder, a new stock certificate evidencing the Series C Preferred not converted. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series C Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion.

4.6.4.2.2 Mandatory Conversion. The Company shall give written notice to each holder of a share of Series C Preferred (A) not more than forty (40) nor less than twenty (20) days before the anticipated effective date of the registration statement with respect to any Qualified Public Offering, and shall also give written notice to each such holder upon the occurrence of any Qualified Public Offering; and (B) upon the occurrence of any other Series C Mandatory Conversion Event. Following the conversion of such shares, each holder of shares so converted may surrender the certificate therefor at the office of the Company or any transfer agent for the Series C Preferred. Upon such surrender, the Company shall issue and deliver to each holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. Any dividends or distributions declared but unpaid at the time of conversion with respect to a share of Series C Preferred so converted shall be payable ratably to the holders of the Common issued upon such conversion.

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4.6.4.3 Effective Date of Conversion.

4.6.4.3.1 Optional Conversion. The conversion of any shares of Series C Preferred shall be deemed to have been made immediately prior to the close of business on the date that the shares to be converted are surrendered to the Company together with the notice required by Section 4.6.4.2.1, and the person or persons entitled to receive the shares of Common issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common on such date.

4.6.4.3.2 Mandatory Conversion. The conversion of shares of Series C Preferred shall take place upon the first to occur of the Series C Mandatory Conversion Events, whether or not the certificates representing such shares of Series C Preferred shall have been surrendered, or new certificates representing the shares of Common into which such shares have been converted shall have been issued.

4.6.4.4 Adjustment of Conversion Price.

4.6.4.4.1 Subdivision or Combination of Shares. If the Company at any time subdivides or combines the outstanding Common after the Filing Date, the Series C Conversion Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportions as the Common is subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

4.6.4.4.2 Stock Dividends. If the Company at any time pays a dividend, or makes any other distribution, to holders of Common payable in shares of Common, or fixes a record date for the determination of holders of Common entitled to receive a dividend or other distribution payable in shares of Common, the Series C Conversion Price shall be decreased by multiplying it by a fraction:

(A) the numerator of which shall be the total number of shares of Common outstanding immediately prior to such dividend or distribution, and

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(B) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution (plus, if the Company paid cash instead of fractional shares otherwise issuable in such dividend or distribution, the number of additional shares which would have been outstanding had the Company issued fractional shares instead of cash),

effective automatically as of the date the Company shall take a record of the holders of its Common for the purpose of receiving such dividend or distribution (or if no such record is taken, as of the effectiveness of such dividend or distribution).

4.6.4.4.3 Reclassification, Consolidation or Merger. If at any time, as a result of:

(A) a capital reorganization or reclassification (other than a subdivision, combination or dividend which gives rise to adjustment of the Series C Conversion Price pursuant to Sections 4.6.4.4.1 or 4.6.4.4.2), or

(B) a merger or consolidation of the Company with another corporation (whether or not the Company is the surviving corporation),

the Common issuable upon the conversion of the Series C Preferred shall be changed into or exchanged for the same or a different number of shares of any class or classes of stock of the Company or any other corporation, or other securities convertible into such shares, then, as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of the Series C Preferred (or of any securities into which the Series C Preferred is changed or for which the Series C Preferred is exchanged), so that:

(X) the holders of Series C Preferred or of such substitute securities shall thereafter be entitled to receive, upon conversion of the Series C Preferred or of such substitute securities, the kind and amount of shares of stock, other securities, money and property which such holders would have received at the time of such capital reorganization, reclassification, merger, or consolidation, if such holders had converted their Series C Preferred into Common immediately prior to such capital reorganization, reclassification, merger, or consolidation, and

(Y) the Series C Preferred or such substitute securities shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments theretofore provided in Section 4.6.4.4.

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The provisions of this Section 4.6.4.4.3 shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

4.6.4.4.4 Additional Shares of Common. If at any time the Company issues (or is deemed by the express provisions of Section 4.3.4.4.5 to have issued or sold) Additional Shares of Common without consideration or for a consideration per share less than the Series C Conversion Price in effect at such issuance, then the Series C Conversion Price shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) equal to the price determined by multiplying the Series C Conversion Price by a fraction:

(A) the numerator of which shall be the number of shares of Common Outstanding immediately prior to the issuance of such Additional Shares of Common plus the number of shares of Common which the aggregate consideration received (or by the express provisions hereof deemed to have been received) by the Company for the total number of such Additional Shares of Common so issued would purchase at the Series C Conversion Price, and

(B) the denominator of which shall be the number of shares of Common Outstanding immediately after the issuance of such Additional Shares of Common;

provided, however, that in no event shall the Series C Conversion Price be reduced below $.01.

4.6.4.4.5 Convertible Securities. For purposes of the adjustment required under Section 4.6.4.4.4, Convertible Securities shall be treated as described in Section 4.3.4.4.5.

4.6.4.4.6 Valuation of Consideration. The value of consideration received by the Company for any issue or sale of securities shall be determined as set forth in Section 4.3.4.4.6.

4.6.4.4.7 Liquidating Dividends. If the Company, at any time while any of the Series C Preferred is outstanding, shall make a distribution of its assets to the holders of its Common as a dividend in liquidation or partial liquidation or by way of return of capital or other than as a dividend payable out of funds legally available for dividends under the laws of the State of Delaware, the holders of the Series C Preferred shall be entitled to receive, without payment of any consideration therefor, the assets that would have been payable to them as owners of that number of shares of Common receivable by exercise of such Series C Conversion Rights, had they been the holders of record of such Common on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the preferential provisions of Section 4.6.3 of this Restated Certificate.

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4.6.4.5 Reservation of Shares. The Company will take such corporate action as may be necessary from time to time so that at all times it will have authorized, and reserved out of its authorized but unissued Common for the sole purpose of issuance upon conversion of shares of Series C Preferred, a sufficient number of shares of Common to permit the conversion in full of all outstanding shares of Series C Preferred.

4.6.4.6 Full Consideration. All shares of Common which shall be issued upon the conversion of any Series C Preferred will, upon issuance, be fully paid and non- assessable. The Company will pay such amounts and will take such other action as may be necessary from time to time so that all shares of Common which shall be issued upon the exercise of the Series C Conversion Right of any Series C Preferred will, upon issuance and without cost to the recipient, be free from all preemptive rights, taxes, liens and charges with respect to the issue thereof.

4.6.4.7 Notice of Adjustment Events. Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under Section 4.6.4.4, the Company shall mail to each holder of Series C Preferred, at least 20 days prior to the record date with respect to such event or, if no record date shall be established, at least 20 days prior to such event, a notice specifying (i) the nature of the contemplated event, and (ii) the date on which any such record is to be taken for the purpose of such event, and (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Common (or other securities) shall be entitled to exchange their shares of Common (or other securities) for securities or other property deliverable in connection with such event.

4.6.4.8 Notice of Adjustments. Whenever the Series C Conversion Price or the kind of securities issuable upon the conversion of Series C Preferred, or both, shall be adjusted pursuant to Section 4.6.4.4, the Company shall mail to each holder of Series C Preferred, by first class mail postage prepaid, promptly after each adjustment, a certificate signed by its President or a Vice President and by its Chief Financial Officer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company made any determination hereunder), and the Series C Conversion Price and the kind of securities issuable upon the conversion of Series C Preferred after giving effect to such adjustment.

4.6.5 Redemption.

4.6.5.1 “Redemption Trigger Date” has the meaning ascribed thereto in Section 4.3.5.1 above.

4.6.5.2 At any time on or after the Redemption Trigger Date, the holders of at least 60% of the outstanding Series C Preferred shall have the right to elect to require the Company to redeem all outstanding shares of Series C Preferred. Within not more than fifteen (15) business days after receipt of written notice of such election (“Series C Redemption Election”), the Company will provide a written notice (“Series C Redemption Notice”) advising each holder of Series C Preferred of the proposed redemption in the form required under Section 4.6.5.3.1. The Board of Directors shall establish the date on which the Series C Preferred will be redeemed (“Series C Redemption Date”), which date will be not less than thirty (30) nor more than ninety (90) days after the date the Company receives the Series C Redemption Election. On the Series C Redemption Date, the Company will redeem for cash, out of funds legally available for such purpose, all shares of Series C Preferred at a price per share equal to the Series C Original Purchase Price (such amount to be adjusted proportionately in the event the shares of Series C Preferred are subdivided into a greater number or combined into a lesser number) plus all declared but unpaid dividends on such shares (the “Series C Redemption Price”).

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4.6.5.2.1 The Series C Redemption Notice shall state:

(a) that the holders of at least 60% of the outstanding Series C Preferred have elected to require the Company to redeem all outstanding shares of Series C Preferred,

(b) the amount of funds legally available for such redemption and the maximum number of shares of Series C Preferred the Company can redeem,

(c) the Series C Redemption Date, and

(d) that each holder is to surrender to the Company in the manner designated at the Company’s principal place of business, its certificate or certificates representing the shares of Series C Preferred to be redeemed.

4.6.5.3 Each holder of shares of Series C Preferred being redeemed shall surrender the certificate or certificates representing such shares to the Company, at the Company’s principal place of business. Upon such surrender (but not earlier than the Series C Redemption Date) the Series C Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be cancelled and retired. If a certificate is surrendered and all the shares evidenced thereby cannot be redeemed, the Company shall cause certificates evidencing the shares not being redeemed to be issued in the name of the registered owner of such shares and to be delivered to such person.

4.6.5.4 If the Series C Redemption Price is either paid or made available for payment through the deposit arrangement specified in Section 4.6.5.6 with respect to any shares of Series C Preferred, then notwithstanding that the certificates evidencing any of the shares to be redeemed shall not have been surrendered, all rights with respect to such shares shall terminate as of the Series C Redemption Date, except only the right of the holder to receive the Series C Redemption Price upon surrender of the certificate evidencing such shares.

4.6.5.5 Within 10 business days of the Company’s receipt of the Series C Redemption Election, the Company shall deposit with any bank or trust company having a capital and surplus of at least $50,000,000 as a trust fund, a sum equal to the aggregate Series C Redemption Price of all outstanding shares of Series C Preferred with irrevocable instructions and authority to the bank or trust company to pay, on or after the Series C Redemption Date, the Series C Redemption Price to the respective holders of Series C Preferred upon the surrender of their share certificates. From and after the date of such deposit, the shares so called for redemption shall be redeemed. The deposit shall constitute full payment of the shares to their holders, and from and after the Series C Redemption Date, the shares shall be deemed to be no longer outstanding, and the holders thereof shall cease to be shareholders with respect thereto and shall have no rights with respect thereto except the rights to receive from the bank or trust company payment of the Series C Redemption Price of the shares, without interest, upon surrender of their certificates therefor (and a certificate for those shares, if any, evidenced by such certificates which are not being redeemed on such Series C Redemption Date). Any funds so deposited and unclaimed at the end of one year from such Series C Redemption Date shall be released or repaid to the Company, after which the former holders of the shares called for redemption shall be entitled to receive payment of the Series C Redemption Price with respect to such shares only from the Company.

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4.6.5.6 Subject to Section 4.6.5.2 hereof, if the funds of the Company legally available therefor shall be insufficient to discharge the Series C Preferred redemption requirement in full, funds to the extent legally available for such purpose shall be set aside upon the Company’s receipt of a Series C Redemption Election in accordance with Sections 4.6.5.6. The maximum number of full shares of Series C Preferred that can be redeemed with such funds shall be redeemed from the holders of shares of Series C Preferred as of the date of such Series C Redemption Election ratably in accordance with the full amounts otherwise payable to them. Thereafter, the Company shall redeem shares of Series C Preferred ratably from the holders thereof as funds legally available therefor become available.

4.6.5.7 Nothing in this Section 4.6.5 shall prevent any holder of shares of Series C Preferred from exercising the Series C Conversion Right of such shares at any time prior to the actual redemption of such shares.

4.6.6 No Reissuance of Series C Preferred. No share or shares of Series C Preferred acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Company shall be authorized to issue.

4.6.7 Protective Provisions. For so long as any shares of Series C Preferred remain outstanding, consent of the holders of at least 60% of the outstanding shares of Series C Preferred shall be required for any action that (i) alters or changes the rights, preferences or privileges of the Series C Preferred, (ii) increases or decreases the authorized number of shares of Series C Preferred, (iii) increases or decreases the authorized number of shares of Common or Preferred, (iv) creates (by reclassification or otherwise) any new class or series of shares having rights, preferences or privileges senior to or on a parity with the Series C Preferred, (v) results in the redemption of any shares of Common (other than pursuant to equity incentive agreements with employees or service providers giving the Company the right to repurchase shares upon the termination of employment or services), (vi) results in any merger, other corporate reorganization, sale of control, or any transaction in which all or substantially all of the assets of the Company are sold, (vii) amends or waives any provision of this Restated Certificate or the Bylaws of the Company, (viii) increases or decreases the authorized size of the Company’s Board of Directors, (ix) creates or amends any employee stock option or incentive plan, (x) results in the payment or declaration of any dividend on any shares of Common or Preferred or (xi) makes or permits any material change in the nature of the business of the Company or any of its subsidiaries.

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5. NAME OF INCORPORATOR

The name and mailing address of the incorporator is Fred D. Hutchison, 5410 Trinity Road, Suite 400, Raleigh, North Carolina 27607.

6. NUMBER OF DIRECTORS

The number of Directors of the Company may be fixed by the Bylaws.

7. ELECTIONS OF DIRECTORS

Elections of directors may be, but shall not be required to be, by written ballot.

8. LIABILITIES OF DIRECTORS

No directors of the Company shall have personal liability arising out of an actions whether by or in the right of the Company or otherwise for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not limit or eliminate the liability of a director (i) for any breach of the director’s, duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware or any successor provision, (iv) for any transaction from which such director derived an improper personal benefit, or (v) acts or omissions occurring prior to the date of the effectiveness of this provision.

Furthermore, notwithstanding the foregoing provision, in the foregoing provision, in the event that the General Corporation Law of Delaware is amended or enacted to permit further limitation or elimination of the personal liability of the director, the personal liability of the Company’s directors shall be limited or eliminated to the fullest extent permitted by the applicable law.

This provision shall not affect any provision permitted under the General Corporation Law of Delaware in the certificate of incorporation, Bylaws or contract or resolution of the Company indemnifying or agreeing to indemnify a director against personal liability. Any repeal or modification of this provision shall not adversely affect any limitation hereunder on the personal liability of the director with respect to acts or omissions occurring prior to such repeal or modification.

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IN WITNESS WHEREOF, said ARGOS THERAPEUTICS, INC. has caused this Third Amended and Restated Certificate of Incorporation to be signed by John Bonfiglio, its Chief Executive Officer, and attested by William N. Wofford, its Assistant Secretary, this 28^th day of March, 2008.

ARGOS THERAPEUTICS, INC.
Per:	/s/ John N. Bonfiglio

ATTESTED:
By:	/s/ William N. Wofford

CERTIFICATE OF AMENDMENT OF

THIRD AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ARGOS THERAPEUTICS, INC.

Pursuant to Section 242

of

the General Corporation Law of the State of Delaware

Argos Therapeutics, Inc. (the “Company”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

1. The name of the Company is Argos Therapeutics, Inc.

2. By written consent in lieu of a meeting of the Board of Directors of the Corporation, pursuant to Section 141(f) of the General Corporation Law of the State of Delaware, a resolution was duly adopted, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth this Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation of the Company (this “Certificate of Amendment”), declaring said Certificate of Amendment to be in the best interest of the Company, and approving said Certificate of Amendment. The stockholders of the Company duly approved said proposed Certificate of Amendment by written consent in lieu of a meeting of the stockholders in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. The text of the Certificate of Amendment is as follows:

*    *    *    *    *

The Third Amended and Restated Certificate of Incorporation of the Company is hereby amended by:

1. Deleting the first paragraph of Section 4.1 in its entirety and inserting the following in lieu thereof:

“The total number of shares of all classes of stock which the Company shall have authority to issue pursuant to this Third Amended and Restated Certificate of Incorporation (this “Restated Certificate”) is 388,455,210, of which (i) 227,000,000 shares are of a class designated “Common Stock”, $0.001 par value (the “Common”), and (ii) 161,455,210 shares are of a class designated “Preferred Stock”, $0.001 par value (the “Preferred”), of which 1,648,253 shares are of a series of such class designated “Series A Preferred Stock” (the “Series A Preferred”), 30,426,397 shares are of a series of such class designated “Series B Preferred Stock” (the “Series B Preferred”), 3,671,086 shares are of a series of such class designated “Series B-1 Preferred Stock” (the “Series B-1 Preferred”), and 125,709,474 shares are of a series of such class designated “Series C Preferred Stock” (the “Series C Preferred”).”

2. Deleting subparagraph (3) of Section 4.3.4.4.4(A) in its entirety and inserting the following in lieu thereof:

“(3) up to 37,610,368 shares of Common issued upon the exercise of any options granted to employees or directors of, or consultants to, the Company as compensation for services rendered to the Company pursuant to one or more option plans approved by the affirmative vote or written consent of the Board of Directors, (such amount to be adjusted proportionately in the event shares of Common are subdivided into a greater number or combined into a lesser number),”

3. Deleting subparagraph (5) of Section 4.3.4.4.4(A) in its entirety and inserting the following in lieu thereof:

“(5) up to 123,099,041 shares of Series C Preferred issued pursuant to the Series C Purchase Agreement,”

4. Deleting subparagraph (6) of Section 4.3.4.4.4(A) in its entirety and inserting the following in lieu thereof:

“(6) up to 54,471 shares of Common and 2,227,314 shares of Series B Preferred issued upon the exercise of warrants described in the Disclosure Schedule to the Series C Purchase Agreement (such amounts to be adjusted proportionately in the event shares of Common are subdivided in to a greater number or combined into a lesser number),”

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation to be executed on its behalf by John N. Bonfiglio, its President and Chief Executive Officer this 21^st day of April, 2008.

/s/ John N. Bonfiglio

John N. Bonfiglio

President & Chief Executive Officer

	Argos Therapeutics, Inc.
Certificate of Amendment to Third Amended and Restated Certificate of Incorporation - Signature Page -

CERTIFICATE OF CORRECTION OF

THIRD AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ARGOS THERAPEUTICS, INC.

October 29, 2008

Argos Therapeutics, Inc., a corporation organized and existing under and by virtue of the Delaware General Corporation Law, does hereby certify:

1. The name of the corporation is Argos Therapeutics, Inc. (the “Company”).

2. The Third Amended and Restated Certificate of Incorporation of the Company filed by the Secretary of State of the State of Delaware on March 28, 2008 (as amended, the “Charter”), requires correction as permitted by Section 103 of the General Corporation Law of the State of Delaware.

3. The inaccuracies or defects of the Certificate of Amendment to be corrected pertain to the number of authorized shares of the Company’s capital stock that investors were to be issued in connection with the cancellation of certain accrued dividends.

4. The first sentence of Section 4.3.2.4 of the Charter is hereby corrected to read as follows:

“In the event a holder of Series A Preferred (i) executes the Series C Preferred Stock Purchase Agreement by and among the Company and the Purchasers named therein dated on or about the Filing Date (the “Series C Purchase Agreement”) and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement (such holder’s “Pro Rata Share”), and (ii) at the Initial Closing (as defined in the Series C Purchase Agreement; hereafter, the “Initial Closing”) purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-l to the Series C Purchase Agreement, then at the Initial Closing such holder shall be issued a number of additional shares of Series A Preferred as shall be determined by the Board of Directors of the Company.”

5. The first sentence of Section 4.4.2.4 of the Charter is hereby corrected to read as follows:

“In the event a holder of Series B Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement, then at the Initial Closing such holder shall be issued a number of additional shares of Series A Preferred as shall be determined by the Board of Directors of the Company.”

6. The first sentence of Section 4.5.2.4 of the Charter is hereby corrected to read as follows:

“In the event, a holder of Series B-l Preferred (i) executes the Series C Purchase Agreement and commits to purchase thereunder an amount of Series C Preferred having an aggregate purchase price at least equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit A-3 to the Series C Purchase Agreement, and (ii) at the Initial Closing purchases the amount of Series C Preferred allocated to such holder as set forth opposite such holder’s name under the heading “Cash Initial Shares” on Exhibit A-1 to the Series C Purchase Agreement, then at the Initial Closing such holder shall be issued a number of additional shares of Series A Preferred as shall be determined by the Board of Directors of the Company.”

[Remainder of Page Intentionally Left Blank]

2

IN WITNESS WHEREOF, the Company has caused this Certificate of Correction to be executed effective as of the date first set forth above.

ARGOS THERAPEUTICS, INC.
By:	/s/ William N. Wofford
	William N. Wofford, Assistant Secretary

	Argos Therapeutics, Inc.
Certificate of Correction of Third Amended and Restated Certificate of Incorporation - Signature Page -

SECOND CERTIFICATE OF AMENDMENT OF

FOURTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ARGOS THERAPEUTICS, INC.

Pursuant to Section 242

of

the General Corporation Law of the State of Delaware

Argos Therapeutics, Inc. (the “Company”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

1. The name of the Company is Argos Therapeutics, Inc.

2. At a meeting of the Board of Directors of the Company a resolution was duly adopted pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth this Certificate of Amendment of the Fourth Amended and Restated Certificate of Incorporation of the Company (this “Certificate of Amendment”), declaring said Certificate of Amendment to be in the best interest of the Company, and approving said Certificate of Amendment. The stockholders of the Company duly approved said proposed Certificate of Amendment by written consent in lieu of a meeting of the stockholders in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. The text of the Certificate of Amendment is as follows:

*  *  *  *  *

The Fourth Amended and Restated Certificate of Incorporation of the Company is hereby further amended by:

1. Deleting the first paragraph of Section 4.1 in its entirety and inserting the following in lieu thereof:

“The total number of shares of all classes of stock which the Company shall have authority to issue pursuant to this Fourth Amended and Restated Certificate of Incorporation (this “Restated Certificate”) is 391,519,894, of which (i) 230,000,000 shares are of a class designated “Common Stock”, $0.001 par value (the “Common”), and (ii) 161,519,894 shares are of a class designated “Preferred Stock”, $0.001 par value (the “Preferred”), of which 1,648,253 shares are of a series of such class designated “Series A Preferred Stock” (the “Series A Preferred”), 29,799,083 shares are of a series of such class designated “Series B Preferred Stock” (the “Series B Preferred”), 3,671,086 shares are of a series of such class designated “Series B-l Preferred Stock” (the “Series B-1 Preferred”), and 126,401,472 shares are of a series of such class designated “Series C Preferred Stock” (the “Series C Preferred”).”

2. Deleting subparagraph (3) of Section 4.3.4.4.4(A) in its entirety and inserting the following in lieu thereof:

“(3) up to 37,622,303 shares of Common issued upon the exercise of any options granted to employees or directors of, or consultants to, the Company as compensation for services rendered to the Company pursuant to one or more option plans approved by the affirmative vote or written consent of the Board of Directors, (such amount to be adjusted, proportionately in the event shares of Common are subdivided into a greater number or combined into a lesser number),”

3. Deleting subparagraph (6) of Section 4.3.4.4.4(A) in its entirety and inserting the following in lieu thereof:

“(6) up to 54,471 shares of Common and 1,600,000 shares of Series B Preferred issued upon the exercise of warrants described in the Disclosure Schedule to the Series C Purchase Agreement (such amounts to be adjusted proportionately in the event shares of Common are subdivided in to a greater number or combined into a lesser number),”

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Company has caused this Second Certificate of Amendment of Fourth Amended and Restated Certificate of Incorporation to be executed on its behalf by John N. Bonfiglio, its President and Chief Executive Officer this 19^th day of February, 2009.

/s/ John N. Bonfiglio

John N. Bonfiglio

President & Chief Executive Officer

	Argos Therapeutics, Inc.
Second Certificate of Amendment to Third Amended and Restated Certificate of Incorporation - Signature Page -

THIRD CERTIFICATE OF AMENDMENT OF

Third AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ARGOS THERAPEUTICS, INC.

Pursuant to Section 242

of

the General Corporation Law of the State of Delaware

Argos Therapeutics, Inc. (the “Company”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

1. The name of the Company is Argos Therapeutics, Inc.

2. By written consent in lieu of a meeting of the Board of Directors of the Corporation, pursuant to Section 141(f) of the General Corporation Law of the State of Delaware, a resolution was duly adopted, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth this Third Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation of the Company (this “Certificate of Amendment”), declaring said Certificate of Amendment to be in the best interest of the Company, and approving said Certificate of Amendment. The stockholders of the Company duly approved said proposed Certificate of Amendment by written consent in lieu of a meeting of the stockholders in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. The text of the Certificate of Amendment is as follows:

*  *  *  *  *

The Third Amended and Restated Certificate of Incorporation of the Company, as amended, is hereby further amended by:

1. Deleting the first paragraph of Section 4.1 in its entirety and inserting the following in lieu thereof:

“4.1 Authorization of Stock. The total number of shares of all classes of stock which the Company shall have authority to issue pursuant to this Third’ Amended and Restated Certificate of Incorporation (this “Restated Certificate”) is 433,039,894, of which (i) 250,760,000 shares are of a class designated “Common Stock”, $0.001 par value (the “Common”), and (ii) 182,279,894 shares are of a class designated “Preferred Stock”, $0.001 par value (the “Preferred”), of which 1,648,253 shares are of a series of such class designated “Series A Preferred Stock” (the “Series A Preferred”), 29,799,083 shares are of a series of such class designated “Series B Preferred Stock” (the “Series B Preferred”), 3,671,086 shares are of a series of such class designated “Series B-l Preferred Stock” (the “Series B-l Preferred”), and 147,161,472 shares are of a series of such class designated “Series C Preferred Stock” (the “Series C Preferred”).”

1

2. Adding a new Section 4.3.4.1.4 reading in its entirety as follows:

“4.3.4.1.4 2010 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.3.4.1.3 above, concurrently with the closing (the “2010 Convertible Note Closing”) under the 2010 Convertible Note and Warrant Purchase Agreement by and among the Company and the Investors named therein dated on or about September 9, 2010 (the “2010 Convertible Note Purchase Agreement”), fifty percent (50%) of the shares of Series A Preferred held by each holder of Series A Preferred and outstanding at the time of the 2010 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series A Preferred issued after the 2010 Convertible Note Closing pursuant to that certain Amended and Restated Put Agreement dated March 31, 2008, by and among the Company, DC Bio Corp., and the other individuals and entities party thereto from time to time (as amended or restated from time to time, the “Put Agreement”), shall immediately upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common shall not occur with respect to any share of Series A Preferred if the holder of such share of Series A Preferred (i) (A) executes the 2010 Convertible Note Purchase Agreement and commits to purchase thereunder a Pro Rata Note (as defined in the 2010 Convertible Note Purchase Agreement) in the principal amount equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit D to the 2010 Convertible Note Purchase Agreement, and (B) at the 2010 Convertible Note Closing purchases the Pro Rata Note allocated to such holder as set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2010 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2010 Convertible Note Closing, in an original principal amount of not less than $ 182,031.57 on terms substantially similar to those described in the 2010 Convertible Note Purchase Agreement. Following the conversion of such shares of Series A Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series A Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series A Preferred are converted pursuant to this Section 4.3.4.1.4(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2010 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series A Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series A Preferred so converted pursuant to this Section 4.3.4.1.4(a), whether declared or not, shall be cancelled. In determining whether any holder of Series A Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.3.4.1.4(a), any purchases of Pro Rata Notes (as defined in the 2010 Convertible Note Purchase Agreement) under the 2010 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Pro Rata Note shall be attributed to more than one holder of Preferred.

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(b) All shares of Common issued to any holder of Series A Preferred as a result of conversion pursuant to this Section 4.3.4.1.4 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of that certain Third Amended and Restated Stockholders’ Agreement by and among the Company and the other parties thereto dated March 31, 2008, as amended (the “Stockholders’ Agreement”), and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series A Preferred that has any shares of Series A Preferred converted pursuant to this Section 4.3.4.1.4. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series A Preferred so converted. If any holder of Series A Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

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3. Adding a new Section 4.4.4.1.4 reading in its entirety as follows:

“4.4.4.1.4 2010 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.4.4.1.3 above, concurrently with the 2010 Convertible Note Closing, fifty percent (50%) of the shares of Series B Preferred held by each holder of Series B Preferred and outstanding at the time of the 2010 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series B Preferred issued after the 2010 Convertible Note Closing pursuant to the Put Agreement, shall immediately upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common shall not occur with respect to any share of Series B Preferred if the holder of such share of Series B Preferred (i) (A) executes the 2010 Convertible Note Purchase Agreement and commits to purchase thereunder a Pro Rata Note (as defined in the 2010 Convertible Note Purchase Agreement) in the principal amount equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit D to the 2010 Convertible Note Purchase Agreement, and (B) at the 2010 Convertible Note Closing purchases the Pro Rata Note allocated to such holder as set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2010 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2010 Convertible Note Closing, in an original principal amount of not less than $182,031.87 on terms substantially similar to those described in the 2010 Convertible Note Purchase Agreement. Following the conversion of such shares of Series B Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series B Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series B Preferred are converted pursuant to this Section 4.4.4.1.4(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2010 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series B Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series B Preferred so converted pursuant to this Section 4.4,4.1.4(a), whether declared or not, shall be cancelled. In determining whether any holder of Series B Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.4.4,1.4(a), any purchases of Pro Rata Notes (as defined in the 2010 Convertible Note Purchase Agreement) under the 2010 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Pro Rata Note shall be attributed to more than one holder of Preferred.

(b) All shares of Common issued to any holder of Series B Preferred as a result of conversion pursuant to this Section 4.4.4.1.4 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

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(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series B Preferred that has any shares of Series B Preferred converted pursuant to this Section 4.4.4.1.4. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series B Preferred so converted. If any holder of Series B Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

4. Adding a new Section 4.5.4.1.4 reading in its entirety as follows:

“4.5.4.1.4 2010 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.5.4,1.3 above, concurrently with the 2010 Convertible Note Closing, fifty percent (50%) of the shares of Series B-l Preferred held by each holder of Series B-l Preferred and outstanding at the time of the 2010 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series B-l Preferred issued after the 2010 Convertible Note Closing pursuant to the Put Agreement, shall immediately upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common shall not occur with respect to any share of Series B-l Preferred if the holder of such share of Series B-l Preferred (i) (A) executes the 2010 Convertible Note Purchase Agreement and commits to purchase thereunder a Pro Rata Note (as defined in the 2010 Convertible Note Purchase Agreement) in the principal amount equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit D to the 2010 Convertible Note Purchase Agreement, and (B) at the 2010 Convertible Note Closing purchases the Pro Rata Note allocated to such holder as set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2010 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2010 Convertible Note Closing, in an original principal amount of not less than $182,031.87 on terms substantially similar to those described in the 2010 Convertible Note Purchase Agreement. Following the conversion of such shares of Series B-l Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series B-l Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series B-l Preferred are converted pursuant to this Section 4.5-4.1.4(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2010 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series B-l Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series B-l Preferred so converted pursuant to this Section 4.5.4.1.4(a), whether declared or not, shall be cancelled. In determining whether any holder of Series B-l Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.5.4.1.4(a), any purchases of Pro Rata Notes (as defined in the 2010 Convertible Note Purchase Agreement) under the 2010 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Pro Rata Note shall be attributed to more than one holder of Preferred.

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(b) All shares of Common issued to any holder of Series B-l Preferred as a result of conversion pursuant to this Section 4.5.4.1.4 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series B-l Preferred that has any shares of Series B-l Preferred converted pursuant to this Section 4.5.4.1.4. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series B-l Preferred so converted. If any holder of Series B-l Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

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5. Adding a new Section 4.6.4.1.4 reading in its entirety as follows:

“4.6.4.1.4 2010 Convertible Note Pay to Play Conversion

(a) Concurrently with the 2010 Convertible Note Closing under the 2010 Convertible Note Purchase Agreement, fifty percent (50%) of the shares of Series C Preferred held by each holder of Series C Preferred and outstanding at the time of the 2010 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series C Preferred issued after the 2010 Convertible Note Closing pursuant to the Put Agreement, shall immediately upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common shall not occur with respect to any share of Series C Preferred if the holder of such share of Series C Preferred (i) (A) executes the 2010 Convertible Note Purchase Agreement and commits to purchase thereunder a Pro Rata Note (as defined in the 2010 Convertible Note Purchase Agreement) in the principal amount equal to such holder’s Pro Rata Share as set forth opposite such holder’s name on Exhibit D to the 2010 Convertible Note Purchase Agreement, and (B) at the 2010 Convertible Note Closing purchases the Pro Rata Note allocated to such holder as set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2010 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2010 Convertible Note Closing, in an original principal amount of not less than $182,031.87 on terms substantially similar to those described in the 2010 Convertible Note Purchase Agreement. Following the conversion of such shares of Series C Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series C Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series C Preferred are converted pursuant, to this Section 4.6.4.1.4(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect, to such shares shall terminate at the 2010 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series C Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series C Preferred so converted pursuant to this Section 4.6.4.1.4(a), whether declared or not, shall be cancelled. In determining whether any holder of Series C Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.6.4.1.4(a), any purchases of Pro Rata Notes (as defined in the 2010 Convertible Note Purchase Agreement) under the 2010 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Pro Rata Note shall be attributed to more than one holder of Preferred.

(b) All shares of Common issued to any holder of Series C Preferred as a result of conversion pursuant to this Section 4.6.4.1.4 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price.

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(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series C Preferred that has any shares of Series C Preferred converted pursuant to this Section 4.6.4.1.4. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series C Preferred so converted. If any holder of Series C Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

6. Adding a new Section 4.3.4.4.4(9) reading in its entirety as follows:

“(9) up to 20,760,000 shares of Series C Preferred issued upon the exercise of warrants issued under the 2010 Convertible Note Purchase Agreement.”

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Company has caused this Third Certificate of Amendment of the Fourth Amended and Restated Certificate of Incorporation to be executed on its behalf by Jeffrey D. Abbey, its President and Chief Executive Officer, this 1^st day of September, 2010.

/s/ Jeffrey D. Abbey

Jeffrey D. Abbey

President & Chief Executive Officer

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FOURTH CERTIFICATE OF AMENDMENT OF

FOURTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ARGOS THERAPEUTICS, INC.

Pursuant to Section 242

of

the General Corporation Law of the State of Delaware

Argos Therapeutics, Inc. (the “Company”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

1. The name of the Company is Argos Therapeutics, Inc.

2. By written consent in lieu of a meeting of the Board of Directors of the Corporation, pursuant to Section 141(0 of the General Corporation Law of the State of Delaware, a resolution was duly adopted, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth this Fourth Certificate of Amendment of the Fourth Amended and Restated Certificate of Incorporation of the Company (this “Certificate of Amendment”), declaring said Certificate of Amendment to be in the best interest of the Company, and approving said Certificate of Amendment. The stockholders of the Company duly approved said proposed Certificate of Amendment by written consent in lieu of a meeting of the stockholders in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. ‘The text of the Certificate of Amendment is as follows:

*    *    *    *    *

The Fourth Amended and Restated Certificate of Incorporation of the Company, as amended, is hereby further amended by:

1. Deleting the first paragraph of Section 4.1 in its entirety and inserting the following in lieu thereof:

“4.1 Authorization of Stock. The total number of shares of all classes of stock which the Company shall have authority to issue pursuant to this Fourth Amended and Restated Certificate of Incorporation (this “Restated Certificate”) is 457,259,867, of which (i) 262,870,000 shares are of a class designated “Common Stock”, $0.001 par value (the “Common”), and (ii) 194,389,867 shares are of a class designated “Preferred Stock”, $0.001 par value (the “Preferred”), of which 1,648,253 shares are of a series of such class designated “Series A Preferred Stock” (the “Series A Preferred”), 29,799,083 shares are of a series of such class designated “Series B Preferred Stock” (the “Series B Preferred”), 3,671,086 shares are of a series of such class designated “Series B-1 Preferred

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Stock” (the “Series B-1 Preferred”), and 159,271,445 shares are of a series of such class designated “Series C Preferred Stock” (the “Series C Preferred”).”

2. Adding a new Section 4.3.4.1.5 reading in its entirety as follows:

“4.3.4.1.5 2011 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.3.4.1.3 and Section 4.3.4.1.4 above, concurrently with the closing (the “2011 Convertible Note Closing”) under the Convertible Note and Warrant Purchase Agreement by and among the Company and the Investors named therein dated on or about July     , 2011 (the “2011 Convertible Note Purchase Agreement”), fifty percent (50%) of the shares of Series A Preferred held by each holder of Series A Preferred and outstanding at the time of the 2011 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series A Preferred issued after the 2011 Convertible Note Closing pursuant to that certain Amended and Restated Put Agreement dated March 31, 2008, by and among the Company, DC Bio Corp., and the other individuals and entities party thereto from time to time (as amended or restated from time to time, the “Put Agreement”) (after giving effect to any conversion effected pursuant to Section 4.3.4.1.4), shall immediately following any conversion effected pursuant to Section 4.3.4.1.4 upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common pursuant to this Section 4.3.4.1.5 shall not occur with respect to any share of Series A Preferred if the holder of such share of Series A Preferred (i) executes the 2011 Convertible Note Purchase Agreement and at the 2011 Convertible Note Closing purchases a Note in the principal amount set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2011 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2011 Convertible Note Closing, in an original principal amount of not less than $58,880.75 on terms substantially similar to those described in the 2011 Convertible Note Purchase Agreement. Following the conversion of such shares of Series A Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series A Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series A Preferred are converted pursuant to this Section 4.3.4.1.5(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2011 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series A Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series A Preferred so converted pursuant to this Section 4.3.4.1.5(a), whether declared or not, shall be cancelled.

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In determining whether any holder of Series A Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.3.4.1 .5(a), any purchases of Notes (as defined in the 2011 Convertible Note Purchase Agreement) under the 2011 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Note shall be attributed to more than one holder of Preferred.

(b) All shares of Common issued to any holder of Series A Preferred as a result of conversion pursuant to this Section 4.3.4.1.5 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of that certain Third Amended and Restated Stockholders’ Agreement by and among the Company and the other parties thereto dated March 31, 2008, as amended (the “Stockholders’ Agreement”), and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series A Preferred that has any shares of Series A Preferred converted pursuant to this Section 4.3.4.1.5. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9 1 6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series A Preferred so converted. If any holder of Series A Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

3. Adding a new Section 4.4.4.1.5 reading in its entirety as follows:

“4.4.4.1.5 2011 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.4.4.1.3 and Section 4.4.4.1.4 above, concurrently with the 2011 Convertible Note Closing, fifty percent (50%) of the shares of Series B Preferred held by each holder of Series B Preferred and outstanding at the time of the 2011 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series B Preferred issued after the 2011 Convertible Note Closing pursuant to the Put Agreement (after giving effect to any conversion effected pursuant to Section 4.4.4.1.4), shall immediately following any conversion effected pursuant to Section 4.4.4.1.4 upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion

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to Common pursuant to this Section 4.4.4.1.5 shall not occur with respect to any share of Series B Preferred if the holder of such share of Series B Preferred (i) executes the 2011 Convertible Note Purchase Agreement and at the 2011 Convertible Note Closing purchases a Note in the principal amount set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2011 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2011 Convertible Note Closing, in an original principal amount of not less than $58,880.75 on terms substantially similar to those described in the 2011 Convertible Note Purchase Agreement. Following the conversion of such shares of Series B Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series B Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series B Preferred are converted pursuant to this Section 4.4.4.1.5(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2011 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series B Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series B Preferred so converted pursuant to this Section 4.4.4.1.5(a), whether declared or not, shall be cancelled. In determining whether any holder of Series B Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.4.4.1.5(a), any purchases of Notes (as defined in the 2011 Convertible Note Purchase Agreement) under the 2011 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Note shall be attributed to more than one holder of Preferred.

(b) All shares of Common issued to any holder of Series B Preferred as a result of conversion pursuant to this Section 4.4.4.1.5 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series B Preferred that has any shares of Series B Preferred converted pursuant to this Section 4.4.4.1.5. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if

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any of the parties that participate in the designation right have any of their shares of Series B Preferred so converted. If any holder of Series B Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

4. Adding a new Section 4.5.4.1.5 reading in its entirety as follows:

“4.5.4.1.5 2011 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.5.4.1.3 and Section 4.5.4.1.4 above, concurrently with the 2011 Convertible Note Closing, fifty percent (50%) of the shares of Series B-1 Preferred held by each holder of Series B-1 Preferred and outstanding at the time of the 2011 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series B-1 Preferred issued after the 2011 Convertible Note Closing pursuant to the Put Agreement (after giving effect to any conversion effected pursuant to Section 4.5.4.1.4), shall immediately following any conversion effected pursuant to Section 4.5.4.1.4 upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common pursuant to this Section 4.5.4.1.5 shall not occur with respect to any share of Series B-1 Preferred if the holder of such share of Series B-1 Preferred (i) executes the 2011 Convertible Note Purchase Agreement and at the 2011 Convertible Note Closing purchases a Note in the principal amount set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2011 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2011 Convertible Note Closing, in an original principal amount of not less than $58,880.75 on terms substantially similar to those described in the 2011 Convertible Note Purchase Agreement. Following the conversion of such shares of Series B-1 Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series B-1 Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series B-1 Preferred are converted pursuant to this Section 4.5.4.1.5(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2011 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series B-1 Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series B-1 Preferred so converted pursuant to this Section 4.5.4.1.5(a), whether declared or not, shall be cancelled. In determining whether any holder of Series B-1 Preferred has satisfied the criteria set forth in clause (i)

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and clause (ii) of this Section 4.5.4.1 .5(a), any purchases of Notes (as defined in the 2011 Convertible Note Purchase Agreement) under the 2011 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Note shall be attributed to more than one holder of Preferred.

(b) All shares of Common issued to any holder of Series B-1 Preferred as a result of conversion pursuant to this Section 4.5.4.1.5 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price (as defined below).

(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series B-1 Preferred that has any shares of Series B-1 Preferred converted pursuant to this Section 4.5.4.1.5. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series B-1 Preferred so converted. If any holder of Series B-1 Preferred loses the right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

5. Adding a new Section 4.6.4.1.5 reading in its entirety as follows:

“4.6.4.1.5 2011 Convertible Note Pay to Play Conversion

(a) In addition to, and not in lieu of, the pay to play conversion provisions set forth in Section 4.6.4.1.3 and Section 4.6.4.1.4 above, concurrently with the 2011 Convertible Note Closing under the 2011 Convertible Note Purchase Agreement, fifty percent (50%) of the shares of Series C Preferred held by each holder of Series C Preferred and outstanding at the time of the 2011 Convertible Note Closing shall automatically convert into shares of Common on a one-to-one basis except as expressly provided under this paragraph (a). In addition, fifty percent (50%) of any shares of Series C Preferred issued after the 2011 Convertible Note Closing pursuant to the Put Agreement (after giving effect to any conversion effected pursuant to Section 4.6.4.1.4), shall immediately following any conversion effected pursuant to Section 4.6.4.1.4 upon issuance convert into shares of Common on a one-to-one basis. The foregoing conversion to Common pursuant to this Section 4.6.4.1.5 shall not occur with respect to any share of Series C Preferred if the holder of such share of Series C Preferred (i) executes

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the 2011 Convertible Note Purchase Agreement and at the 2011 Convertible Note Closing purchases a Note in the principal amount set forth opposite such holder’s name under the heading “Pro Rata Note Amount” on the Schedule of Investors to the 2011 Convertible Note Purchase Agreement; OR (ii) purchases a convertible note from DC Bio Corp., on or about the date of the 2011 Convertible Note Closing, in an original principal amount of not less than $58,880.75 on terms substantially similar to those described in the 2011 Convertible Note Purchase Agreement. Following the conversion of such shares of Series C Preferred, the holder thereof shall surrender the certificate or certificates therefor at the office of the Company or any transfer agent for the Series C Preferred. Upon such surrender, the Company shall issue and deliver to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common to which such holder is entitled. If any of a holder’s shares of Series C Preferred are converted pursuant to this Section 4.6.4.1.5(a), then notwithstanding that the certificates evidencing such shares shall not have been surrendered, all rights with respect to such shares shall terminate at the 2011 Convertible Note Closing, except only the right of the holder to receive certificates evidencing the shares of Common upon surrender of the certificate evidencing such converted shares of Series C Preferred. Any dividends or distributions accrued but unpaid at the time of conversion with respect to a share of Series C Preferred so converted pursuant to this Section 4.6.4.1.5(a), whether declared or not, shall be cancelled. In determining whether any holder of Series C Preferred has satisfied the criteria set forth in clause (i) and clause (ii) of this Section 4.6.4.1.5(a), any purchases of Pro Rata Notes (as defined in the 2011 Convertible Note Purchase Agreement) under the 2011 Convertible Note Purchase Agreement by a Related Party of such holder shall, to the extent requested by such holder, be attributed to such holder; provided that no Pro Rata Note shall be attributed to more than one holder of Preferred.

(b) All shares of Common issued to any holder of Series C Preferred as a result of conversion pursuant to this Section 4.6.4.1.5 shall be aggregated for the purpose of determining the number of shares of Common to which such holder shall be entitled, and no fractional shares shall be issued in connection with such conversion. Any stockholder who would otherwise be entitled to receive a fractional share of Common as a result of such conversion shall receive in lieu thereof cash in an amount equal to such fraction multiplied by the Series C Original Purchase Price.

(c) The rights to designate directors under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement and the rights to designate an observer under Section 9.5 of the Stockholders’ Agreement shall terminate with respect to each holder of Series C Preferred that has any shares of Series C Preferred converted pursuant to this Section 4.6.4.1.5. In the case of a joint right to designate a director or an observer under Sections 9.1.1 through 9.1.6 of the Stockholders’ Agreement, such right shall terminate as to all parties that participate in such designation right if any of the parties that participate in the designation right have any of their shares of Series C Preferred so converted. If any holder of Series C Preferred loses the

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right to designate a director as a result of Section 9.7 of the Stockholders’ Agreement, such holder shall cause its designated director to resign and the Company’s Board of Directors may approve of a replacement director in accordance with Section 9.1.9 of the Stockholders’ Agreement.”

6. Adding a new Section 4.3.4.4.4(10) and Section 4.3.4.4.401) reading in its entirety as follows:

“(10) up to 12,109,73 shares of Series C Preferred issued upon the exercise of warrants issued under the 2011 Convertible Note Purchase Agreement.”

(11) up to 155,700 shares of Common issued upon the exercise of warrants issued during 2011 to GE Capital Corporation or its affiliates pursuant to a credit facility.”

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Company has caused this Fourth Certificate of Amendment of the Fourth Amended and Restated Certificate of Incorporation to be executed on its behalf by Jeffrey D. Abbey, its President and Chief Executive Officer, this 25^th day of July, 2011.

    /s/ Jeffrey D. Abbey

    Jeffrey D. Abbey

    President & Chief Executive Officer

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EX-3.3

Exhibit 3.3

BYLAWS

OF

ARGOS THERAPEUTICS, INC.

(formerly, Merix Bioscience, Inc. and Dendritix, Inc.)

BYLAWS

OF

ARGOS THERAPEUTICS, INC.

(formerly, Merix Bioscience, Inc. and Dendritix, Inc.)

ARTICLE I

OFFICES

1. Principal Office. The principal office of the Corporation shall be located in Durham County, North Carolina or such other place as is designated by the Board of Directors.

2. Registered Office. The registered office of the Corporation required by law to be maintained in the State of Delaware may be, but need not be, identical with the principal office.

3. Other Offices. The Corporation may have offices at such other places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as the affairs of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

1. Place of Meetings. All meetings of stockholders shall be held at the principal office of the Corporation or at such other place, either within or without the State of Delaware, as shall be designated in the notice of the meeting or agreed upon by the Board of Directors.

2. Annual Meeting. The annual meeting of the stockholders shall be held at the principal office of the Corporation during the month of April of each year on any day in that month (except a Saturday, Sunday or a legal holiday) and at such time as is determined by the Board of Directors, for the purpose of electing Directors of the Corporation and for the transaction of such other business as may be properly brought before the meeting.

3. Substitute Annual Meeting. If the annual meeting shall not be held on the day designated by these Bylaws, a substitute annual meeting may be called in accordance with the provisions of Section 4 of this Article II. A meeting so called shall be designated and treated for all purposes as the annual meeting. The shares represented at such substitute annual meeting, either in person or by proxy, and entitled to vote thereat, shall constitute a quorum for the purpose of such meeting.

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4. Special Meetings. Special meetings of the stockholders may be called at any time by the President, the Secretary or the Board of Directors of the Corporation, or by any stockholder pursuant to the written request of the holders of not less than one-tenth (1/10) of all the shares entitled to vote at the meeting.

5. Notice of Meetings.

(a) Written or printed notice stating the time and place of the meeting shall be delivered not less than ten (10) nor more than sixty (60) days before the date thereof, either personally or by mail, by or at the direction of the Board of Directors, President, Secretary or other person calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at his address as it appears on the record of stockholders of the Corporation, with postage thereon prepaid.

(b) In the case of an annual or substitute annual meeting, the notice of meeting need not specifically state the business to be transacted thereat unless it is a matter, other than election of Directors, on which the vote of the stockholders is expressly required by the provisions of the Delaware Corporation Law. In the case of a special meeting, the notice of meeting shall specifically state the purpose or purposes for which the meeting is called.

(c) When a meeting is adjourned for thirty (30) days or more, or when a new record date is fixed after the adjournment for the adjourned meeting, notice of the adjourned meeting shall be given as in the case of an original meeting. When a meeting is adjourned for less than thirty (30) days in any one adjournment, it is not necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat other than by announcement at the meeting at which the adjournment is taken.

6. Voting Lists. At least ten (10) days before each meeting of stockholders the Secretary of the Corporation shall prepare an alphabetical list of the stockholders entitled to vote at such meeting or any adjournment thereof, with the address of and number of shares held by each, which list shall be kept on file at a location in the city where such meeting is to be held or at the place where such meeting is to be held for a period of ten (10) days prior to such meeting, and shall be subject to inspection by any stockholder at any time during the usual business hours. This list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any stockholder during the whole time of the meeting.

7. Quorum.

(a) Unless otherwise provided by law, the holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. When a quorum is present at the original meeting, any business which might have been transacted at the original meeting may be transacted at an adjourned meeting, even when a quorum is not present. In the absence of a quorum at the opening of any meeting of stockholders, such meeting may be adjourned from time to time by the Board of Directors or the vote of a majority of the shares voting on the motion to adjourn, but no other business may be transacted until and unless a quorum is present. If later a quorum is present at an adjourned meeting, then any business may be transacted which might have been transacted at the original meeting.

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(b) The stockholders at a meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of sufficient stockholders to leave less than a quorum.

8. Voting of Shares.

(a) Each outstanding share having voting rights shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders.

(b) Except in the election of Directors, the vote of a majority of the shares voted on any matter at a meeting of stockholders, duly held and at which a quorum is present, shall be the act of the stockholders on that matter, unless the vote by a greater number is required by law or by the charter or Bylaws of the Corporation.

(c) Voting on all matters except the election of Directors shall be by voice vote or by a show of hands unless the holders of one-tenth (1/10) of the shares represented at the meeting shall, prior to the voting on any matter, demand a ballot vote on that particular matter.

(d) Shares of its own stock owned by the Corporation, directly or indirectly, through a subsidiary or otherwise, shall not be voted and shall not be counted in determining the total number of shares entitled to vote; except that shares held in a fiduciary capacity may be voted and shall be counted to the extent provided by law.

9. Proxies. Shares may be voted either in person or by one or more agents authorized by a written proxy executed by the stockholder or by his duly authorized attorney-in-fact. A proxy is not valid after the expiration of thirty-six (36) months from the date of its execution, unless the person executing it specifies therein the length of time for which it is to continue in force, or limits its use to a particular meeting.

10. Inspectors of Election.

(a) Appointment of Inspectors of Election. In advance of any meeting of stockholders, the Board of Directors may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election are not so appointed, the chairman of any such meeting may appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the Board of Directors in advance of the meeting or at the meeting by the person acting as chairman.

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(b) Duties of Inspectors. The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all stockholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical.

(c) Vote of Inspectors. If there are three inspectors of election, the decision, act or certificate of a majority shall be effective in all respects as the decision, act or certificate of all.

(d) Report of Inspectors. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge or question or matter determined by them and shall execute a certificate of any fact found by them. Any report or certificate made by them shall be a prima facie evidence of the facts stated therein.

11. Informal Action by Stockholders. Any action which is required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed and dated by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. When corporate action is taken without a meeting by less than unanimous written consent, prompt notice shall be given to those stockholders who have not consented in writing. Such signed and dated action must be filed with the Secretary of the Corporation to be kept in the Corporate minute book, whether done before or after the action so taken, but in no event later than sixty (60) days after the first signature date.

ARTICLE III

DIRECTORS

1. General Powers. The business and affairs of the Corporation shall be managed by the Board of Directors or by such committees as the Board may establish pursuant to these Bylaws.

2. Number, Term and Qualification. The number of Directors of the Corporation shall be not less than three (3) nor more than seven (7) as may be fixed or changed from time to time, within the minimum and maximum, by the stockholders or by the Board of Directors. Each Director shall hold office until his death, resignation, retirement, removal, disqualification, or his successor is elected and qualifies. Directors need not be residents of the State of Delaware or stockholders of the Corporation.

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3. Election of Directors. Except as provided in Section 5 of this Article III, the Directors shall be elected at the annual meeting of stockholders; and those persons who receive the highest number of votes shall be deemed to have been elected. Election of Directors may be, but shall not be required to be, by written ballot.

4. Removal. Directors may be removed from office with or without cause by a vote of stockholders holding a majority of the outstanding shares entitled to vote at an election of Directors. If a director is elected by a voting group of stockholders, only the stockholders of that voting group may participate in the vote to remove him. If any Directors are so removed, new Directors may be elected at the same meeting.

5. Vacancies. A vacancy occurring in the Board of Directors, including, without limitation, a vacancy created by an increase in the authorized number of Directors or resulting from the stockholders’ failure to elect the full authorized number of Directors, may be filled by the Board of Directors or if the Directors remaining in office constitute less than a quorum of the Directors, they may fill the vacancy by the affirmative vote of a majority of all remaining Directors or by the sole remaining Director. If the vacant office was held by a Director elected by a voting group, only the remaining Director or Directors elected by that voting group or the holders of shares of that voting group are entitled to fill the vacancy. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. The stockholders may elect a Director at any time to fill any vacancy not filled by the Directors.

6. Chairman. There may be a Chairman of the Board of Directors elected by the Directors from their number at any meeting of the Board of Directors. The Chairman shall preside at all meetings of the Board of Directors and of stockholders and perform such other duties as may be directed by the Board of Directors. Until a Chairman of the Board of Directors is elected, the President of the Corporation shall preside at the meetings of the Board of Directors and stockholders.

7. Compensation. The Board of Directors may provide for the compensation of Directors for their services as such and may provide for the payment of any and all expenses incurred by the Directors in connection with such services.

8. Executive and Other Committees.

(a) The Board of Directors, by resolution adopted by a majority of the number of Directors then in office, may designate from among its members an Executive Committee and one or more other committees, each consisting of one or more Directors, and each of which, to the extent authorized by law or provided in the resolution, shall have and may exercise all of the authority of the Board of Directors and may authorize the corporate seal to be affixed to all papers which may require it, except no such committee shall have authority as to the following matters: (i) the dissolution, merger or consolidation of the Corporation, or the sale, lease or exchange of all or substantially all of the property of the Corporation; (ii) the amendment of the Certificate of Incorporation; (iii) the amendment or repeal of the Bylaws or adoption of new Bylaws; (iv) the declaration of a dividend; (v) the issuance of stock; (vi) the adoption of a certificate of ownership and merger pursuant to Section 253 of the Delaware Corporation Law.

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(b) Any resolutions adopted or other action taken by any such committee within the scope of the authority delegated to it by the Board of Directors shall be deemed for all purposes to be adopted or taken by the Board of Directors. The designation of any committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility or liability imposed upon it or him by law.

(c) If a committee member is absent or disqualified, the qualified members present at a meeting, even if not a quorum, may unanimously appoint another Board of Directors member to act in the absent or disqualified member’s place.

(d) Regular meetings of any such committee may be held without notice at such time and place as such committee may fix from time to time by resolution. Special meetings of any such committee may be called by any member thereof upon not less than one day’s notice stating the place, date and hour of such meeting, which notice may be written or oral, and if mailed, shall be deemed to be delivered when deposited in the United States mail addressed to any member of the Executive Committee at his business address. Any member of the Executive Committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the Executive Committee need not state the business proposed to be transacted at the meeting.

(e) A majority of the members of any such committee shall constitute a quorum for the transaction of business at any meeting thereof, and actions of such committee must be authorized by the affirmative vote of a majority of the members of such committee.

(f) Any member of any such committee may be removed at any time with or without cause by resolution adopted by a majority of the Board of Directors.

(g) Any such committee shall elect a presiding officer from among its members and may fix its own rules of procedure which shall not be inconsistent with these Bylaws. It shall keep regular minutes of its proceedings and report the same to the Board of Directors for its information at the meeting thereof held next after the proceedings shall have been taken.

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ARTICLE IV

MEETINGS OF DIRECTORS

1. Regular Meetings. A regular meeting of the Board of Directors shall be held immediately after, and at the same place as, the annual meeting of stockholders. In addition, the Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings.

2. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board (if one has been duly elected), the President or any two Directors.

3. Notice of Meetings.

(a) Regular meetings of the Board of Directors may be held without notice.

(b) The person or persons calling a special meeting of the Board of Directors shall, at least two days before the meeting, give notice thereof by any usual means of communication. Such notice or waiver of notice shall specify the business to be transacted at, or the purpose of, the meeting that is called. Notice of an adjourned meeting need not be given if the time and place are fixed at the meeting adjourning and if the period of adjournment does not exceed ten (10) days in any one adjournment.

(c) A Director may waive notice of any meeting. Attendance by a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.

4. Quorum. A majority of the Directors in office immediately before the meeting shall constitute a quorum for the transaction of business at any meeting of the Board of Directors.

5. Manner of Acting.

(a) Except as otherwise provided in this Section, the act of a majority of the Directors then in office shall be the act of the Board of Directors, unless a greater number is required by law, the charter of the Corporation, or a Bylaw adopted by the stockholders.

(b) A Director of the Corporation, who is present at a meeting of the Board of Directors at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his contrary vote is recorded or his dissent is otherwise entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right of dissent shall not apply to a Director who voted in favor of such action.

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(c) The vote of a majority of the number of Directors then in office shall be required to adopt a resolution constituting an Executive Committee or other committee of the Board. The vote of a majority of the Directors then holding office shall be required to adopt, amend or repeal a Bylaw, or to adopt a resolution dissolving the Corporation without action by the stockholders, in circumstances authorized by law. Vacancies in the Board of Directors may be filled as provided in Section 5 of Article III of these Bylaws.

6. Informal Action by Directors. Action taken by the Directors or members of a committee of the Board of Directors without a meeting is nevertheless Board or committee action if written consent to the action in question is signed by all of the Directors or members of the committee, as the case may be, and filed with the minutes of the proceedings of the Board or committee, whether done before or after the action so taken.

7. Attendance by Telephone. Any one or more Directors or members of a committee may participate in a meeting of the Board or committee by means of a conference telephone or similar communications device which allows all persons participating in the meeting to hear each other, and such participation in the meeting shall be deemed presence in person at such meeting.

ARTICLE V

OFFICERS

1. Number. The officers of the Corporation shall consist of a President, a Secretary, a Treasurer, and such Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers as the Board of Directors may from time to time elect. Any two or more offices, other than that of President and Secretary, may be held by the same person. In no event, however, may an officer act in more than one capacity where action of two or more officers is required.

2. Election and Term. The officers of the Corporation shall be elected by the Board of Directors. Such election may be held at any regular or special meeting of the Board. Each officer shall hold office until his death, resignation, retirement, removal, disqualification, or his successor is elected and qualifies.

3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board with or without cause; but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

4. Compensation. The compensation of all officers of the Corporation shall be fixed by the Board of Directors.

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5. President. The President shall be the chief executive officer of the Corporation and, subject to the control of the Board of Directors, shall supervise and control the management of the Corporation in accordance with these Bylaws. He shall, in the absence of a Chairman of the Board of Directors, preside at all meetings of the Board of Directors and stockholders. He shall sign, with any other proper officer, certificates for shares of the Corporation and any deeds, mortgages, bonds, contracts, or other instruments which may be lawfully executed on behalf of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be delegated by the Board of Directors to some other officer or agent; and, in general, he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time.

6. Vice Presidents. The Vice Presidents, in the order of their appointment, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of that office. In addition, they shall perform such other duties and have such other powers as the President or the Board of Directors shall prescribe. The Board of Directors may designate one or more Vice Presidents to be responsible for certain functions, including, without limitation, Marketing, Finance, Manufacturing and Personnel.

7. Secretary. The Secretary shall keep accurate records of the acts and proceedings of all meetings of stockholders, Directors and committees. He shall give all notices required by law and by these Bylaws. He shall have general charge of the corporate books and records and of the corporate seal, and he shall affix the corporate seal to any lawfully executed instrument requiring it. He shall have general charge of the stock transfer books of the Corporation and shall keep, at the registered or principal office of the Corporation, a record of stockholders showing the name and address of each stockholder and the number and class of the shares held by each. He shall sign such instruments as may require his signature, and, in general, attest the signature or certify the incumbency or signature of any other officer of the Corporation and shall perform all duties incident to the office of Secretary and such other duties as may be assigned him from time to time by the President or by the Board of Directors.

8. Treasurer. The Treasurer shall have custody of all funds and securities belonging to the Corporation and shall receive, deposit or disburse the same under the direction of the Board of Directors. He shall keep full and accurate accounts of the finances of the Corporation in books especially provided for that purpose, which may be consolidated or combined statements of the Corporation and one or more of its subsidiaries as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for the year unless that information appears elsewhere in the financial statements. If financial statements are prepared for the Corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. The Corporation shall mail the annual financial statements, or a written notice of their availability, to each stockholder within one hundred twenty 120 days of the close of each fiscal year. The Treasurer shall, in general, perform all duties incident to his office and such other duties as may be assigned to him from time to time by the President or by the Board of Directors.

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9. Assistant Secretaries and Treasurers. The Assistant Secretaries and Assistant Treasurers shall, in the absence or disability of the Secretary or the Treasurer, perform the respective duties and exercise the respective powers of those offices, and they shall, in general, perform such other duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or by the Board of Directors.

10. Controller and Assistant Controllers. The Controller, if one has been appointed, shall have charge of the accounting affairs of the Corporation and shall have such other powers and perform such other duties as the Board of Directors shall designate. Each Assistant Controller shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Controllers shall exercise the powers of the Controller during that officer’s absence or inability to act.

11. Bonds. The Board of Directors, by resolution, may require any or all officers, agents and employees of the Corporation to give bond to the Corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the Board of Directors.

ARTICLE VI

CONTRACTS, LOANS AND DEPOSITS

1. Contracts. The Board of Directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute and deliver any instrument on behalf of the Corporation, and such authority may be general or confined to specific instances.

2. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.

3. Checks and Drafts. All checks, drafts or other orders for the payment of money issued in the name of the Corporation shall be signed by such officer or officers, or agent or agents, of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.

4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such depository or depositories as the Board of Directors shall direct.

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ARTICLE VII

CERTIFICATES FOR SHARES AND OTHER TRANSFER

1. Certificates for Shares. Certificates representing shares of the Corporation shall be issued, in such form as the Board of Directors shall determine, to every stockholder for the fully paid shares owned by him. These certificates shall be signed by the President or any Vice President or a person who has been designated as the chief executive officer of the Corporation and by the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer and sealed with the seal of the Corporation or a facsimile thereof. The signatures of any such officers upon a certificate may be facsimiles or may be engraved or printed or omitted if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile or other signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. The certificates shall be consecutively numbered or otherwise identified; and the name and address of the persons to whom they are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation.

2. Transfer of Shares. Transfer of shares shall be made on the stock transfer books of the Corporation only upon surrender of the certificates for the shares sought to be transferred by the record holder thereof or by his duly authorized agent, transferee or legal representative. All certificates surrendered for transfer shall be canceled before new certificates for the transferred shares shall be issued.

3. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfer and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers.

4. Restrictions on Transfer.

(a) No stockholder or involuntary transferee shall dispose of or transfer any shares of the Corporation which he now owns or may hereafter acquire except as set forth in this Paragraph 4 of Article VII. Any purported transfer or disposition of shares in violation of the terms of this Paragraph 4 of Article VII shall be void and the Corporation shall not recognize or give any effect to such transaction.

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(b) A stockholder shall be free to transfer, during his lifetime or by testamentary transfer, any or all of his shares of the Corporation to his spouse, any of his children, grandchildren or direct lineal descendants, whether by blood or by adoption, spouses of such issue or a trust for the sole benefit of those persons or any of them; but, in case of any such transfer, the transferee shall be bound by all the provisions of these Bylaws and no further transfer of such shares shall be made by such transferee except back to the stockholder who originally owned them or except in accordance with the provisions of this Paragraph 4 of Article VII.

(c) Any stockholder, or transferee of such stockholder, who wishes to transfer all or any part of his shares of the Corporation (hereinafter “offeror”), other than is permitted in subparagraph (c) above, first shall submit a written offer to sell such shares to the Corporation at the same price per share and upon the same terms and conditions offered by a bona fide prospective purchaser of such shares. Such written offer to the Corporation shall continue to be a binding offer to sell until: (1) expressly rejected by an officer or Director of the Corporation acting pursuant to resolution formally adopted by a majority of the outstanding shares (excluding shares held by the offeror); or (2) the expiration of a period of thirty (30) days after delivery of such written offer to the Corporation, whichever shall first occur.

(d) Upon termination of the offer referred to in subparagraph (d) above, the offeror shall then submit to each of the other holders of shares written offers to sell (hereinafter “offeree”), at the same price per share and upon the same terms and conditions previously offered to the Corporation, any of the shares not previously purchased by the Corporation under the aforesaid offer to it, such shares to be allocated among the offerees on the basis of the percentage of shares then held by them. Each such offer shall continue to be a binding offer to sell until expressly accepted or rejected by the offeree or until the expiration of twenty (20) days after its delivery to the offeree, whichever shall first occur. If any such offeree does not elect to purchase all the shares offered to him, any other offeree may purchase all or any part of the unpurchased shares by giving to the offeror written notice of his election so to purchase not later than five (5) days after the termination of the original offer to the offeree who did not elect to purchase all such shares. If more than one offeree exercises this election to purchase unpurchased shares, such shares shall be divided between or among such offerees in proportion to their then respective holdings of shares. Unless all of the shares offered are purchased by the Corporation and the other stockholders, then all acceptances to purchase less than all of such shares shall be deemed null and void.

(e) Every written offer submitted in accordance with the provisions of this paragraph shall specifically name the person to whom the offeror intends to transfer the shares, the number of shares which he intends so to transfer to each person and the price per share and other terms upon which each intended transfer is to be made. Upon the termination of all such written offers and the five-day period provided for in subparagraph (e) above, the offeror shall be free to transfer, for a period of three (3) months thereafter, any unpurchased shares to the persons so named at the price per share and upon the other terms and conditions so named, provided that any such transferee of those shares shall thereafter be bound by all the provisions of these Bylaws.

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(f) Every written offer submitted to the Corporation shall be deemed to have been delivered when delivered in person to each member of the Board of Directors or if and when sent by prepaid registered or certified mail, to all of the Directors at their last known business addresses. Every written offer submitted to an offeree shall be deemed to have been delivered if and when delivered in person to such offeree or if and when sent by prepaid registered or certified mail, to such offeree at his address as it then appears on the stock books of the Corporation or, if no address appears on said stock books, to his last known residence address.

(g) If any consideration to be received by the offeror for the shares offered is property other than cash, then the price per share shall be measured to the extent of the fair market value of such noncash consideration.

(h) The provisions contained herein shall not apply to the pledge of any shares of the Corporation as collateral for a loan but shall apply to the sale or other disposition of shares under any such pledge.

(i) In the event of any conflict between the terms of this Section 4 of Article VII and any written agreement between the Corporation and any stockholder of the Corporation, the terms of such written agreement shall control, and the provisions of this Section shall not be applicable.

5. Legends. Every certificate representing shares of the Corporation shall bear the following legend prominently displayed:

“The shares represented by this certificate, and the transfer thereof, are subject to the provisions of the Bylaws of the Corporation, a copy of which is on file in, and may be examined at, the principal office of the Corporation.”

6. Closing Transfer Books and Fixing Record Date.

(a) For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, such record date shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Such determination of stockholders of record shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

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(b) For the purpose of determining the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, such record date, when no prior action by the Board of Directors is required by this chapter, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is filed with the Secretary of the Corporation. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware Corporation Law, such record date shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

(c) For the purpose of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

7. Lost Certificates. The Board of Directors may authorize the issuance of a new share certificate in place of a certificate claimed to have been lost or destroyed, upon receipt of an affidavit of such fact from the person claiming the loss or destruction. When authorizing such issuance of a new certificate, the Board may require the claimant to give the Corporation a bond in such sum as it may direct to indemnify the Corporation against loss from any claim with respect to the certificate claimed to have been lost or destroyed; or the Board may, by resolution reciting that the circumstances justify such action, authorize the issuance of the new certificate without requiring such a bond.

8. Holder of Record. The Corporation may treat as absolute owner of the shares the person in whose name the shares stand of record on its books just as if that person had full competency, capacity, and authority to exercise all rights of ownership irrespective of any knowledge or notice to the contrary or any description indicating a representative, pledge or other fiduciary relation or any reference to any other instrument or to the rights of any other person appearing upon its record or upon the share certificate; except that any person furnishing to the Corporation proof of his appointment as a fiduciary shall be treated as if he were a holder of record of the Corporation’s shares.

9. Treasury Shares. Treasury shares of the Corporation shall consist of such shares as have been issued and thereafter acquired but not canceled by the Corporation. Treasury shares shall not carry voting or dividend rights, except rights in share dividends.

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ARTICLE VIII

INDEMNIFICATION AND REIMBURSEMENT

OF DIRECTORS AND OFFICERS

1. Indemnification for Expenses and Liabilities: Any person who at any time serves or has served (i) as a director, officer, employee or agent of the Corporation, (ii) at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, or (iii) at the request of the Corporation as a trustee or administrator under an employee benefit plan, or is called as a witness at a time when he or she has not been made a named defendant or respondent to any Proceeding, shall have a right to be indemnified by the Corporation to the fullest extent from time to time permitted by law against Liability and Expenses in any Proceeding (including without limitation a Proceeding brought by or on behalf of the Corporation itself) arising out of his or her status as such or activities in any of the foregoing capacities.

The Board of Directors of the Corporation shall take all such action as may be necessary and appropriate to authorize the Corporation to pay the indemnification required by this provision, including without limitation, to the extent needed, making a good faith evaluation of the manner in which the claimant for indemnity acted and of the reasonable amount of indemnity due him or her.

Any person who at any time serves or has served in any of the aforesaid capacities for or on behalf of the Corporation shall be deemed to be doing or to have done so in reliance upon, and as consideration for, the rights provided for herein. Any repeal or modification of these indemnification provisions shall not affect any rights or obligations existing at the time of such repeal or modification. The rights provided for herein shall inure to the benefit of the legal representatives of any such person and shall not be exclusive of any other rights to which such person may be entitled apart from this provision.

The rights granted herein shall not be limited by the provisions contained in Section 145 of the Delaware Corporation Law or any successor to such statute.

2. Advance Payment of Expenses: The Corporation shall (upon receipt of an undertaking by or on behalf of the director, officer, employee or agent involved to repay the Expenses described herein unless it shall ultimately be determined that he or she is entitled to be indemnified by the Corporation against such Expenses) pay Expenses incurred by such director, officer, employee or agent in defending a Proceeding or appearing as a witness at a time when he or she has not been named as a defendant or a respondent with respect thereto in advance of the final disposition of such Proceeding.

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3. Insurance: The Corporation shall have the power to purchase and maintain insurance (on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust or other enterprise or as a trustee or administrator under an employee benefit plan) against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability.

4. Definitions: The following terms as used in this Article shall have the following meanings. “Proceeding” means any threatened, pending or completed action, suit, or proceeding and any appeal therein (and any inquiry or investigation that could lead to such action, suit, or proceeding), whether civil, criminal, administrative, investigative or arbitrative and whether formal or informal. “Expenses” means expenses of every kind, including counsel fees. “Liability” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), reasonable expenses incurred with respect to a Proceeding, and all reasonable expenses incurred in enforcing the indemnification rights provided herein. “Director,” “officer,” “employee” and “agent” include the estate or personal representative of a director, officer, employee or agent. “Corporation” shall include any domestic or foreign predecessor of this Corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

ARTICLE IX

GENERAL PROVISIONS

1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and by its charter.

2. Seal. The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form of as may be approved from time to time by the Board of Directors. Such seal may be an impression or stamp and may be used by the officers of the Corporation by causing it, or a facsimile thereof, to be impressed or affixed or in any other manner reproduced. In addition to any form of seal adopted by the Board of Directors, the officers of the Corporation may use as the corporate seal a seal in the form of a circle containing the name of the Corporation and the state of its incorporation (or an abbreviation thereof) on the circumference and the word “Seal” in the center.

3. Waiver of Notice. Whenever any notice is required to be given to any stockholder or Director under the provisions of the Delaware Corporation Law or under the provisions of the charter or Bylaws of the Corporation, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice.

4. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.

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5. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device; provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.

6. Amendments. Except as otherwise provided herein, these Bylaws may be amended or repealed and new Bylaws may be adopted by the affirmative vote of stockholders entitled to exercise a majority of voting power of the Corporation, or, if the Certificate of Incorporation of the Corporation so permits, by the affirmative vote of a majority of the Directors then holding office at any regular or special meeting of the Board of Directors or by unanimous written consent.

The Board of Directors shall have no power to adopt a Bylaw: (i) changing the statutory requirement for a quorum of Directors or action by Directors or changing the statutory requirement for a quorum of stockholders or action by stockholders; (ii) providing for the management of the Corporation otherwise than by the Board of Directors or the committees thereof; (iii) increasing or decreasing the number of Directors; or (iv) classifying and staggering the election of Directors.

No Bylaw adopted or amended by the stockholders may be altered or repealed by the Board of Directors, except to the extent that such Bylaw provision expressly authorizes its amendment or repeal by the Board of Directors. Section 4 of Article VII may not be amended without the affirmative vote or written consent of not less than 75% of the then outstanding shares of capital stock of the Corporation.

THIS IS TO CERTIFY that the above Bylaws were duly adopted by the Board of Directors of the Corporation by action taken, without a meeting, effective July 15, 1997.

/s/ Fred D. Hutchison

Fred D. Hutchison, Assistant Secretary

Dated: September 4, 1998

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AMENDMENT TO BYLAWS

OF DENDRITIX, INC.

Effective September 10, 1998

1. The Bylaws of the Corporation are hereby amended by deleting Section 4 of Article VII in its entirety and substituting the following Section 4 of Article VII in lieu thereof:

“4. Restrictions on Transfer.

(a) No stockholder or involuntary transferee shall dispose of or transfer any shares of the Corporation which he now owns or may hereafter acquire except as set forth in this Section 4 of Article VII. Any purported transfer or disposition of shares in violation of the terms of this Section 4 of Article VII shall be void and the Corporation shall not recognize or give any effect to such transaction.

(b) An individual stockholder shall be free to transfer, during his lifetime or by testamentary transfer, any or all of his shares of the Corporation to his spouse, any of his children, grandchildren or direct lineal descendants, whether by blood or by adoption, spouses of such issue, parents, siblings, or direct lineal descendents, whether by blood or by adoption, of such siblings or a trust or family limited partnership for the sole benefit of those persons or any of them, a Section 501(c)(3) organization or a non-profit foundation or other non-profit organization; and a stockholder, which is a partnership, corporation or limited liability company shall be free to transfer any or all of its shares of the Corporation to its partners, stockholders or members, respectively, if there is no consideration for such transfer; but, in case of any such transfer, the transferee shall be bound by all the provisions of this Agreement and no further transfer of such shares shall be made by such transferee except back to the stockholder who originally owned them or except in accordance with the provisions of this Section 4 of Article VII.

(c) Any stockholder, or transferee of such stockholder, who wishes to transfer all or any part of his shares of the Corporation (hereinafter “offeror”), other than as permitted in subparagraph (b) above, first shall submit a written offer to sell such shares to the Corporation at the same price per share and upon the same terms and conditions offered by a bona fide prospective purchaser of such shares. Such written offer to the Corporation shall continue to be a binding offer to sell until: (1) expressly rejected by the Corporation; or (2) the expiration of a period of thirty (30) days after delivery of such written offer to the Corporation, whichever shall first occur.

(d) Every written offer submitted in accordance with the provisions of this Section 4 of Article VII shall specifically name the person to whom the offeror intends to transfer the shares, the number of shares which he intends so to transfer to each person and the price per share and other terms upon which each intended transfer is to be made. Upon the termination of all such written offers provided for in subparagraph (c) above, the offeror shall be free to transfer, for a period of three (3) months thereafter, any unpurchased shares to the persons so named at the price per share and upon the other terms and conditions so named, provided that any such transferee of those shares shall thereafter be bound by all the provisions of these Bylaws.

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(e) Every written offer submitted to the Corporation shall be deemed to have been delivered when delivered in person to each member of the Board of Directors or if and when sent by prepaid registered or certified mail, to all of the Directors at their last known business addresses.

(f) If any consideration to be received by the offeror for the shares offered is property other than cash, then the price per share shall be measured to the extent of the fair market value of such noncash consideration.

(g) The provisions contained herein shall not apply to the pledge of any shares of the Corporation as collateral for a loan but shall apply to the sale or other disposition of shares under any such pledge.

(h) In the event of any conflict between the terms of this Section 4 of Article VII and any written agreement between the Corporation and any stockholder of the Corporation, the terms of such written agreement shall control, and the provisions of this Section shall not be applicable.

(i) Every certificate representing shares of the Corporation shall bear the following legend prominently displayed:

“The securities represented by this certificate, and the transfer thereof, are subject to the provisions of the Bylaws of the Corporation, a copy of which is on file in, and may be examined at, the principal office of the Corporation.”

(j) The restrictions set forth in this Section 4 of Article VII shall terminate upon the closing of a public offering of securities of the Corporation registered under the Securities Act of 1933, as amended.”

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AMENDMENT TO BYLAWS

OF

MERIX BIOSCIENCE, INC.

Effective April 10, 2001

The Bylaws of the Corporation are hereby amended by deleting the first sentence of Section 2 of Article III and substituting the following sentence in lieu thereof:

“The number of Directors of the Corporation shall be not less than three (3) nor more than nine (9) as may be fixed or changed from time to time, within the minimum and maximum, by the stockholders or by the Board of Directors.”

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AMENDMENT TO BYLAWS

The Bylaws of the Corporation are hereby amended by deleting the first sentence of Section 2 of Article III and substituting the following sentence in lieu thereof:

“The number of Directors of the Corporation shall be not less than three (3) nor more than ten (10) as may be fixed or changed from time to time, within the minimum and maximum, by the stockholders or by the Board of Directors.”

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EX-10.1

Exhibit 10.1

SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

This Second Amended and Restated Registration Rights Agreement dated as of March 31, 2008 (this “Agreement”), among Argos Therapeutics, Inc., a Delaware corporation (the “Company”), and the persons executing a counterpart of this Agreement listed as Holders on the signature pages of this Agreement.

PRELIMINARY STATEMENT

The Company and the Holders of Series A Preferred Stock, Series B Preferred Stock and Series B-1 Preferred Stock were parties to a First Amended and Restated Registration Rights Agreement dated as of April 11, 2001, as amended by that certain Joinder and Amendment to First Amended and Restated Registration Rights Agreement dated as of June 17, 2004 (the “Old Registration Rights Agreement”).

The Company and the purchasers of Series C Preferred Stock have entered into a certain Series C Preferred Stock Purchase Agreement of even date herewith (the “Series C Purchase Agreement”) pursuant to which the Company has agreed to sell and such purchasers have severally agreed to purchase shares of the Series C Preferred Stock.

The Company and the other parties to this Agreement intend that, upon the execution of this Agreement, the Old Registration Rights Agreement shall be superseded by, and amended and restated in its entirety as provided for in this Agreement.

In consideration of the mutual representations and agreements set forth in this Agreement, the Company and the Holders agree to the following:

AGREEMENT

1. RESTATEMENT

1.1 The Old Registration Rights Agreement is hereby superseded by, and amended and restated in its entirety as provided for herein.

2. DEFINITIONS

2.1 As used in this Agreement, the following terms shall have the following meanings:

2.1.1 “Affiliate” means any entity controlling, controlled by or under common control with a designated person. For the purposes of this definition, “control” shall have the meaning specified as of the date of this Agreement for that word in Rule 405 promulgated by the Commission under the Securities Act;

2.1.2 “Aurora Entities” means Aurora Ventures II, LLC, Harbinger/Aurora Venture Fund, LLC, Harbinger/Aurora QP Venture Fund, LLC and their Related Parties, collectively;

2.1.3 “Board” means the Board of Directors of the Company;

2.1.4 “Commencement Date” means the earliest date as of which the Holders shall be entitled to exercise registration rights hereunder, which date shall be the earlier of (a) the fourth anniversary of the date of this Agreement or (b) the 180^th day after the effective date of a Qualified Public Offering;

2.1.5 “Commission” means the Securities and Exchange Commission, and any successor thereto;

2.1.6 “Common Stock” means the Company’s Common Stock, par value $0.001 per share;

2.1.7 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any statute or statutes which shall be enacted to take the place of such Exchange Act, together with all rules and regulations promulgated thereunder;

2.1.8 “Forbion Entities” means Forbion Capital Partners, Cooperatieve AAC LS U.A., a cooperative association with corporate seat in Amsterdam, their Related Parties and ABN-AMRO Ventures B.V., collectively;

2.1.9 “Holders” means holders of outstanding Registrable Securities who are (a) persons executing a counterpart of this Agreement listed as Holders on the signature pages of this Agreement, and (b) any subsequent legal or beneficial owner of Registrable Securities who has become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement in the form of Exhibit B attached hereto and in accordance with Section 15 of this Agreement, including purchasers who purchase Series C Preferred Stock after the date hereof pursuant to the Series C Purchase Agreement;

2.1.10 “Intersouth Entities” means Intersouth Affiliates V, L.P., Intersouth Partners IV, L.P., Intersouth Partners V, L.P. and their Related Parties, collectively;

2.1.11 “Lumira Entities” means Lumira Capital I Limited Partnership, Lumira Capital I Quebec Limited Partnership, SC Biotechnology Development Fund LP, 1761895 Ontario Inc. and their Related Parties, collectively;

2.1.12 “Manager” shall have the meaning ascribed thereto in subsection 2.1.19;

2.1.13 “Notices” shall have the meaning ascribed thereto in subsection 16.4;

2.1.14 “Old Registration Rights Agreement” shall have the meaning ascribed thereto in the Preliminary Statement;

2.1.15 “Preferred Stock” means the Series A Preferred Stock, the Series B Preferred Stock, the Series B-1 Preferred Stock and the Series C Preferred Stock, collectively;

2.1.16 “Qualified Public Offering” means the closing of an initial public offering by the Company for its own account of Common Stock pursuant to a registration statement on Form S-1 (or such successor form as the Commission may promulgate) in which the offering price per share is not less than $0.867054 (as adjusted for stock splits, dividends and the like) with aggregate proceeds to the Company of not less than $30,000,000 (before deduction of underwriters commissions and expenses);

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2.1.17 “Registrable Securities” shall mean the Series A Registrable Securities, the Series B Registrable Securities, the Series B-1 Registrable Securities and the Series C Registrable Securities, collectively. Wherever reference is made in this Agreement to a request or consent of Holders of a certain percentage of Registrable Securities, the determination of such percentage shall be calculated on the basis of shares of Common Stock issued or issuable in respect of the Preferred Stock;

2.1.18 “Registration Expenses” shall have the meaning ascribed thereto in subsection 8.1;

2.1.19 “Related Parties” means with respect to a Stockholder (a) such Stockholder’s Affiliates and (b) if such Stockholder is a venture capital or other investment fund, such Stockholder’s exclusive provider of investment management or investment advisory services (a “Manager”), such Manager’s Affiliates, any other venture capital or investment fund to which such Manager or its Affiliates provide exclusive investment management or investment advisory services, and any other venture capital or investment fund in the same fund family, and “Related Parties” shall mean all of them collectively;

2.1.20 “Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any successor Rule thereto;

2.1.21 “Securities Act” means the Securities Act of 1933, as amended prior to or after the date of this Agreement, or any federal statute or statutes which shall be enacted to take the place of such Act, together with all rules and regulations promulgated thereunder;

2.1.22 “Selling Expenses” shall have the meaning ascribed thereto in subsection 8.1;

2.1.23 “Series A Preferred Stock” means the Company’s Series A Preferred Stock, par value $0.001 per share;

2.1.24 “Series A Registrable Securities” shall mean (i) shares of Common Stock issued or issuable pursuant to the conversion of shares of Series A Preferred Stock and (ii) any shares of Common Stock issued or issuable in respect of such shares upon any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, sale of assets or similar event, excluding in any event securities which have (a) been registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) been sold to the public pursuant to Rule 144 under the Securities Act;

2.1.25 “Series B Preferred Stock” means the Company’s Series B Preferred Stock, par value $0.001 per share;

2.1.26 “Series B Registrable Securities” shall mean (i) shares of Common Stock issued or issuable pursuant to the conversion of shares of Series B Preferred Stock and (ii) any shares of Common Stock issued or issuable in respect of such shares upon any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, sale of assets or similar event, excluding in any event securities which have (a) been registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) been sold to the public pursuant to Rule 144 under the Securities Act;

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2.1.27 “Series B-1 Preferred Stock” means the Company’s Series B-1 Preferred Stock, par value $0.001 per share;

2.1.28 “Series B-1 Registrable Securities” shall mean (i) shares of Common Stock issued or issuable pursuant to the conversion of shares of Series B-1 Preferred Stock and (ii) any shares of Common Stock issued or issuable in respect of such shares upon any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, sale of assets or similar event, excluding in any event securities which have (a) been registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) been sold to the public pursuant to Rule 144 under the Securities Act;

2.1.29 “Series C Preferred Stock” means the Company’s Series C Preferred Stock, par value $0.001 per share;

2.1.30 “Series C Purchase Agreement” shall have the meaning ascribed thereto in the Preliminary Statement;

2.1.31 “Series C Registrable Securities” shall mean (i) shares of Common Stock issued or issuable pursuant to the conversion of shares of Series C Preferred Stock and (ii) any shares of Common Stock issued or issuable in respect of such shares upon any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, sale of assets or similar event, excluding in any event securities which have (a) been registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them or (b) been sold to the public pursuant to Rule 144 under the Securities Act. Wherever reference is made in this Agreement to a request or consent of Holders of a certain percentage of Series C Registrable Securities, the determination of such percentage shall be calculated on the basis of shares of Common Stock issued or issuable in respect of the Series C Preferred Stock;

2.1.32 “Short Form” means Form S-3 under the Securities Act, and any other form promulgated after the date of this Agreement applicable in circumstances substantially comparable to either of those forms, regardless of its designation; and

2.1.33 “TVM Entities” means TVM V Life Science Ventures GmbH & Co. KG and its Related Parties, collectively;

3. DEMAND REGISTRATIONS

3.1 At any time on or after the Commencement Date, by a written notice to the Company, a Holder or Holders holding at least 25% of the Registrable Securities then outstanding may from time to time request that the Company register on Form S-1 or Form S-2 under the Securities Act (or such successor forms as the Commission may promulgate) and under other relevant securities laws, for disposition in accordance with methods stated in the notice, Registrable Securities having an aggregate proposed offering price of at least $3,000,000.

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3.2 When it receives a registration notice under subsection 3.1, the Company shall promptly deliver a copy of the registration notice to each Holder who is not a party to the registration notice, each of whom may then specify, by notice to the Company within fifteen (15) days of receipt of such registration notice, a number of shares of Registrable Securities which it wishes to include in any registration pursuant to the registration notice under subsection 3.1.

3.3 When it receives a registration notice under subsection 3.1, the Company shall use its best efforts to effect the registration under the Securities Act of Registrable Securities specified in the registration notice under subsection 3.1 and subsequent notices under subsection 3.2, all to the extent requisite to permit disposition by such Holders in accordance with the intended methods of disposition described in the registration notice.

4. REGISTRATIONS ON SHORT FORMS

4.1 In addition to the rights provided for in subsection 3.1, if at any time the Company is a registrant entitled to use a Short Form to register Registrable Securities, one (1) or more Holders holding an aggregate of at least 15% of the Registrable Securities then outstanding may by a written notice to the Company request that the Company register Registrable Securities specified in the notice on a Short Form. The Holders shall be entitled to request an unlimited number of registrations on Short Forms.

4.2 When it receives a notice under subsection 4.1, and provided that the reasonably anticipated price to the public of the Registrable Securities proposed to be registered would total more than $1,000,000, the Company shall use its best efforts to effect the expeditious registration under the Securities Act, on a Short Form, of Registrable Securities specified in the notice which are not then freely tradeable without any volume or other limitations pursuant to the provisions of Rule 144.

4.3 When it receives a registration notice under subsection 4.1, the Company shall promptly deliver a copy of the registration notice to each Holder who is not a party to the registration notice, each of whom may then specify, by notice to the Company within fifteen (15) days of receipt of such registration notice, a number of Registrable Securities which it wishes to include in any registration pursuant to the registration notice under subsection 4.1.

4.4 Notwithstanding subsections 4.1 and 4.2, the Company shall not be required to effect any Short Form registration within six (6) months after the effective date of any other registration statement of the Company (other than on Forms S-4 or S-8 or their equivalents).

4.5 The Company shall use all reasonable efforts to qualify for registration on any Short Form; and to that end the Company shall register (whether or not required by law to do so) the Common Stock under the Exchange Act in accordance with the provisions of that Act following the effective date of the first registration of any securities of the Company on Form S-1 or any comparable or successor form.

5. INCIDENTAL REGISTRATIONS

5.1 Each time the Company proposes to register any of its securities under the Securities Act (other than pursuant to Section 3 or 4 hereof) prior to the tenth anniversary of the effective date of a Qualified Public Offering, for sale to the public, whether for its own account or for the account of other security holders or both, it will give at least sixty (60) days’ advance written notice of its intention to do so to each Holder. Each Holder may then specify, by notice to the Company within fifteen (15) days of its receipt of the Company’s notice, a number of shares of Registrable Securities which it wishes to include in the Company’s proposed registration. Subject to the market cutback limitations of Section 10, the Company will use its best efforts to effect the registration under the Securities Act of Registrable Securities specified by Holders under this Section 5.

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6. LIMITATIONS ON REGISTRATION RIGHTS

6.1 Notwithstanding any contrary provision of this Agreement:

6.1.1 the Company shall not be required to effect more than two (2) registrations pursuant to Section 3 at its expense; provided, however, that a demand for registration shall not count as one (1) of the two (2) registrations permitted pursuant to Section 3 under this paragraph 6.1.1 if either (i) the registration statement filed with respect to such registration is not declared effective by the Commission, or (ii) the Holders requesting registration of Registrable Securities under subsections 3.1 and 3.2 do not register and sell at least 90% of the Registrable Securities they have requested be registered in such registration, and provided further that the Holders may request registrations in excess of two (2) if the Holders agree to pay all Registration Expenses associated with such registrations in excess of two (2) and the Board of Directors of the Company does not deem such additional registrations to be unduly burdensome on the management of the Company; and

6.1.2 Section 5 shall not apply to a registration effected solely to implement an employee benefit plan or to any other form or type of registration which does not permit inclusion of Registrable Securities pursuant to Commission rule or practice.

7. REGISTRATION PROCEDURES

7.1 Whenever the Company is required by the provisions of this Agreement to use its best efforts to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible:

7.1.1 in the case of a registration required under Section 3, engage the underwriters designated by the sellers pursuant to subsection 14.1;

7.1.2 before filing each registration statement or prospectus or amendment or supplement thereto with the Commission, furnish each seller with copies of all such documents proposed to be filed which shall be subject to the reasonable approval of such seller or its counsel;

7.1.3 prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become and remain effective for the period provided in subsection 7.2;

7.1.4 prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such registration statement in accordance with the intended methods of disposition set forth in such registration statement;

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7.1.5 prepare and promptly file with the Commission, and notify each seller of such Registrable Securities immediately after the filing of, such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, during such periods as a prospectus relating to such securities is required to be delivered under the Securities Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, and notify each seller immediately after its discovery of such event;

7.1.6 furnish to the underwriters and each seller of such Registrable Securities such numbers of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such underwriters or seller may reasonably request in order to facilitate the disposition of the Registrable Securities subject to such registration statement in accordance with such registration statement;

7.1.7 use its best efforts to register or qualify any Registrable Securities covered by such registration statement under the securities or blue sky laws of such jurisdictions within the United States of America as a seller or the underwriters reasonably request, and to take any other acts which a seller or the underwriters may reasonably request under such securities or blue sky laws to enable the consummation of the disposition in such jurisdictions of such Registrable Securities (provided, however, that the Company may not be required under this Agreement (i) to qualify generally to do business as a foreign corporation in any jurisdiction in which it would not otherwise be required to qualify, or (ii) to subject itself to taxation in any such jurisdiction, or (iii) to consent to general service of process in any such jurisdiction);

7.1.8 provide a transfer agent and registrar for all Registrable Securities sold under the registration not later than the effective date of the registration statement;

7.1.9 cause all Registrable Securities sold under the registration to be listed on each securities exchange or to be qualified and eligible for trading in any automated quotation system, if any, on which similar securities issued by the Company are then listed or traded or, if no such listing or qualification has then occurred, to cause such securities to be so listed or qualified on an exchange or in a trading system that is reasonably acceptable to Holders holding the Registrable Securities being sold;

7.1.10 enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the underwriters, if any, or the Holders holding more than 50% of the Registrable Securities being sold reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares), it being understood that such agreements and actions shall also benefit other Holders who are selling Registrable Securities thereunder;

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7.1.11 advise each seller of Registrable Securities, immediately after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

7.1.12 make available for inspection by each seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller or underwriter in connection with such registration statement, all subject to such limitations as the Company reasonably deems appropriate in order to protect the Company’s confidential or proprietary information; and

7.1.13 if the offering is underwritten and at the request of any seller of Registrable Securities, use all reasonable efforts to furnish on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purpose of such registration, addressed to the underwriters to such effect as reasonably may be requested by counsel for the underwriters, and executed counterparts of such opinion addressed to the sellers of Registrable Securities to the same effect as requested by counsel for the underwriters, and (ii) a letter dated such date from the independent public accountants (as defined in Regulation S-X promulgated under the Exchange Act) retained by the Company, addressed to the underwriters stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five business days prior to the date of such letter) with respect to such registration as such underwriters reasonably may request.

7.2 Notwithstanding any contrary provision of this Section 7, the Company shall not be required to use its best efforts to maintain the effectiveness of any registration statement for a period in excess of one hundred and eighty (180) days or until all of the sellers have sold or otherwise disposed of their Registrable Securities registered under such registration statement, whichever is earlier. This one hundred and eighty (180) day period shall be extended by any period of time in which the sellers are prohibited by law from selling Registrable Securities pursuant to such registration statement.

7.3 It shall be a condition precedent to the inclusion of the Registrable Securities of any seller in a registration effected pursuant to this Agreement that such seller shall (a) furnish to the Company such information regarding such seller, the Registrable Securities of such seller to be registered and the intended method of disposition of such Registrable Securities, and (b) execute such indemnities, underwriting agreements and other documents, as the Company shall reasonably request in order to satisfy the requirements applicable to such registration.

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8. EXPENSES

8.1 The Company shall pay all expenses incurred in effecting (a) the first two (2) registrations of Registrable Securities provided for in Section 3 of this Agreement, (b) all registrations of Registrable Securities provided for in Section 4, and (c) all registrations of Registrable Securities provided for in Section 5 of this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrations, costs of any insurance which might be obtained by the Company with respect to the offering by the Company and reasonable fees and disbursements of a single counsel for the sellers selected by the Holders holding more than 50% of the Registrable Securities being sold (collectively, the “Registration Expenses”), but excluding Selling Expenses. All underwriting discounts and selling commissions applicable to the sale of Registrable Securities are called “Selling Expenses”. All Selling Expenses in connection with each registration statement under Sections 3, 4 and 5 shall be borne by the participating sellers in proportion to the number of Registrable Securities registered by each, or by such participating sellers other than the Company (except to the extent the Company shall be a seller) as they may agree.

9. INDEMNIFICATION

9.1 In the event of any registration of any of its Registrable Securities under the Securities Act pursuant to this Agreement, the Company agrees, to the extent permitted by law, to indemnify and hold harmless each seller of Registrable Securities, and each Affiliate of such seller, against any losses, claims, damages or liabilities, joint or several, arising out of or based upon:

9.1.1 any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any summary prospectus contained therein or any amendment or supplement thereto;

9.1.2 any omission or alleged omission to state in any such document a material fact required to be stated therein or necessary to make the statements therein not misleading; or

9.1.3 any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities laws,

except insofar as any such loss, claim, damage or liability is:

(i) caused by or contained in any information furnished in writing to the Company by such seller expressly for use in connection with such registration; or

(ii) caused by such seller’s failure to deliver a copy of the registration statement or prospectus or any amendment or supplement thereto as required by the Securities Act; or

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(iii) caused by the seller’s use of a prospectus or preliminary prospectus or any amendment or supplement thereto after receipt of notice from the Company that it should no longer be used.

In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each person who controls (within the meaning of the Securities Act) such underwriters to the same extent as provided above with respect to the sellers of Registrable Securities. The Company shall reimburse each person indemnified pursuant to this subsection 9.1 in connection with investigating or defending any loss, claim, damage, liability or action indemnified against. The reimbursements required by this subsection 9.1 shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. The indemnities provided pursuant to this subsection 9.1 shall remain in force and effect regardless of any investigation made by or on behalf of the indemnified party and shall survive transfer of Registrable Securities by a seller.

9.2 In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each seller of Registrable Securities agrees to furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any registration statement or prospectus in connection with the registration or any amendment or supplement thereto.

9.3 To the extent permitted by law, and subject to the limitation set forth in the last sentence of this subsection 9.3, each Holder which is a seller of Registrable Securities in a registration pursuant to this Agreement agrees severally and not jointly to indemnify and hold harmless the Company, its directors and officers, each Affiliate of the Company and each other seller of securities in such registration and each Affiliate of each such other seller against any losses, claims, damages or liabilities, joint or several, arising out of or based upon:

9.3.1 any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any summary prospectus contained therein, or any amendment or supplement thereto; or

9.3.2 any omission or alleged omission to state in any such document a material fact required to be stated therein or necessary to make the statements therein not misleading,

but only insofar as any such loss, claim, damage or liability (a) is caused by or contained in any information furnished in writing to the Company by the indemnifying seller expressly for use in connection with such registration, and excluding any such loss, claim, damage or liability which is caused by or contained in such statements, or caused by such omissions, based upon the authority of an expert as defined in the Securities Act (but only if the indemnifying seller had no ground to believe, and did not believe, that the statements made on the authority of an expert were untrue or that there was an omission to state a material fact), (b) arises out of or is based upon any failure by such seller to deliver a copy of the registration statement or prospectus or any amendment or supplement thereto as required by the Securities Act, or (c) is caused by the seller’s use of a prospectus or preliminary prospectus or any amendment or supplement thereto after receipt of notice from the Company that it should no longer use same.

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In connection with an underwritten offering, each seller will indemnify such underwriters, their officers and directors and each person who controls (within the meaning of the Securities Act) such underwriters to the same extent as provided above with respect to the Company and other sellers. Each seller shall reimburse each person indemnified pursuant to this subsection 9.3 in connection with investigating or defending any loss, claim, damage, liability or action indemnified against. The reimbursements required by this subsection 9.3 shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. The indemnities provided pursuant to this subsection 9.3 shall remain in force and effect regardless of any investigation made by or on behalf of the indemnified party and shall survive transfer of Registrable Securities by a seller. Notwithstanding any contrary provision of this Agreement, however, the liability under this Section 9 of each Holder which is a seller of Registrable Securities shall be limited in the aggregate, with respect to the claims of all indemnified persons taken as a whole, to that portion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the Registrable Securities sold by such indemnifying seller under such registration statement bears to the total public offering price of all securities sold thereunder, up to a maximum amount equal to the amount of the net proceeds received by such indemnifying seller from the Registrable Securities sold by it thereunder.

9.4 Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 9 and shall only relieve it from any liability which it may have to such indemnified party under this Section 9 if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 9 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or that the interest of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. No indemnifying party, in the defense of any such claim or action, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or action. Each indemnified party shall furnish such information regarding itself or the claim in question as an indemnifying party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim or litigation resulting therefrom.

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9.5 In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any Holder exercising rights under this Agreement, or any Affiliate of any such Holder, makes a claim for indemnification pursuant to this Section 9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such selling Holder or any Affiliate in circumstances for which indemnification is provided under this Section 9; then, and in each such case, the Company and such Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, and the Company is responsible for the remaining portion, provided, however, that, in any such case, (A) no such Holder will be required to contribute any amount in excess of the net proceeds received from the sale of all such Registrable Securities offered by it pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

10. MARKETING RESTRICTIONS

10.1 If:

10.1.1 a registration is to be made pursuant to a registration notice under Section 3 or Section 4 of this Agreement;

10.1.2 the offering proposed to be made by the Holder or Holders for whom such registration is to be made is to be an underwritten public offering; and

10.1.3 the managing underwriters of such public offering determine that the total amount of Common Stock to be included in such offering would exceed the maximum number of shares of Common Stock (as specified in a written opinion to the Holders requesting registration) which can be marketed at a price reasonably related to the current market value of such Common Stock and without otherwise materially and adversely affecting such offering,

then the number of shares of Registrable Securities shall be reduced first by excluding the Series A Registrable Securities of the Holders requesting registration on a pro rata basis, second by excluding the Series B Registrable Securities and Series B-1 Registrable Securities of the Holders requesting registration on a pro rata basis, and third by excluding the Series C Registrable Securities of the Holders requesting registration on a pro rata basis, provided, however, that such number of shares of Registrable Securities shall not be reduced if any shares are to be included in such underwriting for the account of the Company or any person other than the Holders,

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and no Registrable Securities other than those registered and included in the underwritten offering shall be offered for sale or other disposition in a transaction which would require registration under the Securities Act until the expiration of one hundred and eighty (180) days after the effective date of the registration statement filed in connection with such registration or such earlier time consented to by the managing underwriters.

10.2 If:

10.2.1 any Holder requests registration of Registrable Securities under Section 5 of this Agreement;

10.2.2 the offering proposed to be made is to be an underwritten public offering; and

10.2.3 the managing underwriters of such public offering determine that the total amount of Common Stock to be included in such offering would exceed the maximum amount of Common Stock (as specified in a written opinion to the Holders requesting registration) which can be marketed at a price reasonably related to the then current market value of such Common Stock and without materially and adversely affecting such offering,

then the number of shares of Registrable Securities shall be reduced first by excluding the Series A Registrable Securities of the Holders requesting registration on a pro rata basis, second by excluding the Series B Registrable Securities and Series B-1 Registrable Securities of the Holders requesting registration on a pro rata basis, and third by excluding the Series C Registrable Securities of the Holders requesting registration on a pro rata basis,

provided, however, that such number of shares of Registrable Securities shall not be reduced if any shares are to be included in such underwriting for the account of any person other than the Company or the Holders;

and no Registrable Securities other than those registered and included in the underwritten offering shall be offered for sale or other disposition in a transaction which would require registration under the Securities Act until the expiration of one hundred and eighty (180) days after the effective date of the registration statement filed in connection with such registration or such earlier time consented to by the managing underwriters.

10.3 In connection with any offering involving an underwriting of Common Stock pursuant to Section 5 of this Agreement, the Company shall not be required to include any of the Registrable Securities of a Holder in such offering unless such Holder agrees to the terms of the underwriting agreed to between the Company and the underwriter or underwriters selected by the Company, provided that all other persons who are holders of 5% or more of the outstanding shares of stock of the Company and that are selling shares in such offering also agree to the terms of such underwriting.

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11. SALE OF PREFERRED STOCK TO UNDERWRITER

11.1 Notwithstanding anything in this Agreement to the contrary, in lieu of converting any Preferred Stock to Common Stock prior to or simultaneously with the filing or the effectiveness of any registration statement filed pursuant to this Agreement, the Holder holding such Preferred Stock may sell such Preferred Stock to the underwriter of the offering being registered upon the undertaking of such underwriter to convert such Preferred Stock into Common Stock before making any distribution pursuant to such registration statement and agreeing to include such Common Stock among the securities being offered pursuant to such registration statement. The Company agrees to cause the Common Stock issuable on conversion of such Preferred Stock to be issued within such time as will permit the underwriter to make and complete the distribution contemplated by the underwriting and to register the Preferred Stock in any registration statement so that the Holder may make the sale described in the first sentence of this Section 11.

12. MARKET STAND-OFF

12.1 Each Holder agrees in connection with the registration in a Qualified Public Offering that, upon the request of the Company or the underwriters managing such underwritten offering, he, she or it will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities (other than the Registrable Securities included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred and eighty (180) days) from the effective date of such registration as the Company or the underwriters may specify, provided that all executive officers and directors of the Company and all other persons who are holders of 1 % or more of the outstanding shares of stock of the Company are similarly restricted.

13. COMPLIANCE WITH RULE 144

13.1 In the event that the Company (a) registers a class of securities under Section 12 of the Exchange Act, (b) issues an offering circular meeting the requirements of Regulation A under the Securities Act or (c) commences to file reports under Section 13 or 15(d) of the Exchange Act, then at the request of any Holder who proposes to sell Registrable Securities in compliance with Rule 144 of the Commission, the Company shall (i) forthwith furnish to such Holder a written statement of compliance with the filing requirements of the Commission as set forth in Rule 144 and (ii) make available to the public and such Holders such information as will enable the Holders to make sales pursuant to Rule 144.

14. DESIGNATION OF UNDERWRITER

14.1 In the case of any registration effected pursuant to Section 3 or 4, the managing underwriters and any other investment banking advisers to the Company shall be selected by Holders holding not less than 50% of the Registrable Securities initiating the registration request, and shall be reasonably acceptable to the Company.

15. GRANT OF SUBSEQUENT REGISTRATION RIGHTS

15.1 The Company shall not grant registration rights to any other person unless such rights are subordinate to the rights of the Holders pursuant to this Agreement or the Holders’ consent to such subsequent registration rights pursuant to Section 16 of this Agreement.

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16. MISCELLANEOUS

16.1 Amendment; Waiver. This Agreement may be amended or modified and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of all of the following:

16.1.1 the Company; and

16.1.2 Holders holding more than 50% of the Registrable Securities and Holders holding at least 60% of the Series C Registrable Securities,

Any amendment, modification or waiver so effected shall be binding upon the Company, the Holders and all of their respective successors and permitted assigns whether or not such party entered into or approved such amendment, modification or waiver; provided, however, that this Agreement may not be amended or modified and the observance of any term hereunder may not be waived with respect to any Holder without the written consent of such Holder unless such amendment, modification or waiver applies to all Holders in the same manner. Notwithstanding the foregoing, this Agreement may be amended with only the written consent of the Company to include additional purchasers pursuant to the Series C Purchase Agreement.

16.2 Severability. In the event that any court or any governmental authority or agency declares all or any part of any Section of this Agreement to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any other Section of this Agreement, and in the event that only a portion of any Section is so declared to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate the balance of such Section.

16.3 Assignments; Transfers. No party hereto may transfer or assign his, her or its rights hereunder to any third party without the prior written consent of the Company and the Holders holding more than 50% of the Registrable Securities excluding the Registrable Securities of a Holder proposing such a transfer of rights, except that (a) any Holder shall be permitted to transfer its rights hereunder without obtaining such prior consent to (i) its Affiliate, (ii) another Holder, or (iii) any transferee of at least 173,000 shares (as adjusted for stock splits, consolidations and the like) of Series C Registrable Securities from such Holder; (b) each of the Aurora Entities shall be permitted to transfer its rights hereunder to any of the other Aurora Entities; (c) each of the Intersouth Entities shall be permitted to transfer its rights hereunder to any of the other Intersouth Entities; (d) each of the Lumira Entities shall be permitted to transfer its rights hereunder to any of the other Lumira Entities; (e) each of the TVM Entities shall be permitted to transfer its rights hereunder to any of the other TVM Entities; and (f) each of the Forbion Entities shall be permitted to transfer its rights hereunder to any of the other Forbion Entities; provided in each case that the Company is notified in writing of any such transfer. This Agreement is binding upon and inures to the benefit of the Company, its successors and assigns, and the Holders, their permitted successors and assigns, heirs, and legal representatives.

16.4 Notices. All notices, requests, consents and other communications hereunder (“Notices”) to any party shall be contained in a written instrument addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor listing all parties and shall be deemed given (a) when delivered in person or duly sent by fax showing confirmation of receipt, (b) three days after being duly sent by first class mail postage prepaid (other than in the case of Notices to or from any non-U.S. resident, which Notices must be sent in the manner specified in clause (a) or (c)), or (c) two days after being duly sent by DHL, Federal Express or other recognized express international courier service:

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(a) if to the Company, to Argos Therapeutics, Inc., 4233 Technology Drive, Durham, North Carolina 27704, Attn: Chief Executive Officer, with a copy to Hutchison Law Group PLLC, 5410 Trinity Road, Suite 400, Raleigh, NC 27607, Attn: William N. Wofford (Fax: 919-829-9696); or,

(b) if to a Holder, at such Holder’s address as set forth in Exhibit A hereto or, if no such address appears, at such Holder’s address as shown on the books of the Company or its transfer agent, with a copy to Foley Hoag LLP, World Trade Center West, 155 Seaport Boulevard, Boston, MA 02210, Attn: David R. Pierson (Fax: 617-832-7000).

16.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

16.6 Counterparts. This Agreement may be executed in two (2) or more counterparts, each which shall be deemed an original but all of which shall together constitute one and the same instrument. A written consent executed pursuant to subsection 16.1 of this Agreement shall be deemed to be part of, and constitute a counterpart of, this Agreement.

16.7 Headings. The headings used herein are solely for the convenience of the parties and shall not serve to modify or interpret the text of the Sections at the beginning of which they appear.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

COMPANY:
ARGOS THERAPEUTICS, INC.
By:
Name:
Its:

IN WITNESS WHEREOF, the parties have caused this Third Amended and Restated Stockholders Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

AURORA VENTURES II, LLC
By:
Name:	B Jefferson Clark
Its:	President, Aurora Mgmt II, LLC

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

BRIGHT MINING AND LAND COMPANY LIMITED PARTNERSHIP
By:
Name:	William T. Bright
Its:	CEO of General Partner

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

CAPITAL TECHNOLOGIES CDPQ INC. 4258398 CANADA INC
By:
Name:	LOUIS LACASSE
Its:	PRESIDENT

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

COMMUNITY INVESTMENT PARTNERS IV L.P., LLLP
By:
Name:	[Illegible]
Its:	[Illegible]

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

COÖPERATIEVE AAC LS U.A.
By:
Name:	[Illegible]
Its:	[Illegible]

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

GENECHEM THERAPEUTICS VENTURE FUND, L.P.
By:
Name:	LOUIS LACASSE
Its:	PRESIDENT GENECHEM MANAGEMENT INC.

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

H&M HOLDINGS, LLC
By:
Name:	William Wofford
Its:	Manager

IN WITNESS WHEREOF, the parties have caused this Third Amended and Restated Stockholders Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

HARBINGER/AURORA QP VENTURE FUND, LLC
By:
Name:	B. Jefferson Clark
Its:	President, Harbinger/Aurora Ventures, LLC

IN WITNESS WHEREOF, the parties have caused this Third Amended and Restated Stockholders Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

HARBINGER/AURORA VENTURE FUND, LLC
By:
Name:	B. Jefferson Clark
Its:	President, Harbinger/Aurora Ventures, LLC

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

INTERSOUTH AFFILIATES V, L.P.
By: Intersouth Associates, V, LLC
Its: General Partner
By:
Name:	Philip R. Tracy
Its:	Member, acting pursuant to Power of Attorney
Date :

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

INTERSOUTH PARTNERS IV, L.P.
By:	Intersouth Associates, IV, LLC
Its:	General Partner

By:
Name:	Philip R. Tracy
Its:	Member, acting pursuant to Power to Attorney
Date:

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

INTERSOUTH PARTNERS V, L.P.
By:	Intersouth Associates, V, LLC
Its:	General Partner

By:
Name:	Philip R. Tracy
Its:	Member, acting pursuant to Power to Attorney
Date:

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

KIRIN PHARMA COMPANY, LTD.
By:
Name:	Katsuhiko Asano, Ph. D.
Its:	President, Chairman of the Board of Directors

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

		LIFESCIENCES OPPORTUNITY FUND LP
		By:	James C Gale
Name:
		Its:	Managing Director

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

		LIFESCENCES OPPORTUNITY FUND INSTITUTIONAL LP
		By:	James C Gale
Name:
		Its:	Managing Director

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

LUMIRA CAPITAL I LIMITED PARTNERSHIP
By: Lumira Capital I (GP) Inc., its General Partner
By:
Name:	Graysanne Bedell Stephen Cummings
Its:	Vice-President Chief Financial Officer

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

LUMIRA CAPITAL I QUEBEC LIMITED PARTNERSHIP
By: Lumira Capital I (QGP) Inc., its General Partner
By:
Name:	Graysanne Bedell Stephen Cummings
Its:	Vice-President Vice-President, Finance

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

1761895 ONTARIO INC.
By:
Name:	Graysanne Bedell Stephen Cummings
Its:	Vice-President, Chief Financial Officer

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

MEDINNOVA PARTNERS INC.
By:
Name:	STEVE HAWKINS
Its:	CEO

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

MIZUHO CAPITAL NO. 3 LIMITED PARTNERSHIP
By:
Name:	Akira Kiyohara
	President of Mizuho Capital Co., Ltd.
Its:	Acting as General Partner of Mizuho Capital No.3 Limited Partnership

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

SC BIOTECHNOLOGY DEVELOPMENT FUND LP
By: SC (GP) Inc., its General Partner
By:
Name:
Its:

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

SMH ARGOS, LLC
By:
Name:	J S Cobbs
Its:	Managing Director

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

TFG CAPITAL AG
By:
Name:	[Illegible]
Its:	CEO Director

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

TVM V LIFE SCIENCE VENTURES GMBH & CO. KG
By:
Name:	[Illegible]
Its:	Managing Limited Partner
By:
Name:	[Illegible]
Its:	Managing Limited Partner

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

NANCY CHANG

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

JOHN N. BONFIGLIO

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

JEFFREY ABBEY

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

TIMOTHY W. TROST

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

CHARLES NICOLETTE

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

FRED MIESOWICZ

IN WITNESS WHEREOF, the parties have caused this Second Amended and Restated Registration Rights Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

LOTHAR FINKE

EXHIBIT A

HOLDERS

NAME	ADDRESS
AURORA VENTURES II, L.L.C	2525 Meridian Parkway Suite 220 Durham, NC 27713 Attention: B. Jefferson Clark
BRIGHT MINING AND LAND COMPANY LIMITED PARTNERSHIP	200 Greenbriar Road Summersville, WV 26651 Attention: James E. Davis
CAPITAL TECHNOLOGIES CDPQ INC.	1001 De Maisonneuve Blvd, West Suite 920 Montreal, Quebec H3A 3C8 Attention: Louis Lacasse
COMMUNITY INVESTMENT PARTNERS IV L.P., LLLP	c/o CIP Management L.P., LLLP The Jones Financial Companies, L.L.L.P. 12555 Manchester Road St. Louis, MO 63131 Attention: Daniel A. Burkhardt
COÖPERATIEVE AAC LS U.A.	c/o Forbion Capital Partners (1411 DC) Naarden at Gooimeer 2-35 P.O. Box 5187, 1410 AD Naarden The Netherlands Attention: Sander van Deventer
GENECHEM THERAPEUTICS VENTURE FUND L.P.	1001 De Maisonneuve Blvd, West Suite 920 Montreal, Quebec H3A 3C8 Attention: Louis Lacasse
H&M HOLDINGS, LLC	5410 Trinity Road, Suite 400 Raleigh, NC 27607 Attention: William N. Wofford

NAME	ADDRESS
HARBINGER/AURORA QP VENTURE FUND, LLC	2525 Meridian Parkway Suite 220 Durham, NC 27713 Attention: B. Jefferson Clark
HARBINGER/AURORA VENTURE FUND, LLC	2525 Meridian Parkway Suite 220 Durham, NC 27713 Attention: B. Jefferson Clark
INTERSOUTH AFFILIATES V, L.P.	406 Blackwell Street Suite 200 Durham, NC 27701 Attention: Dennis Dougherty
INTERSOUTH PARTNERS IV, L.P.	406 Blackwell Street Suite 200 Durham, NC 27701 Attention: Dennis Dougherty
INTERSOUTH PARTNERS V, L.P.	406 Blackwell Street Suite 200 Durham, NC 27701 Attention: Dennis Dougherty
KIRIN PHARMA COMPANY, LTD.	10-1, Shinkawa 2-chome Chuo-ku, Tokyo 104-8288 Japan
LIFESCIENCES OPPORTUNITY FUND LP	c/o Signet Healthcare Partners 152 West 57th St., 19th Floor New York, NY 10019 Attention: James Gale COPY TO: JP Morgan Chase Tower 600 Travis, Suite 5800 Houston, TX 77002 Attention: Jerald Cobbs

NAME	ADDRESS
LIFESCIENCES OPPORTUNITY FUND INSTITUTIONAL LP	c/o Signet Healthcare Partners 152 West 57th St., 19th Floor New York, NY 10019 Attention: James Gale COPY TO: JP Morgan Chase Tower 600 Travis, Suite 5800 Houston, TX 77002 Attention: Jerald Cobbs
LUMIRA CAPITAL I LIMITED PARTNERSHIP	20 Bay Street, 11th Floor Suite 303 Toronto, Ontario M5J 2N8
LUMIRA CAPITAL I QUEBEC LIMITED PARTNERSHIP	1550 Metcalfe Street Suite 502 Montreal, Quebec H3A 1X6 COPY TO: Legal Dept. MDS Capital Corp. 20 Bay Street, 11th Floor Toronto, Ontario M5J 2N8
1761895 ONTARIO INC.	20 Bay Street, 11th Floor Toronto, Ontario M5J 2N8

NAME	ADDRESS
SC BIOTECHNOLOGY DEVELOPMENT FUND LP	One Capital Place P.O. Box 897, GT Grand Cayman Cayman Islands COPY TO: Legal Dept. MDS Capital Corp. 20 Bay Street, 11th Floor Toronto, Ontario M5J 2N8
SMH ARGOS, LLC	c/o Signet Healthcare Partners 152 West 57th St., 19th Floor New York, NY 10019 Attention: James Gale COPY TO: JP Morgan Chase Tower 600 Travis, Suite 5800 Houston, TX 77002 Attention: Jerald Cobbs
TFG CAPITAL AG	Mainstrasse 16 45768 Marl Germany Attention: Vorstand/lnvestment Manager
TVM V LIFE SCIENCE VENTURES GMBH & CO. KG	c/o TVM Capital Corporation 101 Arch Street, Suite 1950 Boston, MA 02110 Attention: David Poltack
MEDINNOVA PARTNERS INC.	c/o JovInvestment Management Inc. 26 Wellington St. East, Suite 608 Toronto, Ontario M5E 1S2
MIZUHO CAPITAL NO. 3 LIMITED PARTNERSHIP

NAME	ADDRESS
NANCY CHANG	c/o CAZ Investments, LP One Riverway, Suite 2000 Houston, TX 77056 Attention: Christopher Alan Zook
JOHN N. BONFIGLIO	c/o Argos Therapeutics, Inc. 4233 Technology Drive, Durham, NC 27704
JEFFREY ABBEY	c/o Argos Therapeutics, Inc. 4233 Technology Drive, Durham, NC 27704
TIMOTHY W. TROST	c/o Argos Therapeutics, Inc. 4233 Technology Drive, Durham, NC 27704
CHARLES NICOLETTE	c/o Argos Therapeutics, Inc. 4233 Technology Drive, Durham, NC 27704
FRED MIESOWICZ	c/o Argos Therapeutics, Inc. 4233 Technology Drive, Durham, NC 27704
LOTHAR FINKE	c/o Argos Therapeutics, Inc. 4233 Technology Drive, Durham, NC 27704

EXHIBIT B

ADDITIONAL HOLDER SIGNATURE PAGE

By executing this signature page in the space provided, the undersigned hereby agrees (i) that it is a “Holder” as defined in the Second Amended and Restated Registration Rights Agreement dated as of March 31, 2008, among Argos Therapeutics, Inc. and certain Holders named on Exhibit A thereto (the “Registration Rights Agreement”), (ii) that it is a party to the Registration Rights Agreement for all purposes, and (iii) that it is bound by all terms and conditions of the Registration Rights Agreement.

EXECUTED this      day of         , 20    .

Holder:

By:

Name:

Its:

EX-10.2

Exhibit 10.2

NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED OR (III) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.

Shares Issuable Upon Exercise: 30,000

Warrant No. W-72

WARRANT TO

PURCHASE SHARES OF COMMON STOCK

Expires October 31, 2012

THIS CERTIFIES THAT, for value received, Eckhart Kämpgen (hereinafter referred to as “Initial Holder”, and, along with any other registered holder of this Warrant, as “Holder”) is entitled to subscribe for and purchase Thirty Thousand (30,000) shares of the fully paid and nonassessable shares of the Common Stock, par value $0.001 per share (the “Common Stock”, which term shall include any stock into which it may be converted or exchanged) of MERIX Bioscience, Inc., a Delaware corporation (the “Company”), at a price per share of $0.18 (the “Warrant Price”). The Stock is subject to the terms and provisions of that certain First Amended and Restated Stockholders Agreement dated as of April 11, 2001 among the Company, the Holder and certain other signatories thereto, as amended from time to time (the “Stockholders’ Agreement”). The shares issuable upon exercise of this Warrant, as adjusted pursuant to the provisions hereof, are referred to as the “Shares”. The purchase price of each Share and such other price as shall result, from time to time, from adjustments specified herein is hereafter referred to as the “Warrant Price”, subject to the provisions and upon the terms and conditions hereinafter set forth.

1. Term. The purchase right represented by this warrant is exercisable, subject to the vesting schedule set forth below, until October 31, 2012:

(a) On and after October 31, 2002, this Warrant may be exercised to purchase up to 5,000 Shares; and

(b) On the last day of each calendar month following October 31, 2002 until March 31, 2003, this Warrant may be exercised to purchase up to an additional 5,000 of the Shares. This Section 1 shall be interpreted such that on or after March 31, 2003, this Warrant may be exercised to purchase up to 100% of the Shares. Vesting under this paragraph (b) is conditioned upon Initial Holder’s service as a consultant to the Company on the relevant vesting date.

2. Warrant Conversion. Notwithstanding the foregoing Section 1, in the event the Company completes a Qualified Public Offering (“QPO”), as defined in Section 4.3.4.1.2 of the Company’s Amended and Restated Certificate of Incorporation, prior to the expiration of this Warrant, the purchase right represented by this Warrant shall be exercisable, in whole or in part, at any time from and after the date of the QPO and prior to 5:00 p.m., Durham, N.C. time, two (2) years after the closing date of the QPO.

3. Method of Exercise.

3.1 The purchase right represented by this Warrant may be exercised by Holder hereof, in whole or in part, by either, at the election of Holder hereof, (a) the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company, and by the payment in full to the Company, by check, of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being purchased or (b) if in connection with a registered public offering of the Company’s securities, the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A-1 duly executed) at the principal office of the Company together with notice of arrangements reasonably satisfactory to the Company for payment to the Company either by check or from the proceeds of the sale of shares to be sold by Holder in such public offering of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being purchased. The person or persons in whose name(s) any certificate(s) representing Shares shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record Holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be delivered to the Holder hereof as soon as possible and in any event within thirty (30) days of receipt of such notice and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof as soon as possible and in any event within such thirty-day period.

3.2 Cashless Exercise. Notwithstanding anything to the contrary contained in this Warrant, this Warrant may be exercised by presentation and surrender of this Warrant to the Company at its principal executive offices with a written notice of the Holder’s intention to effect a cashless exercise, including a calculation of the number of shares of Stock to be issued upon such exercise in accordance with the terms hereof. In the event of a cashless exercise, in lieu of paying the Warrant Price in cash, the holder shall surrender this Warrant for that number of shares of Stock determined by multiplying the number of Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the then current Fair Market Value per share of the Stock and the then applicable Warrant Price and the denominator of which shall be the then current Fair Market Value per share of the Stock. The “Fair Market Value” shall mean (1) if the Shares are traded on an exchange or quoted on the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”), the closing price on the day before the exercise date, (2) if the Shares are not traded on an exchange or on the NASDAQ National Market but are traded in the over-the-counter market, the closing price on the day before the exercise date, or (3) if the Shares are not traded on an exchange or on the NASDAQ National Market or in the over-the-counter market, the Fair Market Value as mutually agreed to by the Holder and the Board of Directors of the Company (or if they are unable to agree, as determined by a mutually agreed independent third party appraisal, whose fees shall be paid by the Company).

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4. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issuance upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its stock to provide for the exercise of the right represented by this Warrant.

5. Adjustment of Warrant Price and Number of Shares. The number and kind of securities purchasable upon the exercise of the Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

5.1 Reclassification or Merger. In case of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall execute a new Warrant providing that the holder of this Warrant shall have the right to exercise such new Warrant and upon such exercise to receive, in lieu of each share of stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by a holder of one share of stock issuable upon the exercise hereof. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5. The provisions of this paragraph 5.1 shall similarly apply to successive reclassifications, changes, mergers and transfers.

5.2 Subdivisions or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its stock, the Warrant Price and the number of Shares issuable upon exercise hereof shall be proportionately adjusted.

5.3 Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend payable in shares of stock (except any distribution specifically provided for in the foregoing paragraphs 5.1 and 5.2), then the Warrant Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common outstanding immediately prior to such dividend or distribution, assuming that all convertible securities of the Company have been converted into shares of Common and (b) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution, assuming that all convertible securities of the Company have been converted into shares of Common, and the number of Shares subject to this Warrant shall be proportionately adjusted.

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5.4 No Impairment. The Company will not, by amendment of its Amended and Restated Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment

5.5 Notices of Record Date. In the event of any taking by the Company of a record of its stockholders for the purpose of determining stockholders who are entitled to receive payment of any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining stockholders who are entitled to vote in connection with any proposed merger or consolidation of the Company with or into any other corporation, or any proposed sale, lease or conveyance of all or substantially all of the assets of the Company, or any proposed liquidation, dissolution or winding up of the Company, the Company shall mail to the holder of the Warrant, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

6. Notice of Adjustments. Whenever the Warrant Price shall be adjusted pursuant to the provisions hereof, the Company shall within thirty (30) days of such adjustment deliver a certificate signed by its chief financial officer to the registered holder(s) hereof setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price after giving effect to such adjustment.

7. Fractional Share. No fractional shares of stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the then fair market value of the stock to be issued upon the exercise hereof.

8. Requirements for Transfer.

8.1 The Holder of this Warrant, by acceptance hereof, agrees that this Warrant and the Shares to be issued upon exercise hereof are being acquired for investment and that such holder will not offer, sell or otherwise dispose of this Warrant or any Shares to be issued upon exercise hereof unless either (i) they first shall have been registered under the Securities Act of 1933, as amended (the “Act”), or (ii) the Company first shall have been furnished with an opinion of legal counsel, reasonably satisfactory to the Company, to the effect that such sale or transfer is exempt from the registration requirements of the Act.

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8.2 Notwithstanding the foregoing, no registration or opinion of counsel shall be required for a transfer by the Initial Holder to (i) an officer or director of the Initial Holder, or (ii) a corporation or other entity in which an officer or director of the Initial Holder holds greater than a Seventy-Five percent (75%) ownership interest or (iii) a permitted transferee pursuant to the provisions of the Stockholders’ Agreement.

8.3 This Warrant and all Shares issued upon exercise of this Warrant (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such Act or an opinion of counsel satisfactory to the Company is obtained to the effect that such registration is not required.”

The foregoing legend may be removed from the certificates representing any Shares issued upon exercise hereof, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144(k) under the Act.

9. Rights as Stockholders. No holder of the Warrant, as such, shall be entitled to vote or receive dividends or be deemed the holder of shares of Common or any other securities of the Company which may at any time be issuable on the exercise thereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

10. Modification and Waiver. This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

11. Notices. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be personally delivered, or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefore on the signature page of this Warrant.

12. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Shares issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the holder hereof.

13. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity agreement reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

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14. Descriptive Headings. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

15. Exchange of Warrants. Upon the surrender by Holder of any Warrant or Warrants, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 8 hereof, issue and deliver to or upon the order of such Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of such Holder or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of stock called for on the face or faces of the Warrant or Warrants so surrendered.

16. Transfers, etc.

16.1 The Company will maintain a register containing the names and addresses of the Holders of this Warrant. Any Holder may change its or his address as shown on the warrant register by written notice to the Company requesting such change.

16.2 Subject to the provisions of Section 8 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit B attached hereto) at the principal office of the Company.

16.3 Until any transfer of the Warrant is made in the warrant register, the Company may treat the registered Holder of this Warrant as the absolute owner hereof for all purposes; provided, however, that if and when this Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

17. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE.

MERIX Bioscience, Inc. 4233 Technology Drive Durham, North Carolina 27704
Per:
	Clint G. Dederick, Jr., President

Date: October 31, 2002

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EXHIBIT A

NOTICE OF EXERCISE

To: MERIX Bioscience, Inc

1. The undersigned hereby elects to purchase              shares of the Common Stock of MERIX Bioscience, Inc. pursuant to the terms of the attached Warrant (Warrant No. W-72), and tenders herewith payment of the purchase price of such shares in full.

2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below:

Name		Address
	(Signature)
(Date)

EXHIBIT A-1

NOTICE OF EXERCISE

To: MERIX Bioscience, Inc.

1. Contingent upon and effective immediately prior to the closing (the “Closing”) of MERIX Bioscience, Inc.’s (the “Company”) public offering contemplated by the Registration Statement of Form S-    , filed                                         , 200    , the undersigned hereby elects to purchase              shares of Common Stock of the Company (or such lesser number of shares as may be sold on behalf of the undersigned at the Closing) pursuant to the terms of the attached Warrant (Warrant No. W-72).

2. Please deliver to the custodian for the selling stockholders a stock certificate representing such              shares.

3. The undersigned has instructed the custodian for the selling stockholders to deliver to the Company $                     or, if less, the net proceeds due the undersigned from the sale of shares in the aforesaid public offering. If such net proceeds are less than the purchase price for such shares, the undersigned agrees to deliver the difference to the Company prior to the Closing.

(Signature)

Date

EXHIBIT B

ASSIGNMENT FORM

FOR VALUE RECEIVED,                                                               hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Warrant No. W-72) with respect to the number of shares of stock covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated:	Signature:
Dated:	Witness:

EX-10.3

Exhibit 10.3

NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.

Shares Issuable Upon Exercise: Up to 480,000

Warrant No. W-76

WARRANT TO

PURCHASE SHARES OF COMMON STOCK

Expires February 5, 2013

THIS CERTIFIES THAT, for value received, Johannes W.G. Vieweg, M.D. (hereinafter referred to as “Initial Holder,” and, along with any other registered holder of this Warrant, as “Holder”) is entitled to subscribe for and purchase up to Four Hundred Eighty Thousand (480,000) of the fully paid and nonassessable shares of the Common Stock, par value $0.001 per share (the “Common Stock”), of Argos Therapeutics, Inc., a Delaware corporation (the “Company”), at a price of $0.18 per share. The shares issuable upon exercise of this Warrant, as adjusted pursuant to the provisions hereof, are referred to as the “Shares”. The purchase price of each Share and such other price as shall result, from time to time, from adjustments specified herein is herein referred to as the “Warrant Price”, subject to the provisions and upon the terms and condition hereinafter set forth. This Warrant is being issued pursuant to a written compensatory contract under Rule 701 promulgated under the Securities Act of 1933, as amended (“Rule 701”), and it is the intent of the Company and the Initial Holder that this Warrant is issued under and in compliance with this Rule 701. This Warrant is issued as a replacement of Warrant W-73 for the purchase of up to 800,000 shares of common stock, which warrant W-73 is null and void.

1. Term. (a) This Warrant shall be exercisable, subject to the vesting schedule set forth below, until February 5, 2013:

(i) On and after March 31, 2005, this Warrant may be exercised to purchase up to 320,000 Shares; and

(ii) With respect to the remaining 160,000 Shares, upon the first to occur of completion of a Phase I clinical trial sponsored by the Company (as defined in the Consulting Agreement, dated March 31, 2005, by and between the Initial Holder and the Company (the “Consulting Agreement”)) or September 30, 2005.

Upon the completion of clause (ii) of this Section 1, this Warrant may be exercised to purchase up to 100% of the Shares, provided, however, that all Shares shall be immediately exercisable in the event that (A) the Initial Holder terminates his consultancy pursuant to Section 6.2(a) of the Consulting Agreement or (B) the Company terminates the Initial Holder’s consultancy pursuant to Section 6.2(c) of the Consulting Agreement. In the event that the Initial Holder terminates his consultancy pursuant to Section 6.2(c) of the Consulting Agreement, all warrants that have not been exercised at the time of such termination shall terminate and no longer be exercisable.

(b) Notwithstanding the foregoing, in the event of a merger, consolidation, corporate reorganization, or any transaction in which all or substantially all of the assets or stock of the Company are sold, leased, transferred or otherwise disposed of (other than a mere reincorporation transaction or one in which the holders of capital stock of the Company immediately prior to such merger or consolidation continue to hold at least a majority of the voting power of the surviving corporation) (a “Transfer of Control”), any unexercisable portion of this warrant that will become exercisable after the Transfer of Control shall become immediately exercisable as of a date prior to the Transfer of Control, which date shall be determined by the Board of Directors of the Company (the “Board”). The exercise of any Shares that was permissible solely by reason of this Section l(b) shall be conditioned upon the consummation of the Transfer of Control. The Board may further elect, in its sole discretion, to provide that any Shares which are not exercised as of the date of the Transfer of Control shall terminate effective as of the date of the Transfer of Control.

2. Method of Exercise. The purchase right represented by this Warrant may be exercised by Holder hereof, in whole or in part, by either, at the election of Holder hereof, the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company, and by the payment in full to the Company, by check, of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being purchased. The person or persons in whose name(s) any certificate(s) representing shares of Common Stock shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record Holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be delivered to the Holder hereof as soon as possible and in any event within thirty (30) days of receipt of such notice and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof as soon as possible and in any event within such thirty-day period, The exercise of this Warrant is expressly conditioned upon the person in whose name any shares issuable upon the exercise hereof are to be issued becoming party to, and agreeing to be bound by the terms of, the Company’s First Amended and Restated Stockholders’ Agreement (as such agreement may be amended and/or restated from time to time).

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3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issuance upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its stock to provide for the exercise of the right represented by this Warrant.

4. Adjustment of Warrant Price and Number of Shares. The number and kind of securities purchasable upon the exercise of the Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

(a) Reclassification or Merger. In case of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall execute a new Warrant providing that the holder of this Warrant shall have the right to exercise such new Warrant and upon such exercise to receive, in lieu of each share of stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by a holder of one share of stock issuable upon the exercise hereof. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Paragraph 4. The provisions of this subparagraph (a) shall similarly apply to successive reclassifications, changes, mergers and transfers. In lieu of the foregoing, in the event of (i) any consolidation or merger of the Company with or into any other corporation, or (ii) any sale of all or substantially all of the assets of the Company, in either case in which the Company shall not be the continuing surviving entity and which results in a reclassification or change of outstanding securities issuable upon exercise of this Warrant, then the Company shall have the option to purchase this Warrant on the closing date of such event for cash or freely-tradable, unrestricted securities in an amount per share equal to the excess (if any) of the Market Value (as defined herein) of the Shares over the Warrant Price. The “Market Value” of each Share shall be defined as the amount determined by dividing the total consideration to be received by the Company or its stockholders in connection with such event by the number of shares of common stock then outstanding, assuming that all convertible securities of the Company have been converted into common stock. Any securities to be delivered to the Company or its security holders shall be valued as follows: Fair market value of the securities shall mean the average of the closing bid and asked prices of the securities quoted in the Over-The-Counter Market Summary or the closing price quoted on any exchange on which the securities are listed, whichever is applicable, as published in the Eastern Edition of The Wall Street Journal for the ten (10) trading days prior to the date of determination of fair market value or if not so registered, then the fair market value as mutually agreed to by the Holder and the Board (or if they are unable to agree, as determined by a mutually agreed independent third party appraisal, whose fees shall be paid by the Company).

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(b) Subdivisions or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its stock, the Warrant Price and the number of Shares issuable upon exercise hereof shall be proportionately adjusted.

(c) Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend payable in shares of stock (except any distribution specifically provided for in the foregoing subparagraphs (a) and (b)), then the Warrant Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of common stock outstanding immediately prior to such dividend or distribution, assuming that all convertible securities of the Company have been converted into common stock and (b) the denominator of which shall be the total number of shares of common stock outstanding immediately after such dividend or distribution, assuming that all convertible securities of the Company have been converted into common stock, and the number of Shares subject to this Warrant shall be proportionately adjusted.

(d) No Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Paragraph 4 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment.

(e) Notices of Record Date. In the event of any taking by the Company of a record of its stockholders for the purpose of determining stockholders who are entitled to receive payment of any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining stockholders who are entitled to vote in connection with any proposed merger or consolidation of the Company with or into any other corporation, or any proposed sale, lease or conveyance of all or substantially all of the assets of the Company, or any proposed liquidation, dissolution or winding up of the Company, the Company shall mail to the holder of the Warrant, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

5. Notice of Adjustments. Whenever the Warrant Price shall be adjusted pursuant to the provisions hereof, the Company shall within thirty (30) days of such adjustment deliver a certificate signed by its chief financial officer to the registered holder(s) hereof setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price after giving effect to such adjustment.

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6. Fractional Share. No fractional shares of stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the then fair market value of the stock to be issued upon the exercise hereof.

7. Requirements for Transfer.

(a) The Holder of this Warrant, by acceptance hereof, agrees that this Warrant and the Shares to be issued upon exercise hereof are being acquired for investment and that such holder will not offer, sell or otherwise dispose of this Warrant or any Shares to be issued upon exercise hereof unless either (i) they first shall have been registered under the Securities Act of 1933, as amended (the “Act”), or (ii) the Company first shall have been furnished with an opinion of legal counsel, reasonably satisfactory to the Company, to the effect that such sale or transfer is exempt from the registration requirements of the Act.

(b) [omitted]

(c) This Warrant and all Shares issued upon exercise of this Warrant (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such Act or an opinion of counsel satisfactory to the Company is obtained to the effect that such registration is not required.”

The foregoing legend may be removed from the certificates representing any Shares issued upon exercise hereof, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144(k) under the Act. All Shares issued upon exercise of this Warrant (unless registered under the Act) shall also be imprinted with any legend required by the Company’s First Amended and Restated Stockholders’ Agreement (as such agreement may be amended and/or restated from time to time).

8. Rights as Stockholders. No holder of the Warrant, as such, shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise thereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

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9. Modification and Waiver. This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

10. Notices. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be personally delivered, or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefore on the signature page of this Warrant.

11. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Shares issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the holder hereof.

12. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity agreement reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

13. Descriptive Headings. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute apart of this Warrant.

14. Exchange of Warrants. Upon the surrender by Holder of any Warrant or Warrants, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Paragraph 7 hereof, issue and deliver to or upon the order of such Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of such Holder or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of stock called for on the face or faces of the Warrant or Warrants so surrendered.

15. Transfers, etc.

(a) The Company will maintain a register containing the names and addresses of the Holders of this Warrant. Any Holder may change its or his address as shown on the warrant register by written notice to the Company requesting such change.

(b) Subject to the provisions of Paragraph 7 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit B attached hereto) at the principal office of the Company.

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(c) Until any transfer of the Warrant is made in the warrant register, the Company may treat the registered Holder of this Warrant as the absolute owner hereof for all purposes; provided, however, that if and when this Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

16. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE.

Argos Therapeutics, Inc. 4233 Technology Drive Durham, NC 27704
By:
	Clint G. Dederick, Jr. President and Chief Executive Officer

Date: March 31, 2005

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EXHIBIT A

Notice of Exercise

To:

1. The undersigned hereby elects to purchase              shares of the Common Stock of Argos Therapeutics, Inc. pursuant to the terms of the attached Warrant (Warrant No. W-76), and tenders herewith payment of the purchase price of such shares in full.

2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below:

Name		Address
	(Signature)
(Date)

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EXHIBIT B

Assignment Form

FOR VALUE RECEIVED,                      hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Warrant No. W-76) with respect to the number of shares of stock covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

(Date)	(Signature)
(Date)	(Signature)

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EX-10.4

Exhibit 10.4

ARGOS THERAPEUTICS, INC.

STOCK OPTION PLAN

1. Purpose. The Argos Therapeutics, Inc. Stock Option Plan (the “Plan”) is established to create an additional incentive for key employees, directors and consultants or advisors of Argos Therapeutics, Inc. and any successor corporations thereto (collectively referred to as the “Company”), and any present or future parent and/or subsidiary corporations of such corporation (all of whom along with the Company being individually referred to as a “Participating Company” and collectively referred to as the “Participating Company Group”), to promote the financial success and progress of the Participating Company Group. For purposes of the Plan, a parent corporation and a subsidiary corporation shall be as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Administration. The Plan shall be administered by the Board of Directors of the Company (the “Board”) and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board. Any subsequent references herein to the Board shall also mean the committee if such committee has been appointed and, unless the powers of the committee have been specifically limited, the committee shall have all of the powers of the Board granted herein, other than power to terminate or amend the Plan as provided in Paragraph 12 hereof, subject to the terms of the Plan and any applicable limitations imposed by law. All questions of interpretation of the Plan or of any option granted under the Plan (an “Option”) shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan and/or any Option. Options may be either incentive stock options as defined in Section 422 of the Code (“Incentive Stock Options”) or nonqualified stock options. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, or election.

3. Eligibility. The Options may be granted only to employees (including officers) and directors of the Participating Company Group or to individuals who are rendering services as consultants, advisors or other independent contractors to the Participating Company Group. The Board, in its sole discretion, shall determine which persons shall be granted Options (an “Optionee”). A director of the Company shall be eligible to be granted only a nonqualified stock option unless the director is also an employee of the Company. An individual who is rendering services as a consultant, advisor, or other independent contractor shall be eligible to be granted only a nonqualified stock option. An Optionee may, if otherwise eligible, be granted additional Options.

4. Shares Subject to Option. Options shall be options for the purchase of the authorized but unissued common stock of the Company (the “Stock”), subject to adjustment as provided in Paragraph 10 below. The maximum number of shares of Stock which may be issued under the Plan shall be two Million three Hundred seventy-one thousand (2,371,219) shares. In the event that any outstanding Option for any reason expires or is terminated or cancelled and/or shares of Stock subject to repurchase are repurchased by the Company, the shares allocable to the unexercised portion of such Option, or such repurchased shares, may again be subject to an Option grant. It is intended that the Plan shall constitute a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act of 1933, as amended (“Rule 701”) and that the Plan shall otherwise be administered in compliance with the requirements of Rule 701. To ensure such compliance, the Board shall maintain a record of shares subject to outstanding Options under the Plan and the exercise price of such Options, plus a record of all shares of Common Stock issued upon the exercise of such Options and the exercise price of such Options.

5. Time for Granting Options. All Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the shareholders of the Company.

6. Terms, Conditions and Form of Options. Subject to the provisions of the Plan, the Board shall determine for each Option (which need not be identical) the number of shares of Stock for which the Option is granted, whether the Option is to be treated as an Incentive Stock Option or as a nonqualified stock option and all other terms and conditions of the Option not inconsistent with the Plan. Options granted pursuant to the Plan shall comply with and be subject to the following terms and conditions:

(a) Option Price. The option price for each Option shall be established in the sole discretion of the Board; provided, however, that (i) the option price per share for an Incentive Stock Option shall be not less than the fair market value of a share of Stock on the date of the granting of the Incentive Stock Option and (ii) the option price per share of an Incentive Stock Option granted to an Optionee who at the time the Incentive Stock Option is granted owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code (a “Ten Percent Owner Optionee”) shall be not less than one hundred ten percent (110%) of the fair market value of a share of Stock on the date the Option is granted. For this purpose, “fair market value” means the value assigned to the stock for a given day by the Board, as determined pursuant to a reasonable method established by the Board that is consistent with the requirements of Sections 422 and 424 of the Code and the regulations thereunder (which method may be changed from time to time). Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a nonqualified stock option) may be granted by the Board in its discretion with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying with the provisions of Section 424(a) of the Code. Nothing hereinabove shall require that any such assumption or modification will result in the Option having the same characteristics, attributes or tax treatment as the Option for which it is substituted.

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(b) Exercise Period of Options. The Board shall have the power to set the time or times within which each Option shall be exercisable or the event or events upon the occurrence of which all or a portion of each Option shall be exercisable and the term of each Option; provided, however, that (i) no Incentive Stock Option shall be exercisable after the expiration of ten (10) years after the date such Incentive Stock Option is granted, (ii) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the date such Incentive Stock Option is granted and (iii) no Incentive Stock Option shall be exercisable after the date the Optionee’s employment with the Participating Company Group is terminated for cause (as determined in the sole discretion of the Board); and provided, further, an Option shall terminate and cease to be exercisable no later than three (3) months after the date on which the Optionee terminates employment with the Participating Company Group, unless the Optionee’s employment with the Participating Company Group shall have terminated as a result of the Optionee’s death or disability (within the meaning of Section 22(e)(3) of the Code), in which event the Option shall terminate and cease to be exercisable no later than twelve (12) months from the date on which the Optionee’s employment terminated. For this purpose, an Optionee’s employment shall be deemed to have terminated on account of death if the Optionee dies within three (3) months following the Optionee’s termination of employment.

(c) Payment of Option Price. Payment of the option price for the number of shares of Stock being purchased pursuant to any Option shall be made in cash, by check, cash equivalent or in any other form as may be permitted by the Board in its discretion.

(d) $100,000 Limitation. The aggregate fair market value, determined as of the date on which an Incentive Stock Option is granted, of the shares of Stock with respect to which incentive stock options (determined without regard to this subparagraph) are first exercisable during any calendar year (under this Plan or under any other plan of the Participating Company Group) by any Optionee shall not exceed $100,000. If such limitation would be exceeded with respect to an Optionee for a calendar year, the Incentive Stock Option shall be deemed a nonqualified stock option to the extent of such excess.

7. Standard Form of Stock Option Agreement. All Options shall be evidenced by a written award agreement substantially in the form of the nonqualified stock option agreement attached hereto as Exhibit A or the incentive stock option award agreement attached hereto as Exhibit B, as applicable, both of which are incorporated herein by reference (the “Standard Option Agreements”).

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8. Transfer of Control. Upon a merger, consolidation, corporate reorganization, or any transaction in which all or substantially all of the assets or stock of the Company are sold, leased, transferred or otherwise disposed of (other than a mere reincorporation transaction or one in which the holders of capital stock of the Company immediately prior to such merger or consolidations continue to hold at least a majority of the voting power of the surviving corporation) (a “Transfer of Control”), then any unexercisable portion of an outstanding Option shall become immediately exercisable as of a date prior to the Transfer of Control, which date shall be determined by the Board. The exercise of any Option that was permissible solely by reason of this Paragraph 8 shall be conditioned upon the consummation of the Transfer of Control. The Board may further elect, in its sole discretion, to provide that any Options which became exercisable solely by reason of this Paragraph 8 and which are not exercised as of the date of the Transfer of Control shall terminate effective as of the date of the Transfer of Control. Notwithstanding the foregoing, an outstanding Option shall not so accelerate if and to the extent: (i) such Option is, in connection with a Transfer of Control, either to be assumed by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof), (ii) such Option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option at the time of such Transfer of Control and provides for subsequent payout in accordance with the same vesting schedule applicable to such Option or (iii) the acceleration of such Option is subject to other limitations imposed by the Board at the time of the grant of the Option. The determination of option comparability under clause (i) above shall be made by the Board, and its determination shall be final, binding and conclusive.

9. Authority to Vary Terms. The Board shall have the authority from time to time to vary the terms of the Standard Option Agreements either in connection with the grant of an individual Option or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of such revised or amended standard form or forms of stock option agreement shall be in accordance with the terms of the Plan. Such authority shall include, but not by way of limitation, the authority to grant Options which are not immediately exercisable.

10. Effect of Change in Stock Subject to Plan. The Board shall make appropriate adjustments in the number and class of shares of Stock subject to the Plan and to any outstanding Options and in the option price of any outstanding Options in the event of a stock dividend, stock split, reverse stock split, combination, reclassification or like change in the capital structure of the Company.

11. Options Non-Transferable. During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee. No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution.

12. Termination or Amendment of Plan. The Board may terminate or amend the Plan at any time; provided however, that without the approval of the Company’s shareholders, there shall be (a) no increase in the total number of shares of Stock covered by the Plan (except by operation of the provisions of Paragraph 10 above), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no extension of the period during which Incentive Stock Options may be granted beyond the date which is ten (10) years following the date the Plan is adopted by the Company or the date the Plan is approved by the shareholders of the Company. In any event, no amendment may adversely affect any then outstanding Option or any unexercised portion thereof, without the consent of the Optionee, unless such amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option.

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13. Miscellaneous

(a) Nothing in this Plan or any Option granted hereunder shall confer upon any Optionee any right to continue in the employ of the Participating Company Group, or to serve as a director thereof, or interfere in any way with the right of a Participating Company to terminate his or her employment at any time. Unless specifically provided otherwise, no grant of an Option shall be deemed salary or compensation for the purpose of computing benefits under any employee benefit plan or other arrangement of a Participating Company for the benefit of its employees unless the Participating Company shall determine otherwise. No Optionee shall have any claim to an Option until it is actually granted under the Plan. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall, except as otherwise provided by the Board, be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as otherwise provided by the Committee.

(b) The Plan and the grant of Options hereunder shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any United States government or regulatory agency as may be required.

(c) The terms of the Plan shall be binding upon the Company, and its successors and assigns.

(d) This Plan and all actions taken hereunder shall be governed by the laws of the State of North Carolina.

(e) With respect to any payments not yet made to a Optionee by the Company, nothing contained herein shall give any such Optionee any rights that are greater than those of a general creditor of the Company.

(f) If any provision of this Plan or a Standard Option Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Standard Option Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Standard Option Agreement, it shall be stricken and the remainder of the Plan or the Standard Option Agreement shall remain in full force and effect.

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IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing Plan was duly adopted by the Board of Directors of the Company on the 7^th day of December, 1999.

ARGOS THERAPEUTICS, INC.
By:	/s/ Fred D. Hutchison
	Fred Hutchison, Assistant Secretary

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FIRST AMENDMENT

OF Argos Therapeutics, Inc.

STOCK OPTION PLAN

THIS FIRST AMENDMENT of Argos Therapeutics, Inc. Stock Option Plan is dated as of April 10, 2001.

WHEREAS, the Board of Directors of Argos Therapeutics, Inc. (the “Company”) has adopted and the stockholders of the Company have approved the Argos Therapeutics, Inc. Stock Option Plan (the “Plan”); and

WHEREAS, the Board of Directors deems it to be in the best interest of the Company to amend the Plan in order to increase the maximum number of shares of common stock issuable pursuant to options granted under the Plan from 2,371,219 to 3,470,300.

NOW, THEREFORE, the Plan shall be amended as follows:

1. The second sentence of Paragraph 4 of the Plan shall be deleted in its entirety and the following substituted in lieu thereof:

“The maximum number of shares of Stock which may be issued under the Plan shall be Three Million, Four Hundred Seventy Thousand, Three Hundred (3,470,300) shares.”

2. Except as herein amended, the terms and provisions of the Plan shall remain in full force and effect as originally adopted and approved.

IN WITNESS WHEREOF, the undersigned hereby certifies that this First Amendment was duly adopted by the Board of Directors of the Company as of the 10^th day of April, 2001 and by the stockholders of the Company on the 10^th day of April, 2001.

		ARGOS THERAPEUTICS, INC.
[CORPORATE SEAL]
		By:	/s/ Mark T. Weedon
ATTEST:			Mark T. Weedon
			President and CEO
By:	/s/ Fred D. Hutchison
	Fred D. Hutchison
	Secretary

SECOND AMENDMENT

OF Argos Therapeutics, Inc.

STOCK OPTION PLAN

THIS SECOND AMENDMENT of Argos Therapeutics, Inc. Stock Option Plan is dated as of August 23, 2001.

WHEREAS, the Board of Directors of Argos Therapeutics, Inc. (the “Company”) has adopted and the stockholders of the Company have approved the Argos Therapeutics, Inc. Stock Option Plan (the “Plan”); and

WHEREAS, the Board of Directors deems it to be in the best interest of the Company to amend the Plan in order to increase the maximum number of shares of common stock issuable pursuant to options granted under the Plan from 3,470,300 to 6,773,725.

NOW, THEREFORE, the Plan shall be amended as follows:

1. The second sentence of Paragraph 4 of the Plan shall be deleted in its entirety and the following substituted in lieu thereof:

“The maximum number of shares of Stock which may be issued under the Plan shall be Six Million Seven Hundred Seventy Three Thousand Seven Hundred Twenty Five (6,773,725) shares.”

2. Except as herein amended, the terms and provisions of the Plan shall remain in full force and effect as originally adopted and approved.

IN WITNESS WHEREOF, the undersigned hereby certifies that this Second Amendment was duly adopted by the Board of Directors of the Company as of the 23^rd day of August, 2001 and by the stockholders of the Company on the 29^th day of October, 2001.

	ARGOS THERAPEUTICS, INC.
[CORPORATE SEAL]
	By:	/s/ William N. Wofford
		William N. Wofford
		Assistant Secretary

THIRD AMENDMENT TO

ARGOS THERAPEUTICS, INC.

STOCK OPTION PLAN

THIS THIRD AMENDMENT of Argos Therapeutics, Inc. Stock Option Plan is dated as December 13, 2006.

WHEREAS, the Board of Directors of Argos Therapeutics, Inc., formerly, MERIX Bioscience, Inc. (the “Company”) has adopted and the stockholders of the Company have approved the Argos Therapeutics, Inc. Stock Option Plan, as amended (the “Plan”); and

WHEREAS, the Board of Directors deems it to be in the best interest of the Company to amend the Plan in order to increase the maximum number of shares of common stock issuable pursuant to options granted under the Plan from 6,773,725 to 10,200,000

NOW, THEREFORE, the Plan shall be amended as follows:

1. The second sentence of Paragraph 4 of the Plan shall be deleted in its entirety and the following substituted in lieu thereof:

“The maximum number of shares of Stock which may be issued under the Plan shall be ten million, two hundred thousand (10,200,000) shares.”

2. Except as herein amended, the terms and provisions of the Plan shall remain in full force and effect as originally adopted and approved.

IN WITNESS WHEREOF, the undersigned hereby certifies that this Third Amendment was duly adopted by the Board of Directors of the Company as of the 13^th day of December, 2006 and by the stockholders of the Company on the 15th day of January, 2007.

	ARGOS THERAPEUTICS, INC.
[CORPORATE SEAL]
	By:
		William N. Wofford
		Assistant Secretary

EX-10.5

Exhibit 10.5

ARGOS THERAPEUTICS, INC.

2008 STOCK INCENTIVE PLAN

1. Purpose

The purpose of this 2008 Stock Incentive Plan (the “Plan”) of Argos Therapeutics, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to align their interests with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” includes the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and other business ventures (including, without limitation, any joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2. Eligibility

All of the Company’s employees, officers, directors, and individual consultants and advisors (each a “Service Provider”) are eligible to receive options, restricted stock, restricted stock units and other stock-based awards (each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a “Participant.”

3. Administration and Delegation

(a) Administration by Board of Directors. The Plan shall be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

4. Stock Available for Awards.

(a) Subject to adjustment under Section 8, Awards may be made under the Plan for up to 27,326,263 shares of the common stock of the Company, $0.001 par value per share( the “Common Stock”). If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options (as hereinafter defined), the foregoing provisions shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. At no time while there is any Option (as defined below) outstanding and held by a Participant who was a resident of the State of California on the date of grant of such Option, shall the total number of shares of Common Stock issuable upon exercise of all outstanding options and the total number of shares provided for under any stock bonus or similar plan or agreement of the Company exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of the California Code of Regulations, as amended (the “California Regulations”), based on the shares of the Company which are outstanding at the time the calculation is made unless the Plan complies with all conditions of Rule 701 of the Securities Act of 1933, as amended.

(b) Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.

5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option, or portion of an Option, which is not intended to be or fails to qualify as an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option.”

(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of the Company and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. A Participant who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company shall not be eligible for the grant of an Incentive Stock Option unless (i) the exercise price is at least 110% of the Fair Market Value (as defined below) on the date the Option is granted and (ii) such Incentive Stock Option by its terms is not exercisable after the expiration of five years from the date the Option is granted. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board pursuant to Section 9(f), including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.

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(c) Exercise Price. The Board shall establish the exercise price of each Option and specify such exercise price in the applicable option agreement. The exercise price shall be not less than 100% of the Fair Market Value on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date. The term “Fair Market Value” shall mean, as of a given date: (i) if the Common Stock is listed on a national securities exchange, the last sale price of the Common Stock in the principal trading market for the Common Stock on such date; (ii) if the Common Stock is not listed on a national securities exchange, but is traded in the over-the counter market, the closing bid price for the Common Stock on such date, as reported by the OTC Bulletin Board or the National Quotation Bureau, Incorporated or similar publisher of such quotations; or (iii) if the Common Stock is not listed on a national securities exchange or traded in the over-the-counter market, such price as shall be determined by (or in a manner approved by) the Board in good faith and in compliance with applicable provisions of the Code and the regulations issued thereunder.

(d) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement.

(e) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(f) for the number of shares of Common Stock for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company following exercise either as soon as practicable or, subject to such conditions as the Board shall specify, on a deferred basis (with the Company’s obligation to be evidenced by an instrument providing for future delivery of the deferred shares at the time or times specified by the Board).

(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as may otherwise be provided in the applicable option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) when the Common Stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and to the extent provided for in the applicable option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent permitted by applicable law and provided for in the applicable option agreement or approved by the Board, in its sole discretion, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

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6. Restricted Stock; Restricted Stock Units

(a) General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board may grant Awards entitling the recipient to receive shares of Common Stock to be delivered at the time such shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

(b) Terms and Conditions. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any.

(c) Additional Provisions Relating to Restricted Stock.

(1) Dividends. Participants holding shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the Board. If any such dividends or distributions are paid in shares, or consist of a dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid. Each dividend payment will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the date the dividends are paid to stockholders of that class of stock.

(2) Stock Certificates. The Company may require that any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and be deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). After the expiration of the applicable restriction periods, upon request of a Participant or as otherwise determined by the Company, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant. “Designated Beneficiary” shall mean the Participant’s then living spouse, or, if none, the Participant’s estate.

7. Other Stock-Based Awards

Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based Awards”), including without limitation stock appreciation rights and Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine. Subject to the provisions of the Plan, the Board shall determine the conditions of each Other Stock-Based Award, including any purchase price applicable thereto.

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8. Adjustments for Changes in Common Stock and Certain Other Events

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the number and class of securities and exercise price per share of each outstanding Option, (iii) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award, and (iv) the terms of each other outstanding Award shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b) Change in Control

(1) Definition. Unless otherwise specifically provided in an Award agreement, a “Change in Control” shall be deemed to have occurred upon the first to occur of:

(i) any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) becoming a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing either (A) more than a majority of the voting power of the then outstanding securities of the Company, or (B) more than a majority of the aggregate fair market value of the then outstanding securities of the Company; provided, however, that a Change in Control shall not be deemed to occur as a result of (x) a transaction in which the Company becomes a subsidiary of another corporation and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to more than majority of all votes to which all stockholders of the parent corporation would be entitled in the election of directors, or (y) a transaction in which the person acquires newly issued securities of the Company in exchange for an investment in the Company; or

(ii) the consummation of either: (A) a merger, share exchange, consolidation or reorganization of the Company where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger, share exchange, consolidation or reorganization, shares entitling such stockholders to either (x) more than a majority of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors, or (y) more than a majority of the aggregate fair market value of then outstanding securities of the Company; or (B) a sale or other disposition of all or substantially all of the assets of the Company.

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(2) Consequences of a Change in Control on Awards Other than Restricted Stock Awards. In connection with a Change in Control, the Board may take any one or more of the following actions as to all (or any portion of) outstanding Awards other than Restricted Stock Awards on such terms as the Board determines: (i) provide that Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) in compliance with the applicable provisions of the Code, including Code Sections 409A, 422 and 424, (ii) upon written notice to a Participant, provide that the Participant’s unexercised Options or other unexercised Awards will terminate immediately prior to the consummation of such Change in Control unless exercised by the Participant within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Change in Control, (iv) in the event of a Change in Control under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Change in Control (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Options or other Awards (to the extent the exercise price does not exceed the Acquisition Price) less (B) the aggregate exercise price of all such outstanding Options or other Awards and any applicable tax withholdings, in exchange for the termination of such Options or other Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 8(b), the Board shall not be obligated by the Plan to treat all Awards, or all Awards of the same type, identically.

For purposes of clause (i) above, an Option shall be considered assumed if, following consummation of the Change in Control, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Change in Control, the consideration (whether cash, securities or other property) received as a result of the Change in Control by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Change in Control (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Change in Control is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) with equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Change in Control.

(3) Consequences of a Change in Control on Restricted Stock Awards. Upon the occurrence of a Change in Control other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Change in Control in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a Change in Control involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.

9. General Provisions Applicable to Awards

(a) Transferability of Awards. Except as the Board may otherwise expressly determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

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(b) Documentation. Unless otherwise expressly determined by the Board, each Incentive Stock Option shall be evidenced by a Notice of Incentive Stock Option and Incentive Stock Option Agreement substantially in the form attached as Exhibit A, each Nonstatutory Stock Option shall be evidenced by a Notice of Nonstatutory Stock Option and Nonstatutory Stock Option Agreement substantially in the form attached as Exhibit B, and each Restricted Stock Award shall be evidenced by a Summary of Restricted Stock Purchase and Restricted Stock Purchase Agreement substantially in the form attached as Exhibit C. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

(d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

(e) Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company so requires, at the same time as is payment of the exercise price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

(f) Amendment of Award.

(1) The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant.

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(2) The Board may, without stockholder approval, amend any outstanding Award granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Award provided that such amended exercise price is at least equal to the then-current Fair Market Value. The Board may also, without stockholder approval, cancel any outstanding award (whether or not granted under the Plan) and grant in substitution new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled award.

(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules, regulations or contracts of the Company.

(h) Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.

10. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend or otherwise and the exercise price of and the number of shares subject to such Option are adjusted as of the effective date of the stock dividend or split (rather than as of the record date for such stock dividend or split), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend or split shall be entitled to receive, on the distribution date, the stock dividend or split with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend or split.

(c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board. No Awards shall be granted under the Plan after the expiration of 10 years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company’s stockholders, but Awards previously granted may extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time; provided, however, that if at any time the approval of the Company’s stockholders is required as to any modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 10(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment does not materially and adversely affect the rights of Participants under the Plan.

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(e) Authorization of Sub-Plans. The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to this Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.

(f) Compliance with Code Section 409A. It is intended that all Awards granted hereunder be either exempt from, or issued in compliance with, Code Section 409A. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Code Section 409A is not so exempt or compliant, or for any action taken by the Board.

(g) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware, as to matters within the scope thereof, and the internal laws of the State of North Carolina (without reference to conflict of law provisions), as to all other matters.

* * * * * * * *

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ARGOS THERAPEUTICS, INC.

2008 STOCK INCENTIVE PLAN

CALIFORNIA SUPPLEMENT

Pursuant to Section 10(e) of the Plan, the Board has adopted this supplement for purposes of satisfying the requirements of Section 25102(o) of the California Corporations Code, as amended:

Any Awards granted under the Plan to a Participant who is a resident of the State of California on the date of grant (a “California Participant”) shall be subject to the following additional limitations, terms and conditions:

1. Additional Limitations on Awards.

(a) Generally. The terms of all Awards granted to a California Participant under Sections 5, 6 or 7 of the Plan shall comply, to the extent applicable, with Section 260.140.41 or Section 260.140.42 of the California Regulations.

(b) Maximum Duration of Options. No Options granted to California Participants shall have a term in excess of 10 years measured from the Option grant date.

(c) Minimum Exercise Period Following Termination. Unless a California Participant’s employment is terminated for cause (as defined by applicable law, the terms of any contract of employment between the Company and such Participant, or in the instrument evidencing the grant of such Participant’s Option), in the event of termination of employment of such Participant, such Participant shall have the right to exercise an Option, to the extent that he or she was otherwise entitled to exercise such Option on the date employment terminated, until the earlier of the Option expiration date or: (i) at least six months from the date of termination, if termination was caused by such Participant’s death or “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code) and (ii) at least 30 days from the date of termination, if termination was caused other than by such Participant’s death or “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code).

2. Additional Requirement to Provide Information to California Participants. Unless the Plan or agreement complies with all conditions of Rule 701 of the Securities Act of 1933, as amended (“Rule 701”), the Company shall provide to each California Participant and to each California Participant who acquires Common Stock pursuant to the Plan, not less frequently than annually, copies of annual financial statements (which need not be audited). The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information or when the Plan or agreement complies with all conditions of Rule 701.

3. Additional Limitations on Timing of Awards. No Award granted to a California Participant shall become exercisable, vested or realizable, as applicable to such Award, unless the Plan has been approved by the holders of at least a majority of the Company’s outstanding voting securities by the later of (i) within 12 months before or after the date the Plan was adopted by the Board or the agreement entered into; and (ii) prior to or within 12 months of the granting of any option or issuance of any security under the Plan or agreement to a California Participant.

4. Additional Restriction Regarding Recapitalizations, Stock Splits, Etc. For purposes of Section 8 of the Plan, in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification or other distribution of the Company’s securities, the number of securities allocated to each California Participant must be adjusted proportionately and without the receipt by the Company of any consideration from any California Participant.

EXHIBIT A

Notice of Incentive Stock Option

and

Incentive Stock Option Agreement

EXHIBIT B

Notice of Nonstatutory Stock Option

and

Nonstatutory Stock Option Agreement

EXHIBIT C

Summary of Restricted Stock Purchase and Restricted Stock

Purchase Agreement

FIRST AMENDMENT

OF ARGOS THERAPEUTICS, INC.

2008 STOCK INCENTIVE PLAN

This First Amendment of Argos Therapeutics, Inc. 2008 Stock Incentive Plan is dated as of December 11, 2008.

WHEREAS, the Board of Directors (the “Board”) of Argos Therapeutics, Inc., a Delaware corporation (the “Company”), has adopted, and the stockholders of the Company have approved, the Argos Therapeutics, Inc. 2008 Stock Incentive Plan (the “Plan”); and

WHEREAS, the Board and the stockholders of the Company have approved an amendment to the Plan to increase the number of shares of Common Stock of the Company issuable pursuant to awards granted under the Plan from 27,326,263 shares to 37,612,814 shares.

NOW, THEREFORE, the Plan shall be amended as follows:

1. The first complete sentence of Section 4(a) of the Plan shall be deleted in its entirety and the following substituted in lieu thereof:

“Subject to adjustment under Section 8, Awards may be made under the Plan for up to 37,612,814 shares of the common stock of the Company, $0.001 par value per share (the “Common Stock”).”

2. Except as herein amended, the terms and provisions of the Plan shall remain in full force and effect as originally adopted and approved.

EX-10.6

Exhibit 10.6

ARGOS THERAPEUTICS, INC.

NOTICE OF INCENTIVE STOCK OPTION

2008 STOCK INCENTIVE PLAN

Argos Therapeutics, Inc., a Delaware corporation (the “Company”) grants to the undersigned (the “Participant”) the following incentive stock option to purchase shares (the “Shares”) of the common stock of the Company, par value $0.001 per share (the “Common Stock”), pursuant to the Company’s 2008 Stock Incentive Plan (the “Plan”):

Participant:	*[Participant Name]
Total Number of Shares:	*[Number of Shares]
Grant Date:	*[Grant Date]
Exercise Price per Share:	$*[Exercise Price]
Vesting Commencement Date:	*[Vesting Date]
Vesting Schedule:	*[Describe Vesting Schedule – for example: “25% of the Total Number of Shares shall vest and become exercisable on the 1 year anniversary of the Vesting Commencement Date and 1/48 of the Total Number of Shares shall vest and become exercisable on the corresponding day of each month thereafter, or on the last day of each month, to the extent each month thereafter does not have the corresponding day, until all of the Shares have vested on the fourth anniversary of the Vesting Commencement Date, subject to Participant continuing to be a Service Provider through each such date.”] In addition, this Option may vest and become exercisable on an accelerated basis under Section 2 of the Incentive Stock Option Agreement.
Final Exercise Date:	*[Expiration Date]. This Option may expire earlier pursuant to Section 3 of the Incentive Stock Option Agreement if the Participant’s relationship with the Company is terminated or pursuant to Section 8 of the Plan.

This incentive stock option is granted under and governed by the terms and conditions of the Plan and the Incentive Stock Option Agreement, both of which are incorporated herein by reference. By signing below, the Participant accepts this incentive stock option, acknowledges receipt of a copy of the Plan and the Incentive Stock Option Agreement, and agrees to the terms thereof.

*[PARTICIPANT NAME]:	ARGOS THERAPEUTICS, INC.
	By:
(Signature)
	Name:
Address:	Title:
	Date:

THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

ARGOS THERAPEUTICS, INC.

INCENTIVE STOCK OPTION AGREEMENT

Granted under 2008 Stock Incentive Plan

1. Grant of Option.

This Incentive Stock Option Agreement (the “Agreement”) evidences the grant by Argos Therapeutics, Inc., a Delaware corporation (the “Company”), on the Grant Date to the Participant, an employee of the Company, of an option (this “Option”) to purchase, in whole or in part, on the terms provided herein and in the Plan, the Total Number of Shares at the Exercise Price per Share, all as defined and set forth in the accompanying Notice of Incentive Stock Option (the “Notice”). Capitalized terms that are not otherwise defined herein or in the Notice shall have the meanings given to such terms in the Plan.

It is intended that this Option shall be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). If for any reason the Option, or any portion thereof, does not meet the requirements of Section 422 of the Code, then the Option, or any portion thereof, as necessary, shall be deemed a nonstatutory stock option granted under the Plan. Except as otherwise indicated by the context, the term “Participant,” as used in this Agreement, shall include any person who acquires the right to exercise this Option validly under its terms.

2. Vesting Schedule.

This Option shall vest and become exercisable at the time or times set forth in the accompanying Notice. In addition, this Option may vest and become exercisable on an accelerated basis as follows: Immediately prior to the effective date of a Change in Control, this Option shall vest and become exercisable as to 100% of the Total Number of Shares, it being understood that in no event shall the Participant be entitled to exercise the Option to purchase greater than the Total Number of Shares as a result of this provision.

3. Exercise of Option.

(a) Form of Exercise. Each election to exercise this Option shall be in writing in substantially the form of the Notice of Stock Option Exercise attached to this Agreement as Exhibit A, signed by the Participant, and received by the Company at its principal office, accompanied by this Agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of Shares subject to this Option; provided that, no partial exercise of this Option may be for any fractional share.

(b) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this Option may not be exercised unless the Participant, at the time of the exercise of this Option, is, and has been at all times since the Grant Date, a Service Provider to or of the Company or any subsidiary of the Company as defined in Section 424 (f) of the Code (an “Eligible Participant”).

(c) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this Option shall terminate three months after such cessation (but in no event after the Final Exercise Date); provided that, this Option shall be exercisable only to the extent that the Participant was entitled to exercise this Option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment agreement, confidentiality and nondisclosure agreement, or other agreement between the Participant and the Company, the right to exercise this Option shall terminate immediately upon such violation.

(d) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while the Participant is an Eligible Participant and the Company has not terminated such relationship for “Cause” (as defined below), this Option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee); provided that, this Option shall be exercisable only to the extent that this Option was exercisable by the Participant on the date of the Participant’s death or disability, and further provided that this Option shall not be exercisable after the Final Exercise Date.

(e) Termination for Cause. If, prior to the Final Exercise Date, the Participant’s status as a Service Provider is terminated by the Company for Cause (as defined below), the right to exercise this Option shall terminate immediately upon the effective date of such termination. If the Participant is party to an agreement with the Company that contains an applicable definition of “cause”, “Cause” shall have the meaning ascribed to such term in such agreement. Otherwise, “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to perform the Participant’s responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant shall be considered to have been discharged for Cause if the Company determines, within 30 days after the Participant’s resignation, that discharge for cause was warranted.

4. Restrictions on Transfer; Rights of First Refusal and Stockholder Agreements.

(a) Bylaws. The Participant acknowledges and agrees that the Shares are subject to the provisions of the Company’s Bylaws, as amended from time to time (the “Bylaws”), including without limitation, all restrictions on transfer and rights of first refusal described in the Bylaws. The Participant may inspect the Bylaws at the Company’s principal office.

(b) Legend. Any certificate representing Shares shall bear a legend substantially in the following form (in addition to, or in combination with, any legend required by applicable federal and state securities laws and agreements relating to the transfer and/or voting of the Company securities):

“The securities represented by this certificate, and the transfer thereof, are subject to the restriction on transfer provisions of the Bylaws of the Company, a copy of which is on file in, and may be examined at, the principal office of the Company”

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(c) Stockholder Agreements. The Participant acknowledges and agrees that the Company may condition the issuance of the Shares upon the Participant joining and becoming a party to such stockholder agreements, which may impose certain contractual rights and obligations on the Shares, as may be entered into from time to time by and among the Company and certain holders of the Company’s capital stock.

5. Agreement in Connection with Public Offering. The Participant agrees, in connection with the initial underwritten public offering of the Company’s securities pursuant to a registration statement under the Securities Act of 1933, as amended (the “Securities Act”): (i) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock held by the Participant (other than those shares included in the offering) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company’s securities for a period of 180 days from the effective date of such registration statement, which period may be extended upon the request of the underwriters for an additional period of up to fifteen (15) days if the Company issues or proposes to issue an earnings or other public release within fifteen (15) days of the expiration of the 180-day lockup period, and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering.

The Participant agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters of such offering which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested, by the Company or the underwriters of such offering, the Participant shall provide, within 10 days of such request, such information as may be required by the Company or such underwriters in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 5 shall not apply to a registration relating solely to employee benefits plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of the applicable period. Participant agrees that any transferee of this Option or Shares pursuant to this Agreement shall be bound by this Section 5.

6. Tax Matters.

(a) Withholding. No Shares shall be issued pursuant to the exercise of this Option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this Option.

(b) Disqualifying Disposition. If the Participant disposes of Shares acquired upon exercise of this Option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this Option, the Participant shall immediately notify the Company in writing of such disposition and shall timely satisfy all resulting tax obligations and shall hold the Company harmless with respect to any such tax obligations.

(c) Code Section 409A. The Exercise Price is intended to be the Fair Market Value of the Common Stock on the Grant Date. The Company has determined the Fair Market Value of the Common Stock in good faith and using the reasonable application of a reasonable valuation method, for purposes of determining the Exercise Price. Notwithstanding this, the Internal Revenue Service may assert that the Fair Market Value of the Common Stock on the Grant Date was greater than the Exercise Price. Under Code Section 409A, if the Exercise Price is less than the Fair Market Value of the Common Stock as of the Grant Date, this Option may be treated as a form of deferred compensation and the Participant may be subject to an additional twenty percent (20%) tax, plus interest and possible penalties. The Participant acknowledges that the Company has advised the Participant to consult with a tax adviser regarding the potential impact of Code Section 409A and that the Company, in the exercise of its sole discretion and without the consent of the Participant, may amend or modify this Agreement in any manner and delay the payment of any amounts payable pursuant to this Agreement to the minimum extent necessary to meet the requirements of Code Section 409A, as amplified by any Internal Revenue Service or U.S. Treasury Department regulations or guidance as the Company deems appropriate or advisable.

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7. Nontransferability of Option. This Option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this Option shall be exercisable only by the Participant.

8. Provisions of the Plan. This Option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Option.

9 Entire Agreement; Governing Law. The Plan and the accompanying Notice are incorporated herein by reference. This Agreement, the Notice and the Plan constitute the entire agreement between the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware, as to matters within the scope thereof, and the internal laws of the State of North Carolina (without reference to conflict of law provisions), as to all other matters.

10. Amendment. Except as set forth in Section 6(c), this Agreement may not be modified or amended in any manner adverse to the Participant’s interest except by means of a writing signed by the Company and Participant.

11. No Guarantee of Continued Service. THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF OPTIONS PURSUANT TO THE VESTING SCHEDULE SET FORTH HEREIN AND IN THE NOTICE ARE EARNED ONLY BY CONTINUING SERVICE AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED SERVICE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE PARTICIPANT’S SERVICE WITH OR WITHOUT CAUSE.

*        *        *

4

Exhibit A

ARGOS THERAPEUTICS, INC.

NOTICE OF INCENTIVE STOCK OPTION EXERCISE

2008 STOCK INCENTIVE PLAN

The undersigned (the “Participant”) has previously been awarded an incentive stock option (the “Option”) to purchase shares (the “Shares”) of the common stock of Argos Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to the Company’s 2008 Stock Incentive Plan (the “Plan”), and hereby notifies the Company of the Participant’s desire to exercise the Option on the terms set forth herein:

PARTICIPANT INFORMATION:	OPTION INFORMATION:
Name:	Grant Date:
Address:	Exercise Price Per Share:	$
Taxpayer ID #:	Total Shares Covered by Option:

EXERCISE INFORMATION:
Number of Shares Being     Purchased:
Aggregate Exercise Price:	$

Form of Payment (check all that apply):	¨	Check for $             made payable to “Argos Therapeutics, Inc.”
	¨	Cash in the amount of $
Please register the Shares in my name as follows:
	(Print name as it is to appear on stock certificate)

REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANT:

The Participant hereby represents and warrants to the Company that, as of the date hereof:

1. I am purchasing the Shares for my own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act of 1933 (the “Securities Act”), or any rule or regulation under the Securities Act.

2. I have had such opportunity as I have deemed adequate to obtain from representatives of the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company.

3. I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

4. I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for an indefinite period.

5. I acknowledge that I am acquiring the Shares subject to all other terms of the Plan, including the Notice of Incentive Stock Option and related Incentive Stock Option Agreement.

6. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Shares at this time. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me.

7. I acknowledge that the Shares remain subject to the Company’s right of first refusal and the market stand-off (sometimes referred to as the “lock-up”), all in accordance with the applicable Notice of Incentive Stock Option and related Incentive Stock Option Agreement.

8. I understand that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

(Print Participant Name)

(Signature)

Date:

EX-10.7

Exhibit 10.7

ARGOS THERAPEUTICS, INC.

NOTICE OF NONSTATUTORY STOCK OPTION

2008 STOCK INCENTIVE PLAN

Argos Therapeutics, Inc., a Delaware corporation (the “Company”) grants to the undersigned (the “Participant”) the following nonstatutory stock option to purchase shares (the “Shares”) of the common stock of the Company, par value $0.001 per share (the “Common Stock”) pursuant to the Company’s 2008 Stock Incentive Plan (the “Plan”):

Participant:	*[Participant Name]
Total Number of Shares:	*[Number of Shares]
Grant Date:	*[Grant Date]
Exercise Price per Share:	$*[Exercise Price]
Vesting Commencement Date:	*[Vesting Date]
Vesting Schedule:	*[Describe Vesting Schedule – for example: “25% of the Total Number of Shares shall vest and become exercisable on the 1 year anniversary of the Vesting Commencement Date and 1/48 of the Total Number of Shares shall vest and become exercisable on the corresponding day of each month thereafter, or on the last day of each month, to the extent each month thereafter does not have the corresponding day, until all of the Shares have vested on the fourth anniversary of the Vesting Commencement Date, subject to Participant continuing to be a Service Provider through each such date.”] *[In addition, this option may vest and become exercisable on an accelerated basis under Section 2 of the Nonstatutory Stock Option Agreement.]
Final Exercise Date:	*[Expiration Date]. This option may expire earlier pursuant to Section 3 of the Nonstatutory Stock Option Agreement if the Participant’s relationship with the Company is terminated, or pursuant to Section 8 of the Plan.

This nonstatutory stock option is granted under and governed by the terms and conditions of the Plan and the accompanying Nonstatutory Stock Option Agreement, both of which are incorporated herein by reference. By signing below, the Participant accepts this nonstatutory stock option, acknowledges receipt of a copy of the Plan and the Nonstatutory Stock Option Agreement, and agrees to the terms thereof.

By signing below, I hereby agree and acknowledge that all stock options previously issued to me by the Company shall be of no further force or effect. Furthermore, I hereby relinquish all rights and claims I may have pursuant to the stock option agreements evidencing such options or the respective stock option plan and any amendments pursuant to which such options were granted.

[PARTICIPANT NAME]:	ARGOS THERAPEUTICS, INC.:
	By:
(Signature)
	Name:
Address:	Title:
	Date:

2

THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

ARGOS THERAPEUTICS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

Granted Under 2008 Stock Incentive Plan

1. Grant of Option.

This Nonstatutory Stock Option Agreement (the “Agreement”) evidences the grant by Argos Therapeutics, Inc., a Delaware corporation (the “Company”), on the Grant Date to the Participant, a[n] *[employee/officer/director/consultant/advisor] of the Company, of an option (this “Option”) to purchase, in whole or in part, on the terms provided herein and in the Plan, the Total Number of Shares of Common Stock at the Exercise Price per Share, all as defined and set forth in the accompanying Notice of Nonstatutory Stock Option (the “Notice”). Capitalized terms that are not otherwise defined herein or in the Notice shall have the meanings given to such terms in the Plan.

It is intended that this Option shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant,” as used in this Agreement, shall include any person who acquires the right to exercise this Option validly under its terms.

2. Vesting Schedule.

This Option shall vest and become exercisable at the time or times set forth in the accompanying Notice. [In addition, the Option may vest and become exercisable on an accelerated basis as follows:

*[Immediately prior to the effective date of a Change in Control, this Option shall vest and become exercisable as to 100% of the Total Number of Shares, it being understood that in no event shall the Participant be entitled to exercise the Option to purchase greater than the Total Number of Shares as a result of this provision.]

3. Exercise of Option.

(a) Form of Exercise. Each election to exercise this Option shall be in writing in substantially the form of the Notice of Stock Option Exercise attached to this Agreement as Exhibit A, signed by the Participant, and received by the Company at its principal office, accompanied by this Agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of Shares subject to this Option; provided that, no partial exercise of this Option may be for any fractional share.

(b) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this Option may not be exercised unless the Participant, at the time of the exercise of this Option, is, and has been at all times since the Grant Date, a Service Provider to or of the Company or any subsidiary of the Company as defined in Section 424 (f) of the Code (an “Eligible Participant”).

(c) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this Option shall terminate *[three months] after such cessation (but in no event after the Final Exercise Date); provided that, this Option shall be exercisable only to the extent that the Participant was entitled to exercise this Option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment agreement, confidentiality and nondisclosure agreement, or other agreement between the Participant and the Company, the right to exercise this Option shall terminate immediately upon such violation.

(d) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while the Participant is an Eligible Participant and the Company has not terminated such relationship for “Cause” (as defined below), this Option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee); provided that, this Option shall be exercisable only to the extent that this Option was exercisable by the Participant on the date of the Participant’s death or disability, and further provided that this Option shall not be exercisable after the Final Exercise Date.

(e) Termination for Cause. If, prior to the Final Exercise Date, the Participant’s status as a Service Provider is terminated by the Company for Cause (as defined below), the right to exercise this Option shall terminate immediately upon the effective date of such termination. If the Participant is party to an agreement with the Company that contains an applicable definition of “cause”, “Cause” shall have the meaning ascribed to such term in such agreement. Otherwise, “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to perform the Participant’s responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after the Participant’s resignation, that discharge for cause was warranted.

4. Restrictions on Transfer; Rights of First Refusal and Stockholder Agreements.

(a) Bylaws. The Participant acknowledges and agrees that the Shares are subject to the provisions of the Company’s Bylaws, as amended from time to time (the “Bylaws”), including without limitation, all restrictions on transfer and rights of first refusal described in the Bylaws. The Participant may inspect the Bylaws at the Company’s principal office.

(b) Legend. Any certificate representing Shares shall bear a legend substantially in the following form (in addition to, or in combination with, any legend required by applicable federal and state securities laws and agreements relating to the transfer and/or voting of the Company securities):

“The securities represented by this certificate, and the transfer thereof, are subject to the restriction on transfer provisions of the Bylaws of the Company, a copy of which is on file in, and may be examined at, the principal office of the Company.”

(c) Stockholder Agreements. The Participant acknowledges and agrees that the Company may condition the issuance of the Shares upon the Participant joining and becoming a party to such stockholder agreements, which may impose certain contractual rights and obligations on the Shares, as may be entered into from time to time by and among the Company and certain holders of the Company’s capital stock.

2

5. Agreement in Connection with Public Offering.

The Participant agrees, in connection with the initial underwritten public offering of the Company’s securities pursuant to a registration statement under the Securities Act of 1933, as amended (the “Securities Act”): (i) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock held by the Participant (other than those shares included in the offering) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company’s securities for a period of 180 days from the effective date of such registration statement, which period may be extended upon the request of the underwriters for an additional period of up to fifteen (15) days if the Company issues or proposes to issue an earnings or other public release within fifteen (15) days of the expiration of the 180-day lockup period, and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering.

The Participant agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters of such offering which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested, by the Company or the underwriters of such offering, the Participant shall provide, within 10 days of such request, such information as may be required by the Company or such underwriters in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 5 shall not apply to a registration relating solely to employee benefits plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of the applicable period. Participant agrees that any transferee of this Option or Shares pursuant to this Agreement shall be bound by this Section 5.

6. Tax Matters.

(a) Withholding. No Shares shall be issued pursuant to the exercise of this Option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding or other taxes required by law to be withheld in respect of this Option.

(b) Code Section 409A. The Exercise Price is intended to be not less than the Fair Market Value of the Common Stock on the Grant Date. The Company has determined the Fair Market Value of the Common Stock in good faith and using the reasonable application of a reasonable valuation method, for purposes of determining the Exercise Price. Notwithstanding this, the Internal Revenue Service may assert that the Fair Market Value of the Common Stock on the Grant Date was greater than the Exercise Price. Under Code Section 409A, if the Exercise Price is less than the Fair Market Value of the Common Stock as of the Grant Date, this Option may be treated as a form of deferred compensation and the Participant may be subject to an additional twenty percent (20%) tax, plus interest and possible penalties. The Participant acknowledges that the Company has advised the Participant to consult with a tax adviser regarding the potential impact of Code Section 409A and that the Company, in the exercise of its sole discretion and without the consent of the Participant, may amend or modify this Agreement in any manner and delay the payment of any amounts payable pursuant to this Agreement to the minimum extent necessary to meet the requirements of Code Section 409A, as amplified by any Internal Revenue Service or U.S. Treasury Department regulations or guidance as the Company deems appropriate or advisable.

7. Nontransferability of Option. This Option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this Option shall be exercisable only by the Participant.

3

8. Provisions of the Plan. This Option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Option.

9 Entire Agreement; Governing Law. The Plan and the Notice are incorporated herein by reference. This Agreement, the Notice and the Plan constitute the entire agreement between the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware, as to matters within the scope thereof, and the internal laws of the State of North Carolina (without reference to conflict of law provisions), as to all other matters.

10. Amendment. Except as set forth in Section 6(b), this Agreement may not be modified or amended in any manner adverse to the Participant’s interest except by means of a writing signed by the Company and Participant.

11. No Guarantee of Continued Service. THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF OPTIONS PURSUANT TO THE VESTING SCHEDULE SET FORTH HEREIN AND IN THE NOTICE ARE EARNED ONLY BY CONTINUING SERVICE AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED SERVICE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE PARTICIPANT’S SERVICE WITH OR WITHOUT CAUSE.

*  *  *  *  *  *  *  *  *  *  *

4

Exhibit A

ARGOS THERAPEUTICS, INC.

NOTICE OF NONSTATUTORY STOCK OPTION EXERCISE

2008 STOCK INCENTIVE PLAN

The undersigned (the “Participant”) has previously been awarded a nonstatutory stock option (the “Option”) to purchase shares (the “Shares”) of the common stock of Argos Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to the Company’s 2008 Stock Incentive Plan (the “Plan”), and hereby notifies the Company of the Participant’s desire to exercise the Option on the terms set forth herein:

PARTICIPANT INFORMATION:	OPTION INFORMATION:
Name:	Grant Date:
Address:	Exercise Price Per Share:	$
Taxpayer ID #:	Total Shares Covered by Option:

EXERCISE INFORMATION:
Number of Shares Being     Purchased:
Aggregate Exercise Price:	$

Form of Payment (check all that apply):	¨	Check for $             made payable to “Argos Therapeutics, Inc.”
	¨	Cash in the amount of $
Please register the Shares in my name as follows:
	(Print name as it is to appear on stock certificate)

REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANT:

The Participant hereby represents and warrants to the Company that, as of the date hereof:

1. I am purchasing the Shares for my own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act of 1933 (the “Securities Act”), or any rule or regulation under the Securities Act.

2. I have had such opportunity as I have deemed adequate to obtain from representatives of the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company.

3. I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

4. I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for an indefinite period.

5. I acknowledge that I am acquiring the Shares subject to all other terms of the Plan, including the Notice of Nonstatutory Stock Option and related Nonstatutory Stock Option Agreement.

6. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Shares at this time. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me.

7. I acknowledge that the Shares remain subject to the Company’s right of first refusal and the market stand-off (sometimes referred to as the “lock-up”), all in accordance with the applicable Notice of Nonstatutory Stock Option and related Nonstatutory Stock Option Agreement.

8. I understand that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

(Print Participant Name)

(Signature)

Date:

EX-10.11

Exhibit 10.11

	MERIX Bioscience, Inc.
	4233 Technology Drive
	Durham, NC 27704-2173
	phone: 919-287-6300
	fax: 919-287-6301
July 18, 2003	VIA OVERNIGHT DELIVERY
Charles A. Nicolette, Ph.D.

Dear Dr. Nicolette:

I am pleased to extend this offer of employment with MERIX Bioscience, Inc. (“MERIX” or the “Company”). We at MERIX are excited about the challenges and opportunities that lie ahead for us collectively and are enthusiastic about the prospect of your joining the MERIX team. We look forward to your favorable response to this offer.

This offer is contingent upon the following: satisfactory completion of the MERIX employment application, your ability to begin work on the date indicated below, proof of your authorization to work in the United States (I-9 Employment Eligibility Verification), and execution of a Confidentiality and Inventions Agreement.

The details of this offer are as follows:

Title:	Vice President, Research
Reporting To:	Clint Dederick Chief Executive Officer
Start Date:	As mutually agreed but no later than August 1, 2003.
Compensation:	A base salary of $7500.00 per pay period, which equates to $180,000 annually, and is payable semi-monthly.
Bonus:	A bonus equivalent of 20% of base salary, to be paid on an annual basis, based upon the accomplishment of mutually agreed upon milestones and objectives.
Stock Options:	In accordance with the applicable stock option plan and a written stock option agreement, and subject to the approval of the Board of Directors, you will be granted incentive stock options to purchase 400,000 shares of MERIX common stock. Eighty percent of these options will vest over four years in accordance with the applicable plan. The remaining twenty percent will be subject to an alternative vesting arrangement including achievement of mutually agreed upon milestones.

Charles A. Nicolette, Ph.D.

Page 2 of 4

July 18, 2003

Benefits:	MERIX offers a benefit program for regular, full-time employees, which includes the following elements:
	•      Health Insurance
	•      Dental Insurance
	•      Life and AD&D Insurance
	•      Short Term Disability •      Long Term Disability •      Eleven paid holidays per year •      401(k) Savings and Investment Plan •      Paid Time Off (PTO) eligibility based on service with the Company and initially prorated at 16.67 hours per month (equivalent to 25 days per year) •      Note: MERIX pays 100% of all individual benefit premiums and 50% of dependent premiums.) •      A Benefit Summary is enclosed. Additional details of the plans will be provided at a later date.
	MERIX will regularly review all its benefit plans and reserves the right to change or terminate such plans at any time.
Relocation:	It is the Company’s desire to ease the burdens resulting from your relocation to our Research Triangle area location. To assist you and your family in moving to our area, the Company will provide you with $30,000 (capped) to cover all moving related costs including but not limited to:
	•   The cost of moving your belongings. •   The cost of temporary accommodations in the Research Triangle. •   The cost of up to two trips by your spouse to do house hunting in the Research Triangle area.
	All moving related expenses must be documented.
	In conjunction with the payment of these relocation related expenses by MERIX on your behalf, you will be asked to sign a note requiring you to reimburse the Company for the Company-paid relocation expenses should you resign your employment prior to the one-year anniversary of your start date.
Severance:	If you are terminated without cause (as determined by MERIX’ Board of Directors or Compensation Committee), upon termination you will, upon execution of a release in form reasonably satisfactory to the Company, receive a severance payment equal to six months of salary. You will also continue to receive the identified medical and dental coverage for six months.

Charles A. Nicolette, Ph.D.

Page 3 of 4

July 18, 2003

This offer letter is not intended to, nor does it, create any employment contract for any specified term or duration between you and the Company, In accordance with the laws of the State of North Carolina, your employment with the Company is considered “at will”. This means that, just as you may resign your employment at any time, MERIX may, in its sole discretion, with or without cause, terminate your employment for any reason.

Like most companies, MERIX requires all employees to protect confidential information and to assign to the Company intellectual property developed while working with us at MERIX. A copy of an agreement detailing your obligations is enclosed. Upon acceptance of the terms and conditions of this offer, please sign, date and return to us the duplicate of this letter and the Confidentiality and Inventions Agreement.

The Immigration Reform and Control Act of 1986 makes it unlawful for any employer to hire an illegal alien. The Act requires MERIX to verify the identity and eligibility of each new employee to work in the United States. U.S. Government Form I-9 will be provided on your first day of employment. You will be asked to provide acceptable proof of eligibility to work in the United States. New employees may not be permitted to begin employment at MERIX until such verification is complete.

This letter agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes and replaces all oral and written agreements, if any, between the parties with respect to the subject matter of this letter agreement.

On behalf of all the members of the MERIX team, I wish to reaffirm our excitement about the future potential of this Company and our enthusiasm about the prospect of your joining MERIX. Please let me know if you have any questions or need additional assistance, I can be reached at 919-287-6300.

If our employment offer is satisfactory, please sign the duplicate of this letter and the Confidentiality and Inventions Agreement enclosed and return them to me by Monday, July 21, 2003 via Federal Express (return packaging enclosed). We are looking forward to working with you in contributing to the growth of MERIX.

Sincerely,

Timothy W. Trost

Chief Financial Officer

Charles A. Nicolette, Ph.D.

Page 4 of 4

July 18, 2003

I accept the position of Vice President, Research.

Signed:
Date:	7/19/03
Start Date:	8/1/03

Employee Action Form

Employee’s Name Charles Nicolette		Current Date     2/19/04	Status Change
Hire Date 8/01/03	Effective Date 2/18/04		Present	Proposed
Reason for Action Requested (Check one or more)			Title        (Job Code: 0100) V.P. Research	Title        (Job Code: 0100) V. P. Research & Development
¨ New Hire ¨ Payroll Deduction ¨ Transfer (permanent) ¨ Transfer (temporary) ¨ Bonus ¨ Change of Address	¨ Leave of Absence ¨ Performance Increase ü Promotion ¨ Documentation ¨ Quit ¨ Termination ¨Other (Explain)		Dept. Research	Dept. Research and Development
			Rate $180,000/yr	Rate $200,000/yr
			Complete for New Hires
			ü Exempt        ¨ Non- Exempt
			Phone
			Social Security #
Supervisor’s Comments/General Explanation (Explain in Detail)
In addition to an increase in salary, Charles will receive an increase in stock option grants to from 400,000 to 800,000. In consideration of this increase in salary and additional stock option grants, the terms of Charles’ offer letter shall be amended to state that, “Upon termination without cause (as determined by MERIX’ Board of Directors or Compensation Committee), you will be entitled to the continuance of medical and dental benefits only if you execute a release in a form reasonably acceptable to the Company”. For purposes of this employee action form agreement, “cause” shall be defined as set forth in Exhibit A attached:
Employee’s Comments:

Date Action Discussed with Employee Employee’s Signature

Supervisor’s Signature	Action Acknowledged By
	Human Resources	Dept. Dir./VP	CEO/CFO	Payroll

Exhibit A

“Cause” shall mean:

(a) your failure to diligently and properly perform your duties for the Company;

(b) your misappropriation or unauthorized use of the Company’s tangible or intangible property, or breach of the Confidentiality and Inventions Agreement;

(c) any material failure to comply with the Company’s policies or any other policies and/or directives of the Board;

(d) your use of illegal drugs or any illegal substance, or your use of alcohol in any manner that materially interferes with the performance of your duties under this Agreement;

(e) any dishonest or illegal action (including, without limitation, embezzlement) or any other action whether or not dishonest or illegal by you which is materially detrimental to the interest and well-being of the Company, including, without limitation, harm to its reputation;

(f) your failure to fully disclose any material conflict of interest you may have with the Company in a transaction between the Company and any third party which is materially detrimental to the interest and well-being of the Company;

(g) any adverse action or omission by you which would be required to be disclosed pursuant to public securities laws or which would limit the ability of the Company or any entity affiliated with the Company to sell securities under any Federal or state law or which would disqualify the Company or any affiliated entity from any exemption otherwise available to it; or

(h) your violation of the Company’s policies prohibiting harassment or unlawful discrimination.

MERIX BIOSCIENCE, INC.

February 14, 2008

Charles A. Nicolette, Ph.D.

Re: Amendment 1 to July 18, 2003 Offer Letter

Dear Dr. Nicolette:

This letter is an Amendment (the “Amendment”) to the employment offer letter dated July 18, 2003 (“Offer Letter”) between you and Argos Therapeutics, Inc. (formerly known as MERIX Bioscience, Inc.) (the “Company, and shall become effective as of January 1, 2008.

The section of the Offer Letter entitled “Severance” on page 2 shall be amended and restated in its entirety as follows:

In the event you are terminated, the Company will provide you with compensation equal to six month’s salary. You will also continue to receive the medical and dental coverage you were receiving prior to your termination for six months, subject to the availability of such plans to non-employees. You will continue to be obligated to pay your portion of dependent premiums for such health and dental coverage. These severance benefits will be paid on the Company’s regular pay date or dates of each month after termination for a total of six months provided you execute (and do not revoke) the Company’s standard release within sixty (60) days of the date of your termination of employment.

Except as set forth above or in any other written agreement between us, the remaining terms of the Offer Letter shall remain in full force and effect.

If the foregoing is acceptable, please so indicate by signing and dating this Amendment in the space provided below for your signature and return an executed original of this Amendment to the undersigned and we shall have an agreement governed by North Carolina law.

Sincerely,
ARGOS THERAPEUTICS, INC.
By:
Title:	CEO

ACKNOWLEDGED AND AGREED TO THIS 22 DAY OF FEB, 200[ILLEGIBLE].

Charles A. Nicolette

March 30, 2011

Charles A. Nicolette, Ph.D.

Re: Amendment 3 to July 18, 2003 Offer Letter, as amended

Dear Dr. Nicolette:

This letter is an Amendment (the “Amendment”) to the employment offer letter dated July 18, 2003 (“Offer Letter”) between you and Argos Therapeutics, Inc. (formerly known as MERIX Bioscience, Inc.) (the “Company”), as such letter was previously amended by that certain Employee Action Form dated February 23, 2004, (“Action Form Amendment”) and that certain Amendment 1 to July 18, 2003 Offer Letter dated February 14, 2008. This Amendment shall become effective as of March 30, 2011.

The section of the Offer Letter entitled “Severance” on page 2, as amended by the Action Form Amendment and Amendment 1, shall be further amended and restated in its entirety as follows:

If the Company terminates your employment without “cause” (as defined in Exhibit A (incorporated herein by reference) and as determined by the Argos Therapeutics, Inc. Board of Directors or Compensation Committee in its sole discretion), the Company will provide you with compensation equal to 9 months’ base salary if you first execute and do not revoke the Company’s standard release within the time period specified by the Company at the time of termination, but in any event within 60 days of the termination date (the “Release”). In addition, subject to your execution and non-revocation of the Release, you will also continue to receive the medical and dental coverage you were receiving prior to your termination for 9 months subject to (i) your properly electing and maintaining continued insurance through COBRA or its state law equivalent throughout such period, (ii) the availability of such plans to non-employees, and (iii) the Company’s continuing to sponsor such benefits for its employees generally. You will continue to be obligated to pay your portion of dependent premiums for such health and dental coverage. If those plans are not available to you as a non-employee or the Company does not continue to sponsor such benefits for its employees generally, then the Company will pay you a monthly amount equal to the portion of the premium it was paying on your behalf immediately prior to the termination date, subject to applicable tax withholdings and other deductions. These severance benefits will be paid on the Company’s regular pay date or dates of each month after termination for a total of 9 months commencing on the first regularly scheduled payroll date processed after you have executed, returned and not revoked the Release.

If your employment is terminated within 90 days prior to or within six (6) months following the consummation of a Change of Control (as defined in Exhibit A) by the Company without “cause”, you will continue to be eligible for severance benefits on the terms and conditions and at the times stated in the above paragraph except that you will be eligible for 15 months base salary and 15 months of benefits, subject to your satisfaction of all applicable conditions described in the preceding paragraph.

The severance benefits specified above are subject to the provisions of Exhibit A pertaining to Section 409A.

Except as set forth above or in any other written agreement between us, the remaining terms of the Offer Letter shall remain in full force and effect.

If the foregoing is acceptable, please so indicate by signing and dating this Amendment in the space provided below for your signature and return an executed original of this Amendment to the undersigned and we shall have an agreement governed by North Carolina law.

Sincerely,
ARGOS THERAPEUTICS, INC.
By:
	Jeffrey Abbey, Chief Executive Officer

ACKNOWLEDGED AND AGREED TO THIS      DAY OF MARCH, 2011.

Charles A. Nicolette

EXHIBIT A

Definitions.

“Cause” shall be defined as set forth in Exhibit A of the Action Form Amendment to the Offer Letter.

A “Change of Control” shall be deemed to have occurred:

(A) If any person (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Company or any trustee or fiduciary holding securities under an employee benefit plan of the Company and other than any person that is a stockholder of the company as of December 31, 2010) becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the voting power of the then outstanding securities of the Company; provided that, a Change of Control shall not be deemed to occur as a result of (x) a transaction in which the Company becomes a subsidiary of another corporation and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to fifty percent (50%) or more of all votes to which all stockholders of the parent corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), or (y) a transaction in which the person acquires newly issued securities of the Company in exchange for a bona fide investment in the Company.

(B) Upon the consummation of (1) a merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to less than fifty percent (50%) of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), or (2) a sale or other disposition of all or substantially all of the assets of the Company.

For purposes of clarity, the severance benefits for which you are eligible pursuant to Amendment 3 (the “Severance Benefits”) are only payable upon a “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended and the Treasury Regulations and other applicable guidance thereunder (“Section 409A”). To the extent that there is any ambiguity as to whether the Severance Benefits (or any other provision related to your compensation from the Company) contravene Section 409A, such provision shall be interpreted and applied in a matter that does not result in a Section 409A violation. The Severance Benefits shall be deemed to be series of separate payments, with each installment being treated as a separate payment. The time and form of payment of any compensation may not be deferred or accelerated to the extent it would result in an impermissible acceleration or deferral under Section 409A. To the extent Amendment 3 contains payments which are subject to Section 409A (as opposed to exempt from Section 409A), your rights to such payments are not subject to anticipation, alienation, sale, transfer, pledge, encumbrance, attachment or garnishment and, where applicable, may only be transferred by will or the laws of descent and distribution. To the extent the Severance Benefits are intended to be exempt from Section 409A as a result of an “involuntary separation from service” under Section 409A, if all conditions necessary to establish your entitlement to such Severance Benefits have been satisfied, all Severance Benefits shall be paid or provided in full no later than December 31^st of the second calendar year following the calendar year in which your employment terminated unless another time period is applicable. If you are a “specified employee” (as defined in Section 409A) on the termination date and a delayed payment is required by Section 409A to avoid a prohibited distribution under Section 409A, then no Severance Benefits that constitute “non-qualified deferred compensation” under Section 409A shall be paid until the earlier of (i) the first day of the 7^th month following the date of your “separation from service” as defined in Section 409 A, or (ii) the date of your death. Upon the expiration of the applicable deferral period, all payments deferred under this clause shall be paid in a lump sum and any remaining severance benefits shall be paid per the schedule specified in this Agreement. The Company makes no representation that any payment it makes to you will be exempt from or compliant with Section 409A and makes no affirmative undertaking to preclude Section 409A from applying, but does reserve the right to unilaterally amend this letter agreement as may be necessary or advisable to permit the it to be in documentary and operational compliance with Section 409A which determination will be made in the sole discretion of the Company.

EX-10.12

Exhibit 10.12

	MERIX Bioscience, Inc.
	4233 Technology Drive
	Durham, NC 27704-2173
VIA HAND DELIVERY	phone: 919-287-6300 fax: 919-287-6301

August 19, 2002

Mr. Jeff Abbey

Dear Jeff:

I am pleased to extend this offer of employment with MERIX Bioscience, Inc. (“MERIX” or the “Company”). We at MERIX are excited about the challenges and opportunities that lie ahead for us collectively and are enthusiastic about the prospect of your joining the MERIX team. We look forward to your favorable response to this offer.

This offer includes a 90 day probationary period and is contingent upon the following: satisfactory completion of the MERIX employment application, your ability to begin work on the date indicated below, proof of your authorization to work in the United States (I-9 Employment Eligibility Verification), satisfactory reference checks, and execution of a Confidentiality and Inventions Agreement.

The details of this offer are as follows:

Title:	Director, Strategic Development
Reporting To:	Steve Elliston Vice President, Business Development
Start Date:	As mutually agreed but no later than 9/1/02
Compensation:	A base salary of $6250.00 per pay period, which equates to $150,000 annually, and is payable semi-monthly. Your performance and salary will be reviewed after six months.
Stock Options:	In accordance with the applicable stock option plan and a written stock option agreement, and subject to the approval of the Board of Directors, you will be granted incentive stock options to purchase 60,000 shares of MERIX common stock at fair market value at the date of grant. The options will vest over four years in accordance with the applicable plan.

Page 2 of 3

Benefits: MERIX is in the process of establishing its benefit program for regular, full-time employees, which is expected to include the following elements:

• Company-paid individual medical and dental, life and long- term disability insurance. Company pays 50% of the cost of dependent medical and dental insurance. Details of standard coverage will follow.

• Ten paid holidays per year

• 401(k) Savings and Investment Plan

• Vacation eligibility based on service with the Company and initially prorated at 10 hours per month (equivalent to 3 weeks per year of service)

MERIX will regularly review all its benefit plans and reserves the right to change or terminate such plans at any time.

This offer letter is not intended to, nor does it, create any employment contract for any specified term or duration between you and the Company. In accordance with the laws of the State of North Carolina, your employment with the Company is considered “at will” . This means that, just as you may resign your employment at any time, MERIX may, in its sole discretion, with or without cause, terminate your employment for any reason.

Like most companies, MERIX requires all employees to protect confidential information and to assign to the Company intellectual property developed while working with us at MERIX. A copy of an agreement detailing your obligations is attached. Upon acceptance of the terms and conditions of this offer, please sign, date and return to us the duplicate of this letter and the Confidentiality and Inventions Agreement.

The Immigration Reform and Control Act of 1986 makes it unlawful for any employer to hire an illegal alien. The Act requires MERIX to verify the identity and eligibility of each new employee to work in the United States. U.S. Government Form I-9 will be provided on your first day of employment. You will be asked to provide acceptable proof of eligibility to work in the United States. New employees may not be permitted to begin employment at MERIX until such verification is complete.

This letter agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes and replaces all oral and written agreements, if any, between the parties with respect to the subject matter of this letter agreement.

On behalf of all the members of the MERIX team, I wish to reaffirm our excitement about the future potential of this Company and our enthusiasm about the prospect of your joining MERIX. Please let me know if you have any questions or need additional assistance. I can be reached at 919-287-6347.

Page 3 of 3

If our employment offer is satisfactory, please sign the duplicate of this letter and the Confidentiality and Inventions Agreement enclosed and return it to me by August 20, 2002. We are looking forward to working with you in contributing to the growth of MERIX.

Sincerely,

Stephen Elliston

Vice President, Business Development

I accept the position of Director, Strategic Development

Signed:
Date:	Aug 19, 2002
Start Date:	September 1, 2002

Employee Action Form

Employee’s Name Jeffrey Abbey		Current Date     2/19/04	Status Change
Hire Date 9/01/02	Effective Date 2/18/04		Present	Proposed
Reason for Action Requested (Check one or more)			Title        (Job Code: 8084) Director Business Development	Title        (Job Code: 0810) V. P. Business Development
¨ New Hire ¨ Payroll Deduction ¨ Transfer (permanent) ¨ Transfer (temporary) ¨ Bonus ¨ Change of Address	¨ Leave of Absence ¨ Performance Increase ü Promotion ¨ Documentation ¨ Quit ¨ Termination ¨ Other (Explain)		Dept. Business Development	Dept. Business Development
			Rate $159,000/yr	Rate $180,000/yr
			Complete for New Hires
			ü Exempt        ¨ Non- Exempt
			Phone
			Social Security #
Supervisor’s Comments/General Explanation (Explain in Detail)
In addition to an increase in salary, this promotion includes: 1)      an increase in stock option grants from 60,000 to 400,000 2)      a severance package as follows: In the event you are terminated without cause (as determined by MERIX’ Board of Directors or Compensation Committee in its sole discretion), upon execution of MERIX’ release form, the Company will provide you with compensation equal to six months’ base salary. This severance will be paid on the Company’s regular pay date or dates of each month after termination for a total of six months. Subject to your execution of MERIX’ release form, you will also continue to receive the medical and dental coverage you were receiving prior to your termination for six months, subject to the availability of such plans to non-employees. You will continue to be obligated to pay your portion of dependent premiums for such coverage. For purposes of this employee action form agreement, “cause” shall be defined as set forth in Exhibit A attached to this form.
Employee’s Comments:

Date Action Discussed with Employee Employee’s Signature

Supervisor’s Signature	Action Acknowledged By
	Human Resources	Dept. Dir./VP	CEO/CFO	Payroll

Exhibit A

“Cause” shall mean:

(a) your failure to diligently and properly perform your duties for the Company,

(b) your misappropriation or unauthorized use of the Company’s tangible or intangible property, or breach of the Confidentiality and Inventions Agreement;

(c) any material failure to comply with the Company’s policies or any other policies and/or directives of the Board;

(d) your use of illegal drugs or any illegal substance, or your use of alcohol in any manner that materially interferes with the performance of your duties under this Agreement;

(e) any dishonest or illegal action (including, without limitation, embezzlement) or any other action whether or not dishonest or illegal by you which is materially detrimental to the interest and well-being of the Company, including, without limitation, harm to its reputation;

(f) your failure to fully disclose any material conflict of interest you may have with the Company in a transaction between the Company and any third party which is materially detrimental to the interest and well-being of the Company,

(g) any adverse action or omission by you which would be required to be disclosed pursuant to public securities laws or which would limit the ability of the Company or any entity affiliated with the Company to sell securities under any Federal or state law or which would disqualify the Company or any affiliated entity from any exemption otherwise available to it; or

(h) your violation of the Company’s policies prohibiting harassment or unlawful discrimination.

MERIX BIOSCIENCE, INC.

March 30, 2011

Mr. Jeffrey Abbey

Re: Amendment 2 to August 19, 2002 Offer Letter

Dear Mr, Abbey:

This letter is an Amendment (the “Amendment”) to the employment offer letter dated August 19, 2002 (“Offer Letter”) between you and Argos Therapeutics, Inc. (formerly known as MERIX Bioscience, Inc.) (the “Company”), as such letter was previously amended by an Employee Action Form dated February 19, 2004 (“Amendment 1”). This Amendment shall become effective as of March 30, 2011.

Paragraph 2 of the Employee Action Form, as amended, shall be further amended and restated in its entirety as follows:

If the Company terminates your employment without “cause” (as defined in Exhibit A (incorporated herein by reference) and as determined by the Argos Therapeutics, Inc. Board of Directors or Compensation Committee in its sole discretion), the Company will provide you with compensation equal to 9 months’ base salary if you first execute and do not revoke the Company’s standard release within the time period specified by the Company at the time of termination, but in any event within 60 days of the termination date (the “Release”). In addition, subject to your execution and non-revocation of the Release, you will also continue to receive the medical and dental coverage you were receiving prior to your termination for 9 months subject to (i) your properly electing and maintaining continued insurance through COBRA or its state law equivalent throughout such period, (ii) the availability of such plans to non-employees, and (iii) the Company’s continuing to sponsor such benefits for its employees generally. You will continue to be obligated to pay your portion of dependent premiums for such health and dental coverage. If those plans are not available to you as a non-employee or the Company does not continue to sponsor such benefits for its employees generally, then the Company will pay you a monthly amount equal to the portion of the premium it was paying on your behalf immediately prior to the termination date, subject to applicable tax withholdings and other deductions. These severance benefits will be paid on the Company’s regular pay date or dates of each month after termination for a total of 9 months commencing on the first regularly scheduled payroll date processed after you have executed, returned and not revoked the Release.

If your employment is terminated within 90 days prior to or within six (6) months following the consummation of a Change of Control (as defined in Exhibit A) by the Company without “cause”, you will continue to be eligible for severance benefits on the terms and conditions and at the times stated in the above paragraph except that you will be eligible for 15 months base salary and 15 months of benefits, subject to your satisfaction of all applicable conditions described in the preceding paragraph.

The severance benefits specified above are subject to the provisions of Exhibit A pertaining to Section 409A.

Except as set forth above or in any other written agreement between us, the remaining terms of the Offer Letter shall remain in full force and effect.

If the foregoing is acceptable, please so indicate by signing and dating this Amendment in the space provided below for your signature and return an executed original of this Amendment to the undersigned and we shall have an agreement governed by North Carolina law.

Sincerely,
ARGOS THERAPEUTICS, INC.
By:
	Hubert Birner, Chairman of the Board

ACKNOWLEDGED AND AGREED TO THIS 30 DAY OF MARCH, 2011.

Jeffrey Abbey

EXHIBIT A

Definitions.

“Cause” shall be defined as set forth in Exhibit A of Amendment 1 to the Offer Letter.

A “Change of Control” shall be deemed to have occurred:

(A) If any person (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Company or any trustee or fiduciary holding securities under an employee benefit plan of the Company and other than any person that is a stockholder of the company as of December 31, 2010) becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the voting power of the then outstanding securities of the Company; provided that, a Change of Control shall not be deemed to occur as a result of (x) a transaction in which the Company becomes a subsidiary of another corporation and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to fifty percent (50%) or more of all votes to which all stockholders of the parent corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), or (y) a transaction in which the person acquires newly issued securities of the Company in exchange for a bona fide investment in the Company.

(B) Upon the consummation of (1) a merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to less than fifty percent (50%) of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), or (2) a sale or other disposition of all or substantially all of the assets of the Company

For purposes of clarity, the severance benefits for which you are eligible pursuant to Amendment 2 (the “Severance Benefits”) are only payable upon a “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended and the Treasury Regulations and other applicable guidance thereunder (“Section 409A”). To the extent that there is any ambiguity as to whether the Severance Benefits (or any other provision related to your compensation from the Company) contravene Section 409A, such provision shall be interpreted and applied in a matter that does not result in a Section 409A violation. The Severance Benefits shall be deemed to be series of separate payments, with each installment being treated as a separate payment. The time and form of payment of any compensation may not be deferred or accelerated to the extent it would result in an impermissible acceleration or deferral under Section 409A. To the extent Amendment 2 contains payments which are subject to Section 409A (as opposed to exempt from Section 409A), your rights to such payments are not subject to anticipation, alienation, sale, transfer, pledge, encumbrance, attachment or garnishment and, where applicable, may only be transferred by will or the laws of descent and distribution. To the extent the Severance Benefits are intended to be exempt from Section 409A as a result of an “involuntary separation from service” under Section 409A, if all conditions necessary to establish your entitlement to such Severance Benefits have been satisfied, all Severance Benefits shall be paid or provided in full no later than December 31^st of the second calendar year following the calendar year in which your employment terminated unless another time period is applicable. If you are a “specified employee” (as defined in Section 409A) on the termination date and a delayed payment is required by Section 409A to avoid a prohibited distribution under Section 409A, then no Severance Benefits that constitute “non-qualified deferred compensation” under Section 409A shall be paid until the earlier of (i) the first day of the 7^th month following the date of your “separation from service” as defined in Section 409 A, or (ii) the date of your death. Upon the expiration of the applicable deferral period, all payments deferred under this clause shall be paid in a lump sum and any remaining severance benefits shall be paid per the schedule specified in this Agreement. The Company makes no representation that any payment it makes to you will be exempt from or compliant with Section 409A and makes no affirmative undertaking to preclude Section 409A from applying, but does reserve the right to unilaterally amend this letter agreement as may be necessary or advisable to permit the it to be in documentary and operational compliance with Section 409A which determination will be made in the sole discretion of the Company.

EX-10.13

Exhibit 10.13

	MERIX Bioscience, Inc.
	4233 Technology Drive
	Durham, NC 27704-2173
	phone: 919-287-6300
	fax: 919-287-6301
March 24, 2003	VIA OVERNIGHT DELIVERY
Frederick M. Miesowicz, Ph.D.

Dear Dr. Miesowicz:

I am pleased to extend this offer of employment with MERIX Bioscience, Inc. (“MERIX” or the “Company”). We at MERIX are excited about the challenges and opportunities that lie ahead for us collectively and are enthusiastic about the prospect of your joining the MERIX team. We look forward to your favorable response to this offer.

This offer is contingent upon the following: satisfactory completion of the MERIX employment application, your ability to begin work on the date indicated below, proof of your authorization to work in the United States (I-9 Employment Eligibility Verification), execution of a Confidentiality and Inventions Agreement, satisfactory completion of conversations with selected Board members, and passing a pre-employment drug screening.

The details of this offer are as follows:

Title:	Vice President, Manufacturing & Process Development
Reporting To:	Clint Dederick Chief Executive Officer
Start Date:	As soon as is reasonable after resigning from your present job.
Compensation:	A base salary of $9583.00 per pay period, which equates to $230,000 annually, and is payable semi-monthly.
Bonus:	A bonus equivalent of 20% of base salary, to be paid on an annual basis, based upon the accomplishment of mutually agreed upon milestones and objectives.
Stock Options:	In accordance with the applicable stock option plan and a written stock option agreement, and subject to the approval of the Board of Directors, you will be granted incentive stock options to purchase 800,000 shares of MERIX common stock at fair market value at the date of grant, The options will vest over four years in accordance with the applicable plan.

Frederick M. Miesowicz, Ph.D.

Page 2 of 4

March 24, 2003

Benefits:	MERIX offers a benefit program for regular, full-time employees, which includes the following elements:
	•        Health Insurance
	•        Dental Insurance
	•        Life and AD&D Insurance
	•        Short Term Disability
	•        Long Term Disability
	•        Eleven paid holidays per year
	•        401(k) Savings and Investment Plan
	•        Paid Time Off (PTO) eligibility based on service with the Company and initially prorated at 16.67 hours per month (equivalent to 25 days per year)
	•        Note: MERIX pays 100% of all individual benefit premiums and 50% of dependent premiums.)
	•        A Benefit Summary is enclosed. Additional details of the plans will be provided at a later date.
	MERIX will regularly review all its benefit plans and reserves the right to change or terminate such plans at any time.
Relocation:	It is the Company’s desire to ease the burdens resulting from your relocation to our Research Triangle area location. To assist you and your family in moving to our area, the Company will provide the following additional benefits:
	•   The cost of moving your belongings.
	•   Reimbursement for real estate closing costs which include legal expenses to cover the sale of the house that is your principal residence.
	•   The cost of temporary accommodations in the Research Triangle area for up to 90 days following commencement of your employment and prior to your moving into your new housing.
	•   The cost of up to two additional trips by your spouse to do house hunting in the Research Triangle area.
	In conjunction with the payment of these relocation related expenses by MERIX on your behalf, you will be asked to sign a note requiring you to reimburse the Company for the Company-paid relocation expenses should you resign your employment prior to the one-year anniversary of your start date.
Severance:	If you are terminated, upon termination you will receive a severance payment equal to nine months of salary. You will continue to receive identified medical and dental insurance coverage for nine months.

Frederick M. Miesowicz, Ph.D.

Page 3 of 4

March 24, 2003

This offer letter is not intended to, nor does it, create any employment contract for any specified term or duration between you and the Company. In accordance with the laws of the State of North Carolina, your employment with the Company is considered “at will”. This means that, just as you may resign your employment at any time, MERIX may, in its sole discretion, with or without cause, terminate your employment for any reason.

Like most companies, MERIX requires all employees to protect confidential information and to assign to the Company intellectual property developed while working with us at MERIX. A copy of an agreement detailing your obligations is enclosed. Upon acceptance of the terms and conditions of this offer, please sign, date and return to us the duplicate of this letter and the Confidentiality and Inventions Agreement.

The Immigration Reform and Control Act of 1986 makes it unlawful for any employer to hire an illegal alien. The Act requires MERIX to verify the identity and eligibility of each new employee to work in the United States. U.S. Government Form I-9 will be provided on your first day of employment. You will be asked to provide acceptable proof of eligibility to work in the United States. New employees may not be permitted to begin employment at MERIX until such verification is complete.

This letter agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes and replaces all oral and written agreements, if any, between the parties with respect to the subject matter of this letter agreement.

On behalf of all the members of the MERIX team, I wish to reaffirm our excitement about the future potential of this Company and our enthusiasm about the prospect of your joining MERIX. Please let me know if you have any questions or need additional assistance. I can be reached at 919-287-6300.

If our employment offer is satisfactory, please sign the duplicate of this letter and the Confidentiality and Inventions Agreement enclosed and return them to me. We are looking forward to working with you in contributing to the growth of MERIX.

Sincerely,

Clint Dederick

President and CEO

Frederick M. Miesowicz, Ph.D.

Page 4 of 4

March 24, 2003

I accept the position of Vice President, Manufacturing & Process Development.

Signed:
Date:	April 4, 2003
Start Date:	ASAP AFTER RESIGNING CURRENT POSITION.

February 22, 2008

Frederick M. Miesowicz, Ph.D.

Re: Amendment 1 to March 24, 2003 Offer Letter

Dear Dr. Miesowicz:

This letter is an Amendment (the “Amendment”) to the employment offer letter dated March 24, 2003 (“Offer Letter”) between you and Argos Therapeutics, Inc. (formerly known as MERIX Bioscience, Inc.) (the “Company, and shall become effective as of January 1, 2008.

The section of the Offer Letter entitled “Severance” on page 2 shall be amended and restated in its entirety as follows:

In the event you are terminated, the Company will provide you with compensation equal to nine month’s salary. You will also continue to receive the medical and dental coverage you were receiving prior to your termination for nine months, subject to the availability of such plans to non-employees. You will continue to be obligated to pay your portion of dependent premiums for such health and dental coverage. These severance benefits will be paid on the Company’s regular pay date or dates of each month after termination for a total of nine months provided you execute (and do not revoke) the Company’s standard release within sixty (60) days of the date of your termination of employment.

Except as set forth above or in any other written agreement between us, the remaining terms of the Offer Letter shall remain in full force and effect.

If the foregoing is acceptable, please so indicate by signing and dating this Amendment in the space provided below for your signature and return an executed original of this Amendment to the undersigned and we shall have an agreement governed by North Carolina law.

Sincerely,
ARGOS THERAPEUTICS, INC.
By:
Title:	CEO

ACKNOWLEDGED AND AGREED TO THIS 22 DAY OF FEBRUARY, 2008.

Frederick M. Miesowicz

EX-10.14

Exhibit 10.14

	MERIX Bioscience, Inc.
	4233 Technology Drive
	Durham, NC 27704-2173
	phone: 919-287-6300
	fax: 919-287-6301

VIA OVERNIGHT DELIVERY

August 11, 2004

Ms. Lori R. Harrelson

Dear Lori:

I am pleased to extend this offer of employment with MERIX Bioscience, Inc. (“MERIX” or the “Company”). We at MERIX are excited about the challenges and opportunities that lie ahead for us collectively and are enthusiastic about the prospect of your joining the MERIX team. We look forward to your favorable response to this offer.

This offer includes a 90 day probationary period and is contingent upon the following: satisfactory completion of the MERIX employment application, your ability to begin work on the date indicated below, proof of your authorization to work in the United States (I-9 Employment Eligibility Verification), and execution of a Confidentiality and Inventions Agreement.

The details of this offer are as follows:

Title:	Controller
Reporting To:	Timothy Trost Chief Financial Officer
Start Date:	As mutually agreed but no later than 9/7, 2004.
Compensation:	A base salary of $3541.67 per pay period, which equates to $85,000 annually, and is payable semi-monthly
Stock Options:	In accordance with the applicable stock option plan and a written stock option agreement, and subject to the approval of the Board of Directors, you will be granted incentive stock options to purchase 50,000 shares of MERIX common stock at fair market value at the date of grant. The options will vest over four years in accordance with the applicable plan.

Lori R. Harrelson

Page 2 of 3

August 11, 2004

Benefits:	MERIX offers a benefit program for regular, full-time employees, which includes the following elements:
	•        Health Insurance •        Dental Insurance •        Life and AD&D Insurance •        Short Terra Disability •        Long Term Disability •        Eleven paid holidays per year •        401(k) Savings and Investment Plan •        Flexible Spending Account •        Paid Time Off (PTO) eligibility based on service with the Company and initially prorated at 16.67 hours per month (equivalent to 25 days per year) •        Note: MERIX pays 100% of all individual benefit premiums and 50% of dependent premiums.)
	MERIX will regularly review all its benefit plans and reserves the right to change or terminate such plans at any time.

This offer letter is not intended to, nor does it, create any employment contract for any specified term or duration between you and the Company. In accordance with the laws of the State of North Carolina, your employment with the Company is considered “at will”. This means that, just as you may resign your employment at any time, MERIX may, in its sole discretion, with or without cause, terminate your employment for any reason.

Like most companies, MERIX requires all employees to protect confidential information and to assign to the Company intellectual property developed while working with us at MERIX. A copy of an agreement detailing your obligations is enclosed. Upon acceptance of the terms and conditions of this offer, please sign, date and return to us the duplicate of this letter and the Confidentiality and Inventions Agreement.

The Immigration Reform and Control Act of 1986 makes it unlawful for any employer to hire an illegal alien. The Act requires MERIX to verify the identity and eligibility of each new employee to work in the United States. U.S. Government Form I-9 will be provided on your first day of employment. You will be asked to provide acceptable proof of eligibility to work in the United States. New employees may not be permitted to begin employment at MERIX until such verification is complete.

This letter agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes and replaces all oral and written agreements, if any, between the parties with respect to the subject matter of this letter agreement.

Lori R. Harrelson

Page 3 of 3

August 11, 2004

On behalf of all the members of the MERIX team, I wish to reaffirm our excitement about the future potential of this Company and our enthusiasm about the prospect of your joining MERIX. Please let Marilyn French know if you have any questions or need additional assistance. She can be reached at 919-287-6345.

If our employment offer is satisfactory, please sign the duplicate of this letter and the Confidentiality and Inventions Agreement enclosed and return them to Human Resources by August 13, 2004. We are looking forward to working with you in contributing to the growth of MERIX.

Sincerely,
Timothy W.Trost, CPA
Vice President & Chief Financial Officer
I accept the position of Controller.
Signed:
Date:	8-13-04
Start Date:	8-30-04

EX-10.16

Exhibit 10.16

STATE OF NORTH CAROLINA

DURHAM COUNTY

AGREEMENT

This Agreement (“Agreement”) is made effective as of the 16^th day of January, 2001, by and between The GMH Independence Limited Partnership, a North Carolina limited partnership (“Lessor”), Aventis Pharmaceuticals Products Inc. (f/k/a Rhone-Poulenc Rorer Pharmaceuticals Inc.,) a Delaware corporation (“Lessee”), MERIX Bioscience, Inc., a Delaware corporation (“Sublessee”), and Rhone-Poulenc Rorer Inc., a Pennsylvania corporation (“Guarantor”);

WHEREAS, Lessor executed that certain Lease with Ex Vivo Therapies, a Delaware joint venture pursuant to Joint Venture Agreement dated as of June 3, 1993, originally by and among Rhone-Poulenc Rorer, Inc., a Pennsylvania corporation, Rorer Merger Corp., a Delaware corporation, Applied Immune Sciences, Inc., a Delaware corporation and Applied Immune Sciences Venture, Inc., a Delaware corporation (now Aventis Pharmaceuticals Products Inc.) (“Original Tenant”), dated as of June 14,1995 (the “Lease”) pertaining to approximately 20,000 square feet of space situated at 4233 Technology Drive, Durham, North Carolina (the “Premises”) which Premises are more particularly described in the Lease; and

WHEREAS, the Original Tenant assigned all of its rights, title and interest in and to Lessee by way of Assignment of Lease made effective as of the 5^th day of August, 1996 by and between Lessor, Original Tenant, Lessee and Guarantor; and

WHEREAS, the Lease along with the Assignment of Lease (which also modified the Lease) are hereinafter referred to as the “Lease”; and

WHEREAS, the Lease is guaranteed by Guarantor by Guaranty dated as of the 2^nd day of June, 1995 (the “Guaranty”); and

WHEREAS, Lessee desires to sublet the Premises to Sublessee pursuant to the terms of the Sublease Agreement dated January 16, 2001 by and between Lessee and Sublessee, a copy of which is attached hereto as Exhibit A (the “Sublease”), and Lessor is willing to consent to the same subject to the following terms and conditions; and

WHEREAS, Guarantor has agreed to consent to the Sublease and to confirm that it remains liable under the terms of the Sublease;

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Continued Obligations. Notwithstanding the sublease of the Premises from Lessee to Sublessee or Lessor’s consent thereto or Lessor’s acceptance of payments from Sublessee, Lessee and Guarantor shall remain liable to Lessor for all payments due Lessor under the Lease and for performance of all obligations by it to be performed under the Lease and the consent given herein below shall not be construed as relieving Lessee from obtaining the express written consent of Lessor to any further assignment or subletting or as releasing Lessee from any liability or obligation whatsoever under the Lease or as releasing Guarantor from any liability or obligation whatsoever under the Guaranty. It is expressly understood and agreed that no lease exists or is made hereby between Lessor and Sublessee and that all rights of Sublessee regarding the Premises or any portion thereof are derivative through Lessee and that if Lessee’s rights under the Lease shall for any reason terminate, so also shall Sublessee’s rights terminate.

2. Joint and Several Liability. Lessee and Sublessee each hereby agree for the benefit of Lessor that hereafter they shall each be jointly and severally liable to Lessor for the payment of all sums due to be paid Lessor under the Lease and for the performance of all obligations to be performed by Lessee under the Lease.

3. Notices. Henceforth any notice required or permitted to be given by Lessor to Lessee under the Lease shall be deemed to have been sufficiently given for all purposes when made by personal delivery, by overnight courier service or sent in the United States mail as certified or registered mail, return receipt requested, postage prepaid and addressed as follows:

Lessor:	The GMH Independence Limited Partnership 4400 Ben Franklin Boulevard Durham, North Carolina 27704 Attn: Mr. Gary M. Hock
Lessee:	Aventis Pharmaceuticals Products Inc. 399 Interpace Parkway Parsippany, New Jersey 07054 Attn: General Counsel
	with a copy to:
Sublessee:	MERIX Bioscience, Inc. 4233 Technology Drive Durham, North Carolina 27704 Attention: Chief Executive Officer

Notice shall be deemed given when received by personal delivery or overnight courier or within three days after mailing if sent by certified or registered mail, return receipt requested.

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4. Indemnity. Sublessee and Lessee shall jointly and severally indemnify and hold Lessor harmless from and against any and all claims arising out of (a) Sublessee’s use of the Premises or any part thereof, (b) any activity, work, or other thing done, permitted or suffered by Sublessee in or about the Premises or the Building, or any part thereof, (c) any breach or default by Sublessee in the performance of any of its obligations under the Sublease, or (d) any act, omission or negligence of Sublessee, or any officer, agent, employee, contractor, servant, invitee or guest of Sublessee; and in each case from and against any and all damages, losses, liabilities, lawsuits, costs and expenses (including reasonable attorneys’ fees at alt tribunal levels) arising in connection with any such claim or claims as described in (a) through (d) above, or any action brought thereon. If such action be brought against Lessor, Sublessee upon notice from Lessor shall defend the same through counsel selected by Sublessee’s insurer or other counsel, in each case acceptable to Lessor, in its reasonable discretion. All insurance required by Lessee under the Lease shall also be provided by Sublessee as provided in the Sublease.

5. Consent. Subject to the terms and conditions of this Agreement Lessor hereby consents to the Sublease. This Consent shall not be construed to relieve Lessee from obtaining the express written consent of Lessor to any modification of the Sublease or to any further assignment of the Lease or subletting of the Premises, except as expressly stated herein. Notwithstanding the foregoing, nothing in the Sublease shall be deemed to amend or modify the Lease and in the event of a conflict between the Lease and the Sublease, the terms of the Lease shall control.

6. Use. Lessor hereby consents to the proposed use of the Premises by Sublessee as set forth in the Sublease; provided, however, the second and third sentences of Section 6 of the Lease shall remain in full force and effect.

7. Assignment of Sublease by Sublessee. Sublessee shall have the right to assign the Sublease to a MERIX Entity (as hereinafter defined) without Lessor’s consent, provided that at the time of making such assignment of Sublease (i) Lessee is in not in default of any of the provisions of the Lease and Sublessee is not in default under any provision of the Sublease, (ii) there is no event which, with notice or passage or time, would be deemed to be a default under the Lease or the Sublease, (iii) Sublessee gives Lessor ten (10) days written notice prior to the execution of such assignment, (iv) any assignment shall not result in Guarantor, Lessee or Sublessee being released or discharged from any liability under the Guaranty, Lease or Sublease, as the case may be, and Guarantor, Lessee and Sublessee remain liable for the full performance of the terms, covenants and conditions of the Guaranty, Lease and Sublease, (v) the assignee shall agree in writing to comply with and be bound by all the terms, covenants, conditions, provisions and agreements of the Lease and this Agreement and verifies that its use of the Premises complies with Section 6 of the Lease, and (vi) Sublessee shall deliver to Lessor and Lessee promptly after execution an executed copy of such assignment. For purposes of this Agreement, a “MERIX Entity” shall mean (i) MERIX Bioscience, Inc. (“MERIX”) or (ii) an affiliate of MERIX. An affiliate shall mean any corporation which directly controls or is controlled by or is under common control with MERIX. Control shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation through the ownership of voting securities.

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8. Upfit. Lessor hereby consents to the upfit by Sublessee of 10,000 square feet of unfurnished space in the Premises (the “Shell Space”) at Sublessee’s sole cost and expense, subject to (a) the approval of Lessor of the plans for such upfit; (b) the plan shall provide that the upfit will be performed and Sublessee shall perform the upfit in a good and workmanlike manner using materials that are substantially similar and of better or equal quality to those presently contained in the Premises; (c) the plan shall provide Sublessee shall use contractors and engineers that are licensed in North Carolina and are qualified to perform the work to prepare the Premises for its intended use, each as reasonably acceptable to Lessor; (d) Sublessee shall not commence any such work without first delivering to Lessor a policy or policies of workers’ compensation and commercial general liability insurance naming Lessor as an additional insured; (e) Sublessee and Lessee warrant that any upfit installed by Sublessee will not violate the permitted uses of the Premises, will comply with all applicable building codes and zoning laws, and will not impact the structure of the Shell Building, the Shell Space or the Tenant Upfit; (f) Sublessee shall furnish Lessor with all permits required prior to commencement of the upfit work and all certificates and approvals with respect to the upfit that may be required by any governmental authority and deliver to Lessor properly executed general and subcontractor affidavits stating that all laborers and materialmen have been paid in full and final waivers of liens and lien releases from all general contractors and subcontractors who have performed the upfit or furnished materials to the Premises as a result of the upfit by Sublessee; and (g) Sublessee, at its expense, shall deliver, within thirty (30) days after completion of the upfit, the as-built plans to the Lessor. All Tenant Upfit and other upfit currently in the Premises as of the date of this Agreement and the Sublease, all Lessor Trade Fixtures (as hereinafter defined) and all upfit performed by the Sublessee shall immediately become Lessor’s property without compensation to Lessee or Sublessee and shall remain on the Premises upon the termination or earlier expiration of the Sublease, and Lease.

9. Trade Fixtures. For purposes of this Agreement, (i) Trade Fixtures shall mean the moveable and free standing personal property and equipment not affixed to the Premises, such as freezers and fume hoods, but shall not include case work (which is deemed Lessor’s property), and (ii) Lessor Trade Fixtures shall mean all of the case work, facility management system (Dell), flow cytometer (Eples XL), manifolds (CO2), mirrors, stainless steel tables and stainless steel work benches in the Premises as of the date of this Agreement and the Sublease. Lessor Trade Fixtures shall not include any enterprise management systems, including without limitation, any material resource planning systems or any manufacturing execution systems, installed by Sublessee after the commencement of the Sublease. All Lessor Trade Fixtures in the Premises at the commencement of this Agreement shall remain the property of Lessor and may not be removed by Sublessee or Lessee at any time. All other Trade Fixtures either placed in the Premises by Sublessee or in the Premises as of the date of the Sublease and identified on Exhibit B shall remain the property of Sublessee and be removable at any time, provided at the time of removal Sublessee shall promptly and at its own expense repair any damage to the Premises in removing any such Trade Fixtures and reconnect all connections.

10. Restoration. Lessor hereby agrees that neither Sublessee nor Lessee shall be obligated to restore the Premises to the condition which existed upon the commencement of the term of the Lease and that the provision of Section 9 of the Lease which require such restoration are hereby waived; provided, however, that all tenant upfit (including, but not limited to, the Tenant Upfit), case work, the heating, ventilating and air conditioning equipment located on the Premises at the termination of Sublessee’s occupancy of the Premises and the Lessor Trade Fixtures shall be the property of Lessor without compensation to Sublessee or Lessee and shall remain on the Premises at the termination of Sublessee’s occupancy of the Premises.

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11. Ownership of Improvements. It is understood and agreed that all alterations, Improvements and Tenant Upfit and Lessor Trade Fixtures, whether constructed by Lessor or Lessee, and notwithstanding the provisions of the Lease, shall be and hereby is the property of Lessor, without compensation to Lessee. In connection therewith, Lessee does hereby grant, bargain, sell, transfer, convey, assign and deliver to Lessor, as of the date of this Agreement, all of Lessee’s right, title and interest, of whatever kind and character, in and to the Tenant Upfit and Lessor Trade Fixtures, free and clear of any and all liens, mortgages, encumbrances, pledges and security agreements of any nature whatsoever, to have and to hold unto Lessor, its successors and assigns forever, all of the Tenant Upfit and Lessor Trade Fixtures hereby granted, bargained, sold, transferred, conveyed, assigned and delivered. Lessee covenants that it is seized of the Tenant Upfit and Lessor Trade Fixtures in fee and has the right to convey the same in fee simple, the same is free and clear of all encumbrances whatsoever, and Lessee will warrant and defend the title thereto against the lawful claims of all persons whomsoever,

12. Duke Guaranty. Duke has agreed to guaranty certain obligations of Sublessee under the Sublease to Lessee, a copy of which is attached hereto as Exhibit C (the “Duke Guaranty”). A condition precedent to Lessor’s consent to the Sublease and this Agreement is the delivery to Lessor of an original fully executed Duke Guaranty.

13. Lease. Lessor’s consent to this Agreement is conditioned upon and subject to the execution and delivery of a lease for the Premises, satisfactory to Lessor, commencing on September 1, 2006 for a five (5) year term.

14. Property Line. The parties agree that the Property as described in the Lease may be modified by Lessor without Lessee’s or Sublessee’s consent on the southern property line and the western property line; provided, however, that the movement of the property line shall not adversely affect the ingress or egress to the Premises or the ability of Lessee or Sublessee to conduct business in the Premises. Upon notification by Lessor of the revised Property and description thereof, the Property shall be so defined. Neither Sublessee nor Lessee shall be liable for any cost incurred in connection with modifying the property line, including, without limitation, any costs incurred in connection with repaying the parking lot and altering any utility lines, if any.

15. Ratification by Lessee. Lessee expressly ratifies and confirms the terms and provisions of the Lease and acknowledges its continuing direct liability under the Lease. The Lease remains in full force and effect and is unaffected by the Sublease or by the Duke Guaranty.

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16. Ratification by Guarantor. Guarantor hereby ratifies and confirms the terms and provisions of the Lease and the Guaranty and acknowledges that it remains directly and uncondi-tionally liable under the Guaranty and the Lease. The Guaranty remains in full force and effect and is unaffected by the Sublease or by the Duke Guaranty.

17. Modification. To the extent applicable, the Lease is hereby amended by the terms of this Agreement.

18. Capitalized Terms. All capitalized terms not otherwise defined in this Agreement shall have the same meaning as set forth in the Lease.

19. Entire Agreement. This Agreement contains the complete agreement of the parties regarding the terms and conditions of the consent to the Sublease and there are no oral or written conditions, terms, understandings or other agreements pertaining thereto which have not been incorporated herein.

20. Governing Law and Jurisdiction. The laws of the State of North Carolina shall govern the validity, interpretation, performance and enforcement of this Agreement. All parties hereby submit to the jurisdiction of the state courts situated in Durham County, North Carolina.

21. Modification and Waiver. No provision of this Agreement shall be amended, waived or modified except by an instrument in writing signed by the parties.

22. Binding Effect; Survival. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, heirs and assigns.

23. Counterparts. To facilitate execution, this Agreement may be executed in any number of counterparts as may be convenient or necessary and it shall not be necessary that the signatures of all parties hereto be contained on any one counterpart hereof. Additionally, the parties hereto hereby covenant and agree that for purposes of facilitating the execution of this Agreement, the signature pages taken from separate individually executed counterparts of this Agreement may be combined to form multiple fully executed counterparts. All executed counterparts of this Agreement shall be deemed to be originals, but all such counterparts, taken together, shall constitute one and the same agreement.

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IN WITNESS WHEREOF, Lessor, Lessee, Sublessee and Guarantor have caused this instrument to be duly executed under seal, all as of the day and year first above written.

LESSOR:
THE GMH INDEPENDENCE LIMITED PARTNERSHIP
BY:	THE GMH FAMILY, LLC.		(SEAL)
	Sole General Partner
	BY		(SEAL)
		Gary M. Hock, Manager

LESSEE:
AVENTIS PHARMACEUTICALS PRODUCTS INC. (f/k/a Rhone-Poulenc Rorer Pharmaceuticals Inc.)
BY
	Vice President

ATTEST:

Assistant Secretary

[CORPORATE SEAL]

SUBLESSEE:
MERIX BIOSCIENCE, INC.
BY
	Exec. Vice President

ATTEST:

                     Secretary

[CORPORATE SEAL]

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GUARANTOR.
RHONE-POULENC RORER INC.
BY
	Vice President

ATTEST:

Secretary

[CORPORATE SEAL]

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EXHIBIT A

STATE OF NORTH CAROLINA

DURHAM COUNTY

SUBLEASE AGREEMENT

AGREEMENT OF SUBLEASE made as of the 16 day of January, 2001, by and between Aventis Pharmaceuticals Products Inc. (f/k/a Rhone-Poulenc Rorer Pharmaceuticals Inc.), a Delaware corporation (“Sublessor”), and Merix Bioscience, Inc., a Delaware corporation authorized to do business in North Carolina (“Sublessee”).

W I T N E S S E T H:

WHEREAS, Sublessor is the Tenant under a certain Lease (the “Lease”) dated as of June 14, 1995, with The GMH Independence Limited Partnership (“Lessor”) as Landlord, pertaining to approximately 20,000 square feet of space (10,000 square feet of which is finished as office and lab space (the “Finished Space”) and 10,000 square feet of which is unfinished space (the “Shell Space”)) located at 4233 Technology Drive, Durham, North Carolina (the “Subleased Premises”), a copy of which is attached hereto as Exhibit “A” and made a part hereof (Terms used and not otherwise defined herein shall have the meaning ascribed to them in the Lease); and

WHEREAS, Sublessor is the Tenant under the Lease by way of Assignment of Lease (“Assignment”) made and effective as of the 5^th day of August, 1996 by and between Lessor, Ex Vivo Therapies, a Delaware joint venture (“Assignor”), Sublessor as assignee and Rhone-Poulenc Rorer, Inc. (“Guarantor”), a copy of which is attached hereto as Exhibit B; and

WHEREAS, Sublessee desires to sublease the Subleased Premises from Sublessor and Sublessor desires to sublease the Subleased Premises to Sublessee, subject to the terms and conditions of this Sublease Agreement.

NOW, THEREFORE, in consideration of the premises, which are incorporated herein by reference, and of the terms, conditions and covenants set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Subleased Premises. Sublessor hereby sublets to Sublessee, and Sublessee hereby subleases from Sublessor, the Subleased Premises, shown as Exhibit “C” attached hereto and made a part hereof, and consisting of approximately 20,000 rentable square feet of office space consisting of the Shell Space and the Finished Space situated at 4233 Technology Drive, Durham, North Carolina.

2. Term of Sublease. The term (the “Term”) of this Sublease shall commence on the date that Sublessor has received all of the following: (a) a copy of this Sublease Agreement executed by Sublessee and Sublessor; (b) an executed copy of the Lessor’s and Guarantor’s consent to this Sublease; and (c) an executed copy of a Guaranty from Duke University guaranteeing the payment of the Base Rent and Additional Rent (each as defined below) under this Sublease for the time period specified in the Guaranty (the “Commencement Date”), and shall end on the 1^st day of September, 2006, (or until such term shall sooner cease or expire as hereinafter provided) (the “Termination Date”). Possession of the Subleased Premises shall be delivered to Sublessee on the Commencement Date. The parties agree that the consent by Lessor and Guarantor shall include (i) a consent to the proposed use by Sublessee of the Subleased Premises as set forth in Section 4 of this Sublease; (ii) a consent to the upfit of the Shell Space at Sublessee’s sole cost and expense, subject to (A) the approval of Lessor of the plans for such upfit; (B) the plans shall provide that the upfit will be performed and Sublessee shall perform the upfit in a good and workmanlike manner using materials that are substantially similar and of better or equal quality to those presently contained in the Subleased Premises; (C) the plans shall provide and Sublessee shall use contractors and engineers that are licensed in North Carolina and are qualified to perform the work to prepare the Subleased Premises for its intended use, each as reasonably acceptable to Lessor; (D) Sublessee shall not commence any such work without first delivering to Lessor a policy or policies of workers’ compensation and commercial general liability insurance naming Lessor as an additional insured; (E) Sublessee and Sublessor warrant that any upfit installed by Sublessee will not violate the permitted use of the Subleased Premises and will materially comply with all applicable building codes and zoning laws and will not impact the structure of the Shell Space; (F) Sublessee shall furnish Lessor with all permits required prior to commencement of the upfit work and all certificates and approvals with respect to the upfit as may be required by any governmental authority and deliver to the Lessor properly executed general and subcontractor affidavits stating that all laborers and materialmen have been paid in full and final waivers of liens and lien releases from all general contractors and subcontractors who have performed the upfit or furnished materials to the Subleased Premises as a result of the upfit; and (G) Sublessee, at its expense, shall deliver within 30 days after completion of the upfit the as built plans for the Shell Space to the Lessor; (iii) a waiver by Lessor of any obligation of Sublessee or Sublessor to restore the Subleased Premises to the condition that existed prior to the Commencement Date or the commencement date of the Lease, respectively; provided, however, that all tenant upfit (including but not limited to Tenant Upfit), case work, the heating, ventilating and air conditioning equipment located on the Subleased Premises, work above the ceiling of the Shell Space installed by Sublessee, and all Lessor Trade Fixtures (as defined below) shall remain on the Subleased Premises at the termination of Sublessee’s occupancy of the Subleased Premises without compensation to Sublessee, unless Lessor requests the removal of same at the time Lessor approves such installations. For purposes of this Sublease, “Lessor Trade Fixtures” means the building management system, flow optometers, manifolds, mirrors, stainless steel tables and stainless steel workbenches located on the Subleased Premises as of the Commencement Date of this Sublease and shall not be deemed to include any enterprise management systems, including without limitation any material resource planning systems or any manufacturing execution systems installed by Sublessee. In addition, on or before November 10, 2000, Lessor shall have delivered to Sublessee an agreement to lease the Subleased Premises directly from Lessor upon the expiration of the term of this Sublease upon terms that are satisfactory to the Sublessee (the “Additional Lease”). If Lessor fails to give such consent and deliver the Additional Lease by December 15, 2000, then Sublessee may cancel this Sublease by giving written notice of cancellation to Sublessor. Neither party shall have liability to the other for any termination or cancellation under this Section 2, unless such party by its willful act caused Lessor to refuse timely to consent to this Sublease.

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3. The Lease.

(a) As between Sublessor and Sublessee, all of the Articles of the Lease are incorporated into this Sublease as if fully set forth in this Sublease, except the following: Sections l,2,5,6,7(a) and (d), 8, 15, 49, and 55. Where applicable, references in the Lease to Landlord will mean Sublessor and to Tenant will mean Sublessee, provided, however, Sublessor shall not be released thereby. Sublessor represents and warrants that it has full right, power and authority under the Lease to enter into this Sublease, subject to Lessor’s consent as provided therein. Sublessor further represents and warrants that the Lease is in full force and effect and has not been modified, amended or terminated except as stated in the Assignment. The copy of the Lease and Assignment attached hereto is a complete and accurate copy of the Lease and Assignment. Sublessor also represents and warrants that Sublessor is not in default under the terms of the Lease and no condition exists which with the giving of notice or passage of time, or both, would be a default under the Lease. Sublessor shall not modify or terminate the terms of the Lease without the written consent of the Sublessee.

(b) Sublessee acknowledges that it has reviewed and is familiar with all of the terms, covenants and conditions of the Lease that are incorporated herein and made a part hereof. Sublessee assumes and agrees to perform, observe and comply with all of the terms, covenants and conditions on the Lessee’s part to be performed, observed and complied with under the Lease and Assignment. This Sublease is expressly made subject and subordinate to all of the terms, covenants and conditions of the Lease. In the event of a conflict between the terms of the Lease and this Sublease, the terms of the Lease as modified by the Assignment shall control. At all times where consent is required of the Lessor under the Lease for an act of Sublessor as Tenant, consent shall be required by Lessor for such act by Sublessee.

(c) Sublessor shall deliver a copy of any notice of default received by Sublessor from Lessor with respect to the Lease within two days of receipt thereof. Sublessor shall provide Sublessee an opportunity to cure any such default within the cure period proved in the Lease, if any, but Sublessee shall not be obligated to do so. Nothing herein shall affect the rights of Lessor under the Lease.

4. Occupancy.

(a) Sublessee shall use and occupy the Subleased Premises solely for (i) research and development; (ii) cell culturing and other operations for the preparation of therapeutic vaccine and/or other services for (A) support of human clinical trials and (B) potential commercial purposes; and (iii) the development and or commercialization of other products related or substantially similar thereto. Sublessee has conducted an inspection, or been afforded the opportunity to inspect, the Subleased Premises and shall accept the Subleased Premises “as is” and “where is”, subject to Lessor’s obligations for maintenance and repair under the Lease and subject to any latent defects.

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(b) Sublessee covenants that it will occupy the Subleased Premises in accordance with the terms of the Lease and will not suffer to be done or omit to do any act that may result in a violation of or a default under any of the terms and conditions of the Lease, or render Sublessor liable for any charge or expense arising out of, by reason of, or resulting from, Sublessee’s failure to perform or observe any of the terms and conditions of the Lease pertaining to the Subleased Premises.

(c) Sublessee agrees that Sublessor shall not be required to perform any of the covenants and obligations of Lessor under the Lease and, insofar as any of the covenants and obligations of Sublessor hereunder are required to be performed under the Lease by Lessor thereunder, Sublessee acknowledges that Sublessor shall be entitled to look to Lessor for such performance. Any default or failure of performance by Lessor shall not affect this Sublease or waive or defer any of Sublessee’s obligations hereunder; provided, however, that in the event of any such default or failure of performance by Lessor, Sublessor shall take such action as may reasonably be required, under the circumstances, to secure such performance upon Sublessee’s written request therefor and at Sublessee’s cost and expense.

5. Rent; Security Deposit.

(a) Base Rent. Sublessee shall pay to Sublessor base rent (“Base Rent”) as specified below:

Period	Rent Rate Per Square Foot		Square Foot of Premises		Annual Rent		Monthly Rent
Commencement Date until 14 months Thereafter	$	9.50		20,000	$	190,000	$	15,833.33
First 12 month period Thereafter	$	9.83		20,000	$	196,650	$	16,387.50
Second 12 month Period thereafter	$	10.17		20,000	$	203,481	$	16,956.75
Third 12 month Period thereafter	$	10.54		20,000	$	210,519	$	17,543.25
Fourth 12 month Period thereafter	$	10.91		20,000	$	218,178	$	18,181.50
Remaining months Of the Term	$	11.29		20,000	$	225,837	$	18,819.75

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Provided, however, that Sublessee shall not be obligated to pay Base Rent for the first sixty (60) days after the Commencement Date.

(b) Additional Rent. Sublessee shall be obligated to reimburse Sublessor for those costs and expenses that Sublessor is obligated to pay to Lessor under Sections 10(b), 14(a) and 16(a) of the Lease (collectively, “Additional Rent”); provided, however, that all such expenses and costs shall be prorated and adjusted between Sublessor and Sublessee as of the Commencement Date or the date the Sublease terminates, as the case may be. Sublessor shall notify Sublessee of any amounts due under such Sections of the Lease, including copies of all invoices received from Lessor with respect thereto, and Sublessee shall pay any such amounts to Sublessor within thirty (30) days of receipt of such notice.

The respective amounts set forth above for Base Rent shall be paid by the first day of each month in lawful money of the United States at Sublessor’s address specified for notices in Section 16. If Sublessee fails or refuses to pay any installment of Base Rent within five business days of when due, Sublessor shall be entitled to collect interest on the amount of the late payment equal to the Prime Rate of Interest as disclosed by Wachovia Bank, N.A. In addition, Sublessee shall pay a late fee of eight percent multiplied by the amount of the late payment commencing on the date the payment is delinquent until paid in full to compensate Sublessor for the additional expense involved in handling delinquent payments and not as interest; provided, however, that Sublessee shall not be obligated to pay a late fee unless Sublessee has paid Base Rent late two other times in any consecutive twelve-month (12) period. If the payment of a late charge required by this Section is found to constitute interest notwithstanding the contrary intention of Sublessor and Sublessee, the late charge shall be limited to the maximum amount of interest that lawfully may be collected by Sublessor under applicable law, and if any payment is determined to exceed such lawful amount, the excess shall be applied to any unpaid rent then due and payable hereunder and/or credited against the next succeeding installment of Base Rent payable hereunder.

(c) Security Deposit. On the Commencement Date, Sublessee shall pay to Sublessor a security deposit in the amount of $ 15,833.33 (the “Security Deposit”). If Sublessee fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Sublease, Sublessor may use, apply or retain all or any portion of the Security Deposit for the payment of any rent or other charge in default, or for the payment of any other sum which Sublessor incurs by reason of Sublessee’s default, or to compensate Sublessor for any loss or damage which Sublessor may suffer thereby. If Sublessor uses or applies all or any portion of the Security Deposit, Sublessee must within ten (10) days after written demand therefor deposit cash with Sublessor in an amount sufficient to restore the Security Deposit to its full amount and Sublessee’s failure to do so will be a material breach of this Sublease. Sublessor shall not, unless otherwise required by law, be required to keep the Security Deposit separate from its general accounts, nor pay interest on the Security Deposit to Sublessee. If Sublessee performs all of Sublessee’s obligations hereunder, the Security Deposit or so much thereof as has not been used or applied by Sublessor, will be returned to Sublessee (or at Sublessor’s option, to the last assignee, if any, of Sublessee’s interest hereunder) at the expiration or other termination of the Sublease Term, and after Sublessee has vacated the Subleased Premises. The obligation to return the Security Deposit upon termination of the Sublease shall survive termination of this Sublease.

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6. Furniture; Fixtures. As of the Commencement Date, Sublessor does hereby grant, bargain, sell, transfer, convey, assign, and deliver to Sublessee all of Sublessor’s right, title, and interest in and to the furniture, trade fixtures, and equipment located in the Subleased Premises on the Commencement Date set forth in Exhibit D attached hereto and made a part hereof (the “Sublessor Furniture”) free and clear of any and all liens, mortgages, encumbrances, pledges, and security agreements of any kind whatsoever, to have and to hold unto Sublessee, its successors and assigns forever, all of the Sublessor Furniture hereby granted, bargained, sold, transferred, conveyed, assigned, and delivered. Exhibit D shall not include the Lessor Trade Fixtures.

7. Alterations and Improvements by Sublessee. Sublessee will not make any alterations or improvements to the Subleased Premises without the prior written consent of Sublessor and Lessor, which consent of Sublessor shall not be unreasonably withheld, conditioned or delayed and of Lessor shall be subject to the terms of the Lease. Sublessor will be deemed to have consented to the improvements or alterations proposed by Sublessee if Sublessor fails to provide notice of its consent to such improvements to Sublessee within fifteen (15) days of receipt of Sublessee’s request for such consent. Sublessor acknowledges that Sublessee intends to make improvements to the Shell Space and Sublessor agrees to approve the Plans for such improvements as long as the improvements (i) do not violate any laws; (ii) do not alter the structure of the Building, and (iii) receive all approvals required under the Lease. Upon termination of this Sublease, Sublessee shall only be required to remove those alterations or improvements which Sublessor or Lessor required to be removed upon termination at the time Sublessor or Lessor, as the case may be, approved such alterations or improvements.

8. Environmental. No later than five (5) business days after execution by Sublessee of this Sublease, Sublessor shall provide Sublessee with copies of all documentation in Sublessor’s possession relating to any facilities validation or environmental testing regarding the Subleased Premises. Sublessor represents and warrants to Sublessee that neither Sublessor nor any of its agents, servants, employees, contractors, or subcontractors (collectively, “Sublessor’s Representatives”) have received any request for information, notice of claim, demand, or notification relating to any alleged violation of any Regulations or any Hazardous Substances located at, on, in, under or emanating from the Subleased Premises and Sublessor and Sublessor’s Representatives know of no facts or circumstances related to environmental matters concerning the Subleased Premises that could lead to any future environmental claims, liabilities, or responsibilities against Lessor, Sublessor or Sublessee. Sublessor hereby waives and releases Sublessee from any and all Environmental Claims (as defined below) related to events or conditions first existing prior to the date of this Sublease (“Pre-Existing Conditions”), known or unknown, foreseen or unforeseen, which exist or which may arise under any Regulations. Sublessor hereby agrees to indemnify and hold harmless Sublessee from any and all claims, costs, losses, damages and expenses (including without limitation fines, penalties and reasonable attorney’s fees)(collectively, “Environmental Claims”) that are asserted against or incurred by Sublessee relating to Pre-Existing Conditions. Sublessee hereby agrees to indemnify and hold harmless Sublessor from any and all Environmental Claims asserted against or incurred by Sublessor that result from Sublessee’s activities in, on, or around the Subleased Premises.

9. Casualty, Condemnation and/or Termmation. If the whole or any part of the Subleased Premises shall be taken or condemned in any manner by any competent authority for any public or quasi-public use, or if the Lessor under the Lease or Sublessor as Tenant thereunder shall terminate the Lease as provided in the Lease by reason of Casualty or otherwise as permitted therein, in any such event, the term of this Sublease shall cease and terminate as of the date of vesting of title or such condemnation or termination as the case may be.

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10. No Assignment or Subletting. Sublessee, for itself, its successors and assigns, expressly covenants that it shall not assign, sublet, mortgage or encumber this Sublease without the prior written consent of Sublessor which consent will not be unreasonably withheld, conditioned or delayed, provided, however, Sublessee shall have the right to assign this Sublease to a MERIX Entity (as hereinafter defined) without Sublessor’s consent, but Sublessee shall be required to comply with the terms of the Agreement between The GMH Independence Limited Partnership, Aventis Pharmaceuticals Products Inc., MERIX Bioscience, Inc., and Rhone-Poulenc Rorer Inc. For purposes of this Sublease, a “MERIX Entity” shall mean (i) MERIX Bioscience, Inc. (“MERIX”) or (ii) an affiliate of MERIX. (iii) any entity which is the surviving corporation as a result of the merger of MERIX into such entity, or (iv) any entity which purchases all of the assets of MERIX and continues the business thereof. An affiliate shall mean any corporation which directly controls or is controlled by or is under common control with MERIX. Control shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation through the ownership of voting securities.

11. Quiet Enjoyment. Sublessor covenants and agrees with Sublessee that, provided Sublessee pays and performs all of its covenants, agreements and obligations under this Sublease, Sublessee may peaceably and quietly enjoy the Subleased Premises, subject, nevertheless, to the terms and conditions of this Sublease and the Lease.

12. Sublessor. The term “Sublessor” as used in this Agreement of Sublease refers to the Tenant under the Lease at the time in question, so that if the Lease shall be assigned, such covenants, conditions and agreements shall be binding upon each successor assignee.

13. Indemnity. Each party hereto does hereby agree to indemnify the other and hold the other harmless, of and from any claim, damage, liability, cost or expense, including reasonable attorney’s fees, which either may suffer or incur by reason of the failure of the other to perform, observe or comply with any of the terms, covenants and conditions of this Agreement of Sublease or the Lease, as such terms, covenants and conditions may affect the Subleased Premises.

14. Broker’s Commission. Sublessee represents to Sublessor that the sole broker with whom it has dealt in connection with this transaction is Advantis/GVA- Sue Back. Sublessor covenants that it will pay Advantis/GVA- Sue Back $20,000 in commission on or before thirty (30) days of the complete execution of this Sublease and will indemnify Sublessee and hold Sublessee harmless from and against any and all claims of Advantis/GVA with respect to a commission or fee.

15. Attorney’s Fees. If Sublessor, Sublessee, or Broker shall commence an action against the other arising out of or in connection with this Sublease, the prevailing party shall be entitled to recover its costs of suit and reasonable attorney’s fees.

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16. Notices. Any and all notices that are or may be required to be given pursuant to the terms of this Agreement of Sublease or the Lease shall be sent by Certified Mail, Return Receipt Requested, to the parties hereto at their respective addresses set forth below:

SUBLESSOR: Aventis Pharmaceuticals Inc. 399 Interpace Parkway Parsippany, New Jersey 07054	SUBLESSEE: Merix Bioscience, Inc. 4233 Technology Drive Durham, North Carolina 27704
Attn: General Counsel	Attn: Chief Executive Officer
With a copy to:
Robert P. Cull, Manager, N.A. Real Estate Aventis Pharmaceuticals Inc. P.O. Box 6800 Route 202-206 Bridgewater, New Jersey 08807

17. Binding Effect. The covenants, conditions and agreements contained herein shall be binding upon and inure to the benefit of Sublessor and Sublessee and their respective heirs, executors, administrators, successors and permitted assigns.

18. Governing Law. This Agreement of Sublease is entered into in the State of North Carolina, and its validity and interpretation shall be construed in accordance with the laws of that State.

19. Sublessee Insurance.

(a) Fire Insurance. At all times during the term hereof, Sublessee shall maintain in effect policies of property damage insurance covering (i) all leasehold improvements, including any alterations, additions or improvements as may be made by Sublessee and in which Sublessee may have an insurable interest, and (ii) fixtures and other personal property from time to time in, on or upon the Premises in an amount not less than one hundred percent (100%) of their actual replacement cost (“Replacement Cost”) from time to time during the term of this Sublease, providing protection against any peril included within the classification of fire and extended coverage, together with insurance against sprinkler damage, vandalism and malicious mischief.

(b) Liability Insurance. Sublessee at all times beginning on the Commencement Date and during the term hereof and at its sole cost and expense shall procure and continue in force commercial general liability insurance to protect Sublessor and Lessor in connection with the construction of improvements by Sublessee on the Premises or use, operation or condition of the Premises. Such insurance at all times shall be in an amount of not less than a combined single limit of $2,000,000 insuring against any and all liability of the insured with respect to said Premises or arising out of the use or occupancy thereof. Prior to commencement of the Sublessee upfit, Sublessee shall furnish evidence of workers’ compensation coverage with a statutory limit, employers liability insurance with a limit of $1,000,000 per occurrence and builders’ risk insurance with a limit of $2,000,000.

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(c) General. All insurance required to be carried by Sublessee hereunder shall be issued by responsible insurance companies qualified to do business in the State of North Carolina, reasonably acceptable to Sublessor. Each policy shall name Sublessor and Lessor as additional insured, and copies of all policies or certificates evidencing the existence and amounts of such insurance shall be delivered to Sublessor and Lessor by Sublessee at least ten (10) days prior to the Commencement Date of this Sublease. No such policy shall be cancelable except after ten (10) days prior written notice to Sublessor and Lessor. Sublessee shall furnish Sublessor and Lessor with renewals or binders of any such policy at least ten (10) days prior to the expiration thereof. Sublessee agrees that if Sublessee does not take out and maintain such insurance, Sublessor and Lessor may (but shall not be required to) procure said insurance on Sublessee’s behalf and charge the Sublessee the premiums, payable upon demand. Sublessee shall have the right to provide such insurance coverage pursuant to blanket policies obtained by the Sublessee, provided such blanket policies expressly afford coverage to the Premises and the Sublessee upfit and to Sublessee as required by this Sublease.

(d) Adjustment; Not less often than every two and one-half (2-1/2) years during the term of this Sublease, Sublessee and Sublessor and Lessor shall agree in writing on the full Replacement Cost of the Sublessee upfit and leasehold improvements pursuant to Section 19(a) above. If in the opinion of Sublessor the amount or type of fire insurance and/or public liability and property damage insurance at that time is not adequate or not provided for herein, Sublessee shall either acquire or increase the insurance coverage as required by Sublessor and mutually agreed by Sublessee.

[The remainder of this page intentionally has been left blank.]

9

IN WITNESS WHEREOF, Sublessor and Sublessee have each caused this Agreement of Sublease to be executed by its duly authorized partner of officer and the appropriate corporate seals have been hereunto affixed all as of the day and year first written.

ATTEST:
By:		[Corporate Seal]	MERIX BIOSCIENCE, INC. (Seal)
Its:	Secretary		By:
			Its:	Executive Vice President
ATTEST:			AVENTIS PHARMACEUTICAL PRODUCTS INC. (F/K/A RHONE-POULENC RORER PHARMACEUTICALS INC.)
By:		[Corporate Seal]	By:
Its:	Assistant Secretary		Its:	Vice President

10

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is made the 31 day of July, 2005 (the “Effective Date”) by and between CNL RETIREMENT MOP 4223 DURHAM NC, LP, a Delaware limited partnership, whose address is 450 South Orange Avenue, Orlando, Florida 32801 (“Landlord”), and ARGOS THERAPEUTICS, INC. (f/k/a Merix Bioscience, Inc.), a Delaware corporation, whose address is 4223 Technology Drive, Durham, North Carolina 27704 (“Tenant”).

W I T N E S S E T H:

WHEREAS, Landlord’s predecessor-in-interest, THE GMH INDEPENDENCE LIMITED PARTNERSHIP, a North Carolina limited partnership (“GHM”), and Tenant entered into that certain Lease (the “Lease”) dated January 16, 2001, for the leasing of certain real property located at 4223 Technology Drive, Independence Park, Durham, North Carolina, and all improvements thereon;

WHEREAS, Landlord purchased the Property from GMH and now holds the interest as Landlord under the Lease;

WHEREAS, Landlord and Tenant wish to modify the terms of the Lease as more particularly set forth below.

NOW THEREFORE, for and in consideration of the premises hereof, the mutual covenants and benefits set forth herein and in the Lease and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Capitalized Terms. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Lease.

2. Termination. Section 50 of the Lease is hereby deleted in its entirety and replaced as follows:

50. TERMINATION. Tenant shall have the one-time right to terminate this Lease on August 31, 2008 by giving written notice to Landlord no later than February 28, 2008 and upon payment with such notice of a “Termination Fee” in an amount equal to six (6) times the monthly rental payment due on the last month of the Term prior to termination. Tenant’s right to terminate pursuant to this paragraph shall expire at 5:00 EST on February 28, 2008 if Landlord has not received Tenant’s written notice of the exercise of such right by that time.

3. $50.000 Payment. Notwithstanding any references within the Lease to the amount of $50,000 having been paid by Tenant to Landlord, Tenant acknowledges that Landlord has not received such amount from Tenant and that Landlord has no obligation to repay such amount to Tenant. Tenant hereby releases Landlord from any and all liability with respect to the repayment of such amount to Tenant.

4. Ratification; Conflict. Landlord and Tenant hereby ratify and confirm the terms of the Lease and agree that, except as herein amended, all terms and conditions of the Lease remain in full force and effect. In the event of a conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment shall control.

5. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed a fully executed original.

[SIGNATURES ON FOLLOWING PAGE]

2

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment in manner and form sufficient to bind them as of the day and year first above written.

LANDLORD:
CNL RETIREMENT MOP 4223 DURHAM NC, LP, a Delaware limited partnership
By:	CNL RETIREMENT MOP A PACK GP, LLC, a Delaware limited liability company, its sole general partner
	By:
	Name:	Victoria A. Curl
	Title:	Vice President Asset Management

STATE OF FLORIDA

COUNTY OF ORANGE

The foregoing instrument was acknowledged before me this, the 2nd day of Nov, 2005, by Victoria A. Curl, as VP Asset Management of CNL RETIREMENT MOP A PACK GP, LLC, a Delaware limited liability company, as the sole general partner of CNL RETIREMENT MOP 4223 DURHAM NC, LP, a Delaware limited partnership, on behalf of the partnership and the company. He (She) is personally known to me or has produced              as identification.

(NOTARY SEAL)	Notary Public
	Name:
	Serial No.:

	My Commission Expires:

3

		TENANT:
		ARGOS THERAPEUTICS, INC., a Delaware corporation
		By:
Attest		Name:	Timothy W. Trost
		Title:	VP & CFO
Name:	William Wofford
Assistant Secretary

[Corporate Seal]

NORTH CAROLINA

DURHAM COUNTY

I, [illegible], a Notary Public, do hereby certify that Timothy W. Trost, personally appeared before me this day and acknowledged that he/she is the                                        of ARGOS THERAPEUTICS, INC., a Delaware corporation and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name and by is                                        , sealed with the corporate seal, and attested by                    , as its Secretary.

Witness my hand and notarial seal this, the 22 day of Sept., 2005.

(Notary Public)

My commission expires:

4-2-2010

4

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (this “Amendment”) is made the 7th day of August, 2006 (the “Effective Date”) by and between CNL RETIREMENT MOP 4223 DURHAM NC, LP, a Delaware limited partnership, whose address is 450 South Orange Avenue, Orlando, Florida 32801 (“Landlord”), and ARGOS THERAPEUTICS, INC. (f/k/a Merix Bioscience, Inc.), a Delaware corporation, whose address is 4223 Technology Drive, Durham, North Carolina 27704 (“Tenant”).

W I T N ES S E T H:

WHEREAS, Landlord’s predecessor-in-interest, THE GMH INDEPENDENCE LIMITED PARTNERSHIP, a North Carolina limited partnership (“GHM”), and Tenant entered into that certain Lease (the “Lease”) dated January 16, 2001, for the leasing of certain real property located at 4223 Technology Drive, Independence Park, Durham, North Carolina, and all improvements thereon (the “Property”);

WHEREAS, Landlord purchased the Property from GMH and now holds the interest as Landlord under the Lease;

WHEREAS, Landlord and Tenant modified the Lease by that certain First Amendment to Lease dated July 31, 2005; and

WHEREAS, Landlord and Tenant wish to further modify the terms of the Lease as more particularly set forth below.

NOW THEREFORE, for and in consideration of the premises hereof, the mutual covenants and benefits set forth herein and in the Lease and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Capitalized Terms. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Lease.

2. Installation of Additional Lighting. Landlord shall permit Duke Power Company, LLC to install additional lighting to the exterior of the Property pursuant to the NC Service Agreement – Outdoor Lighting attached hereto as Exhibit A. Tenant agrees to pay all costs and expenses relating thereto, whether billed prior to, during or following the installation of such additional lighting. Tenant’s failure to pay such charges within five (5) days of demand therefore from Landlord shall constitute an event of default pursuant to Section 27 of the Lease.

3. Ratification; Conflict. Landlord and Tenant hereby ratify and confirm the terms of the Lease and agree that, except as herein amended, all terms and conditions of the Lease remain in full force and effect. In the event of a conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment shall control.

4. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed a fully executed original.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Second Amendment in manner and form sufficient to bind them as of the day and year first above written.

LANDLORD:
CNL RETIREMENT MOP 4223 DURHAM NC, LP, a Delaware limited partnership
By:	CNL RETIREMENT MOP A PACK GP, LLC, a Delaware limited liability company, its sole general partner

By: /s/ Victoria A. Curl

Name: Victoria A. Curl

Title: Vice President of Asset Management

STATE OF FLORIDA

COUNTY OF ORANGE

The foregoing instrument was acknowledged before me this, the 14^th day of August, 2006, by Victoria A. Curl, as VP of Asset Management of CNL RETIREMENT MOP A PACK GP, LLC, a Delaware limited liability company, as the sole general partner of CNL RETIREMENT MOP 4223 DURHAM NC, LP, a Delaware limited partnership, on behalf of the partnership and the company. She is personally known to me or has produced                      as identification.

	Christina D. Redman
(NOTARY SEAL)	Notary Public Name:                                                                                                       Serial No.:                                                                                               My Commission Expires:

2

	TENANT:
	ARGOS THERAPEUTICS, INC., a Delaware
	corporation
	By:	/s/ Jeffrey Abbey
Attest:	Name:	Jeffrey Abbey
/s/ William Wofford	Title:	VP Business Development
Name:William Wofford
Asst. Secretary

[Corporate Seal]

NORTH CAROLINA

DURHAM COUNTY

I, Grace S. Collins, a Notary Public, do hereby certify that William N. Wofford, personally appeared before me this day and acknowledged that he is the Assistant Secretary of ARGOS THERAPEUTICS, INC., a Delaware corporation and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name and by its VP Business Dev., sealed with the corporate seal, and attested by William N. Wofford as its Asst. Secretary.

Witness my hand and notarial seal this, the 31^st day of July, 2006.

Grace S. Collins

(Notary Public)

My commission expires:

My Commission Expires 12-02-06.

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EXHIBIT A

4

Electric Service Installation Provisions

WR*: 928226

(Internal Use Only)

I, CNL RETIREMENT, have requested that Duke Power install above ground or underground electric service conductors at my home/business located at 4233 Technology Drive In making this request, I agree to the following checked provisions:

1. While Duke is responsible for locating publicly owned underground utility lines (telephone, catv, gas) I am responsible for identifying for Duke Power or its agent the correct location of all underground objects that might be damaged by or cause damage to Duke Power’s equipment of its contractor’s equipment in the process of installation. Underground objects include, but or not limited to: septic tanks, drain lines, drain fields, designated repair areas, water lines, irrigation lines and electrical lines not owned by Duke Power.

2. Once I have physically marked the underground objects, within + or -30 Inches, using paint, flags, or stakes, Duke Power or its contractor will assume responsibility for avoiding damage to said objects.

3. I assume full responsibility for any damage to underground objects caused by my failure to notify or incorrectly notify Duke Power of the location of the underground objects.

4. Duke Power or its contractor will assume responsibility for performing said installation in a professional manner by avoiding damage to obvious above ground objects such as curbs, gutters, shrubbery, sidewalks, and buildings.

5. I understand the specific route of the proposed above ground or underground conductors and location of poles and/or apparatus as described by the Duke Power representative.

6. In the course of installing underground lines and equipment in areas with landscape trees, there is the probability of some root damage and I will not hold Duke Power or its contractor responsible for damage to or the health of any trees.

7. Equipments tracks and ground disturbance will result from the use of equipment necessary for the installation of above ground or underground facilities.

8. Duke Power or its contractor will not be responsible for reseeding lawns or replacing gravel in the area(s) disturbed due to the installation of poles, apparatus (such as transformers or pedestals) or underground facilities.

9. I May be required to pay a contribution in aid of construction if rock or other adverse conditions are encountered. Refer to Underground Distribution Installation Plan (copy available upon request). Costs associated with lighting installations may vary from those listed below. These conditions include but are not limited to the following examples:

Examples of Charges Unit Cost

Provide a trench in rock (in excess of 10% of trench footage) $54.74 per linear foot

Place clean sand/clay backfill (in excess of 10% of trenchs footage) $2.16 per linear foot

Provide clean sand/clay backfill from off site $Cost plus 15%

Punching under roads/driveways/sidewalks $52.34 per linear foot

Digging within 30* of another utility $8.64 per linear foot

Remove/restore gravel, 2” depth, 10’ width $21.65 per linear foot

Pull secondary/lph primary cable in existing conduct $1.73 per linear foot

Pull 3ph primary cable in existing conduct $2.16 per linear foot

Crew delay due to customer or site conditions $86.41 per hour

Guaranteed meter base location changes more than 10’ at time of installation $422.03 per occurrence

Engineering costs $65.00 per hour

Other: $

10. To meet National Electric Safety Codes, work site grading, and landscaping must be      at final grade or      within 6 inches of final grade (Duke Representative to initial appropriate item) before installation of underground facilities. Refer to Underground Distribution Installation Plan (copy available upon request).

11. I understand that I may be responsible for any additional costs incurred by duke due to Duke’s Inability to perform work on schedule as a result of my failure to have the site ready or remain ready until all work has been completed ($126 minimum charge).

12. I have requested that Duke Power install underground facilities on the property listed above. In making this request, I agree to be the single point of contact for Duke Power and agree to be financially responsible to Duke Power for any damage to Duke Power’s equipment that is caused by a contractor retained by me..

13. NA I have provided Duke Power with the correct load information to size my facilities. I assume full responsibility for any changes in the load information that will require Duke Power to install larger sized underground facilities after the underground service has been installed.

14. These provisions have been explained to me and I have received a copy of this document.

*

7/25/06

CNL RETIREMENT MOP 4233 DURHAM NC, LP, A DELAWARE LIMITED PARTNERSHIP.

BY: CNL RETIREMENT MOP A PACK GP, LLC, A DELAWARE LIMITED LIABILITY COMPANY ITS SOLE GENERAL PARTNER

Robert L Wingat

919-687-3229

7/15/2006

Duke Power Representative

Phone Number

Date

Revised 1/06

Page 1 of 2

ACCOUNT MERIX BIOSCIENCE SERVICE ADDRESS 4233 TECHNOLOGY DRIVE DURHAM,NC ACCOUNT NUMBER 17836464017

NC Service Agreement - Outdoor Lighting

Duke Power Company LLC dba Duke Energy Carolines LLC Data Entery corporation – Electronic Fons Reportion Electronic Distrbution form for North creation only

Customer Name MERIX BIOSCIENCE Project Name 4233 TECHNOLOGY DRIVE Duke Energy Carolines LLC

Service Address 4233 TECHNOLOGY DRIVE, DURHAM, NC Date

Mailing Address 4233 TECHNOLOGY DRIVE, DURHAM NC 27704-2173 TOTAL MONTHLY CHARGES $23.87

Service Requested by CNL RETIREMENT CORPORATION Title PROPERTY OWNER Phone One Time Payment(IncL tax) $0.00

The agreement when Agned by its Customer and by at authorized represented Duke Energy Contract LLC(Duke) will be Contract under which Duke agrees to limits the outdoor lighting indicated below to the Customer and the Customer agrees to pay for the service in accordance with the terms of Rate Schedule Ol and Duke’s Service Regulations on file with the North Carolina Public Service Commission, and on file in Duke’s office. (AS THE RATE SCHEDULE AND SERVICE REGULATIONS MAY BE MODIFIED FROM TIME TO TIME) which Rate Schedule and Service Regulations and hereby incorporated as part of this agreement.

Duke will provide the outdoor lighting service indicated below, but if the service is wholly or partially interrupted or suspended or because lamps turn or are broken, because of any cause beyond Duke’s reasonable control or because Duke records to suspend the service for the purpose of inspecting or making aspects or allegations to its lines or other equipment, then Duke shall not be to provide the service during any such interruption suspended or failure and Duke shall not be contingence for any

Agreement shall be 3 Years, and ose be it shall continued until by author party outing to days when roe to the party, IN THE EVENT OR TERMINATION OUPUTING THE INTAL TERM OF THIS AGREEMENT, THE CUSTOMER AGREES TO PAY DUKE THE TOTAL MONTHLY CHARGE FOR THE NUMBER OF MONTHS REMAINING IN THE INTIAL TERM

Customer Signature Date Signed

Special Instruction None Work Request 928225

Number SA1D 200604269192034

Basic Luminaires

Rate # Units Existing Pole Monthly Charge Rate # Units New Pole w/OH Monthly Charge Rate # Units New Pole w/UG Monthly Charge

Lumlnaire #1

400 Was, 50,.000 lumen High Pressure Sodium lamp. Urban

12.2 0 0.00 17.9 0 0.00 21.95 21.85

Additional Monthly Charges

Rate Existing Pole # Units Monthly Charge Rate # Units New Pole w/OH Monthly Charge

Rate New Pole w/UG # Units Monthly Charge

35* Standard wood pole instead of 30* N/A N/ A N/A $.31 1 0.31 $31 0 0.00

Additional Monthly charge for underground conductor $0.7 for each Increment of 10 feet or less, over 150 service feet per pole Total Secondary UG installed (in feet) 380 10 Increments over 150 per pole 23 1.61*.07=1 poles= 1.61 1.61

Subtotals : $0.00 $0.31 $1.61

Other Charges

Additional One Time Payment Total Amount $0.00

Additional Monthly Payment Total Amount $1.92

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THIRD AMENDMENT TO LEASE

This THIRD AMENDMENT TO LEASE (this “Amendment”) is made as of June 21, 2011, by and between HCP MOP 4233 Durham NC, LP, formerly known as CNL Retirement MOP 4223 Durham NC, LP, a Delaware limited partnership, or its assigns (“Landlord”) and Argos Therapeutics, Inc., a Delaware corporation (‘Tenant”) under the following circumstances:

Landlord and Tenant have entered into that certain Lease dated as of January 16, 2001, as amended by the First Amendment dated July 31, 2005, and as amended by the Second Amendment dated August 7, 2006 (the “Lease”) whereby Landlord has leased to Tenant premises consisting of 20,000 rentable (20,000 usable) square feet and known as Suite No. 100 on the first (1^st) floor of the building located at 4233 Technology Drive, Durham, North Carolina 27704, which real property is described on Exhibit A to the Lease (the “Premises”); and

Landlord and Tenant are executing this Amendment in order to modify certain terms of the Lease.

Each initially capitalized term not defined herein shall have the meaning given such term in the Lease.

NOW THEREFORE, in consideration of the promises and the agreements and covenants contained herein, Landlord and Tenant agree that the Lease is amended and modified as follows:

A. Amendments

1. The Term is hereby extended for an additional period of five (5) years and three (3) months, commencing September 1, 2011 (“First Extended Term Commencement Date”) and expiring on November 30, 2016.

2. Effective upon full execution of this Amendment, Section 3(b) of Lease is hereby deleted in its entirety.

3. Effective on the First Extended Term Commencement Date, Section 5(b) and (c) Rent, of the Lease is hereby amended by substituting the following Rent Schedule. Beginning on the First Extended Term Commencement Date, the amount of Rent payable in accordance with Section 5 (b) and (c) of the Lease shall be as provided in the Rent Schedule as follows:

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Revised Schedule

Lease Year	Annual Rental Rate/r.s.f.		Monthly Rent
9/01/2011 – 8/31/2012	$	14.25/r.s.f.	$	23,750.00
9/01/2012 – 8/31/2013	$	14.54/r.s.f.	$	24,233.33
9/01/2013 – 8/31/2014	$	14.83/r.s.f.	$	24,716.67
9/01/2014 – 8/31/2015	$	15.13/r.s.f.	$	25,216.67
9/01/2015 – 8/31/2016	$	15.43/r.s.f.	$	25,716.67
9/01/2016 – 11/30/2016	$	15.74/r.s.f.	$	26,233.33

4. Section 5 Rent.: The following is hereby added to the end of Section 5 (a) of the Lease:

“Notwithstanding the above, Tenant shall not be obligated to pay rent for the period between January 1, 2012 - January 31, 2012. This rent concession shall total $23,750.00 (“Rent Concession”). The Rent Concession shall be due and payable by Tenant to Landlord if there occurs an event of default under the Lease on the part of Tenant and such default is not cured within any applicable time frame set forth in this Lease.”

5. Section 39 Notices.: Section 39 is hereby amended to revise Landlord address:

HCP MOB 4233 Durham NC, LP

c/o: HCP, Inc.

3000 Meridian Blvd., Suite 200

Franklin, TN 37067

Attn: Asset Manager

6. Section 51. The following is hereby added as a new section to the Lease numbered 51:

SECTION 51. CONSTRUCTION OF CERTAIN IMPROVEMENTS; ACCEPTANCE OF IMPROVED PREMISES

51.1. Tenant Improvement Contribution. Upon full execution of this Third Amendment to Lease and subject to fulfillment of the terms and conditions of this Lease and of the terms and conditions set forth below, Landlord shall provide Tenant with a contribution (the “Contribution”) toward certain tenant improvements to be constructed or installed in the Premises (the “Improvements”), which Improvements shall be and remain at all times the property of Landlord, except for those improvements constituting furniture. Landlord’s Contribution shall be an amount of up to, but not exceeding, $10.00 per rentable square foot. The Contribution shall be available during the calendar year 2011 with any unused or unallocated portion of the Contribution ceasing to be available on December 31,2011.

Landlord shall pay to Tenant or its designee such portion of the Contribution as is supported to Landlord’s reasonable satisfaction by invoices or other appropriate documentation evidencing the actual cost of the Improvements upon fulfillment of all of the following conditions:

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(i) issuance of a certificate of occupancy (if required) by the appropriate governmental authority for all areas affected by the improvements upon completion; (ii) delivery to Landlord of lien waivers executed by Construction Company (as hereinafter defined) and by all subcontractors, materialmen and suppliers, together with affidavits of Tenant and Construction Company setting forth the names of all such subcontractors, materialmen and suppliers; (iii) delivery to Landlord of evidence reasonably satisfactory to Landlord of payment of all costs incurred in connection with the Improvements; (iv) this Lease shall be in full force and effect without default by the Tenant, and (v) resolution to Landlord’s reasonable satisfaction of any aspects of the Improvements that are not in accordance with plans approved by Landlord. The Contribution shall apply only toward amounts Tenant shows, to Landlord’s reasonable satisfaction and in accordance with standard market practices, that Tenant actually expended in connection with the Improvements. Landlord shall pay Tenant such portion of the Contribution within sixty (60) days of the fulfillment of the preceding conditions of this paragraph.

A portion of the Contribution, of up to $1.00 per rentable square foot may be used for furniture, which shall be and remain at all times the property the Tenant. Items constituting “Improvements” shall be determined by Landlord, and may include, but shall not be limited to, all interior demising walls, flooring, electrical materials and equipment, mechanical, plumbing and life-safety equipment in the Premises. Any costs and expenses of the Improvements that exceed or are not covered by the Contribution (“Additional Excess Costs”) shall be the sole responsibility of and shall be paid by Tenant.

51.2. Plans and Specifications; Performance and Construction of Improvements. No improvements shall be done on or in the Building without the specific written authorization of Landlord which shall not be unreasonably withheld. Landlord shall cooperate with Tenant in developing plans for Improvements and Tenant shall obtain Landlord’s prior written approval on all such plans.

Tenant shall impose and enforce all reasonable and customary procedures, conditions and restrictions imposed by or required by Landlord on persons and entities who engage in the Improvements. Tenant shall ensure that Construction Company has all appropriate licenses for the performance and construction of the Improvements, that the Construction Company is bondable (whether or not it is required to actually obtain payment and performance bonds for the Improvements) and that the Construction Company carries insurance with companies acceptable to Landlord in types and amounts acceptable to Landlord, but in no event less than $1,000,000 per person and per occurrence for each of the following types of coverage: employer liability, bodily injury, property damage, personal injury, premises-operations, independent contractor’s protective, products and completed operations and broad form property damage. Tenant shall provide Landlord with certificates of insurance evidencing such coverage prior to commencement of the Improvements and shall ensure that Landlord is named as an additional insured on Construction Company’s insurance policies if Landlord so requests. Tenant shall ensure that Construction Company’s insurance policies provide that they cannot be canceled or allowed to expire until at least thirty (30) days’ prior written notice has been given to Landlord.

Tenant shall ensure that the Improvements shall be conducted in accordance with the procedures provided by Landlord to Tenant.

51.3. Indemnification. Tenant shall indemnify, defend and hold harmless Landlord and each of its successors, assigns, affiliates, employees, officers, directors, agents, contractors and other representatives (each, an “Indemnified Party” and collectively, the

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“Indemnified Parties”) from and against any loss, cost, expense, damage, claim, allegation or other detriment suffered by or brought against an Indemnified Party in connection with acts or omissions relating to the construction or performance of the Improvements, regardless of whether the relevant or alleged act(s) or omission(s) occurred before, during or after completion of the Improvements, unless such loss, cost, expense, damage, claim, allegation or detriment arises from the failure of the Landlord or the Landlord’s predecessors to ensure all construction and improvements made prior to January 16, 2001 complied with applicable governmental or quasi-governmental or utility laws, codes, regulations and requirements.

51.4. Additional Excess Costs. Tenant shall not cause or permit any liens, encumbrances or security interests to attach to any Improvements or any other property at the Premises or to areas or property affected by the Improvements. Throughout the process of preparing the plans for the Improvements and obtaining any necessary governmental permits and approvals, each party shall act diligently and in good faith and shall cooperate with the other and with governmental agencies in whatever manner may be reasonably required. Tenant acknowledges and agrees that Landlord reserves the right, without Tenant’s consent and without liability to Tenant, to require or make any modifications, changes or omissions to the plans required by any governmental or quasi-governmental authority or utility. If the cost of Tenant’s substitutions causes the cost of the Improvements to exceed the Contribution, the Tenant shall be responsible for such difference in cost as part of the Additional Excess Costs. Any change orders or extras requested by Tenant must be agreed to by Landlord in writing. Tenant will pay the cost of any change or extra as and when requested by the party to whom payment is owed. Landlord will have no liability to Tenant for the omission or improper construction, installation or performance of any changes or extras.

51.5. Commencement Date. [Intentionally Deleted.]

51.6. Substitutions; Change Orders and Extras. [Intentionally Deleted.]

51.7. Delays Beyond Landlord’s Control. [Intentionally Deleted.]

51.8. Certain Modifications. [Intentionally Deleted.]

51.9. Other. Landlord shall not be liable for any accident, injury, damage, loss, cost, expense or other detriment suffered by any person or entity in connection with the design, construction, performance or installation of the Improvements unless such accident, injury, damage, loss, cost, expense or other detriment arises form the failure of the Landlord or the Landlord’s predecessors to ensure all construction and improvements made prior to January 16, 2001 complied with applicable governmental or quasi-governmental or utility laws, codes, regulations and requirements. Tenant will use commercially reasonable efforts to ensure that the Improvements will be constructed in accordance with plans and specifications approved by Landlord, that all materials and equipment furnished will be new, that the Improvements will be of good quality, and in compliance with all applicable laws, codes and regulations, including but not limited to environmental, zoning, building and land use laws.

7. Section 52.: The following is hereby added as a new section of the Lease numbered 52:

52. Option to Renew. (a) So long as Tenant is not in default under the terms of this Lease, both at the time of the exercise of this option to renew and at the expiration of the initial

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Term of this Lease, Tenant shall have an option to extend the Term of this Lease for an additional five (5) years subsequent to the First Extended Term (the “Second Extended Term”). The Second Extended Term shall be on and subject to the same terms, covenants and conditions as herein contained, except for Rent, which shall be determined as hereinafter provided. This option shall be exercised only by written notice from Tenant to Landlord and given no less than one hundred eighty (180) days prior to the expiration of the First Extended Term.

(b) Rent During Second Extended Term. Annual Rent per rentable square foot for the Second Extended Term shall be an amount equal to “Fair Market Base Rental Rate”. As used herein the term “Fair Market Base Rental Rate” shall be the fair market annual rental of the Premises mutually determined by Landlord and Tenant based on comparable annual rental rates being charged in the market area for space comparable to the Premises, taking into account the quality and age of the Building; the location, the floor level, quality of tenant improvements provided and other relevant factors and assuming that such annual rental is a “net” rental pursuant to a lease providing for a pass through of taxes and operating expenses on a proportionate basis. Notwithstanding anything to the contrary set forth herein, the foregoing Option to Renew shall not apply to any renewal or extension of the current lease of the Premises or to any offer to lease or any new lease entered into with the current tenant of the Premises or with such tenant’s successors or assigns. In the event of any conflict between this paragraph and Section 18 of the Lease, the provisions of Section 18 shall prevail.

8. Section 53.: The following is hereby added as a new section of the Lease numbered 53:

53. Option to Terminate. So long as Tenant is not in default under the terms of the Lease, Tenant may terminate the Lease effective December 31, 2014 by giving Landlord written notice between September 1, 2014 and September 30, 2014. If Tenant exercises its right to terminate set forth in this paragraph, Tenant’s written notice shall include payment to Landlord a sum of $150,000.00, as consideration for such termination (“Termination Fee”). Tenant’s delivery of such written notice and payment shall be a condition precedent to the exercise of Tenant’s rights under this paragraph. Upon the effective date of termination Tenant shall surrender the Premises to Landlord in accordance with the terms of the Lease, and both parties shall be released of all obligations and liabilities arising under this Lease, provided that the parties shall remain liable for all obligations under the Lease which arose prior to termination or are otherwise intended to survive termination (including without limitation indemnity and accrued payment obligations).

In the event Tenant does not exercise the option to terminate set forth in this Section 53, Tenant shall not be obligated to pay rent for the period January 1, 2015 – February 28, 2015. This rent concession shall total $50,433.34 (“Rent Concession”). The Rent Concession shall be due and payable by Tenant to Landlord if there occurs an event of uncured default under the Lease on the part of Tenant and such default is not cured within any applicable time frame set forth in this Lease.

[Signatures on following page]

5

EX-10.17

Exhibit 10.17

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “AGREEMENT”) made and entered into this tenth day of January, 2000, by and between DUKE UNIVERSITY, a North Carolina not-for-profit corporation, (hereinafter called “DUKE”), having its principal office at Durham, North Carolina 27708, and MERIX BIOSCIENCE, INC., a Delaware corporation organized under the laws of Delaware (hereinafter called “MERIX”), having a mailing address at P.O. Box 14509, Research Triangle Park, North Carolina 27709.

WHEREAS, Eli Gilboa and Smita Nair are inventors of an invention [the “1101 INVENTION” hereinafter] described in Duke Office of Science and Technology File #1101 and in related patent applications defined hereinafter; and

WHEREAS, Eli Gilboa, Smita Nair, and David Boczkowski are inventors of an invention [the “1215 INVENTION” hereinafter] described in Duke Office of Science and Technology File #1215 and in related patent applications defined hereinafter; and

WHEREAS, DUKE has the right to grant licenses to the 1101 INVENTION and to the 1215 INVENTION under PATENT RIGHTS (as hereinafter defined), and wishes to have the inventions covered by the PATENT RIGHTS utilized in the public interest; and

WHEREAS, DUKE represents that it is the sole owner of the entire right, title and interest in and to said inventions and PATENT RIGHTS; and

WHEREAS, DUKE granted to Dendritix, Inc. in an Option Agreement made the eighteenth day of December 1998 an option to obtain an exclusive license to the 1101 INVENTION and also to the 1215 INVENTION under the terms and conditions specified hereinafter; and

WHEREAS, Dendritix, Inc. has changed its corporate name to Merix Bioscience, Inc.; and

WHEREAS, MERIX has informed DUKE that it wishes to exercise its exclusive option to license the 1215 INVENTION and the 1101 INVENTION under the terms and conditions specified hereinafter; and

WHEREAS, MERIX represents that it intends to develop and commercialize the Patents Rights so that products made under the PATENT RIGHTS shall become available to the public; and

NOW THEREFORE, in consideration of the premises and the faithful performance of the covenants herein contained, IT IS AGREED:

ARTICLE 1 - DEFINITIONS

1.01 - For the purposes of this AGREEMENT, and solely for that purpose, the terms and phrases set forth hereinafter in capital letters shall be defined as follows:

a. “FIELD” shall mean all uses of the know-how and patent rights, cell lines, substances and material produced by cell lines and included in PATENT RIGHTS, specifically including, without limitation, research and development, diagnosis, prevention, therapy, and monitoring of all human and animal diseases or disorders.

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b. “PATENT RIGHTS” shall mean all U.S. and foreign Patent Applications filed to protect the 1101 INVENTION or the 1215 INVENTION and any patent now issued or hereafter issuing on any such patent application, substitutes, continuations, extensions, renewals, reissues, reexaminations, additions, continuations-in-part, divisionals, or reissues thereof and any patent revalidations, registrations, supplementary protection certificates, patents of importation or cautionary notices thereof in connection with the 1101 INVENTION or 1215 INVENTION. As of the EFFECTIVE DATE of this AGREEMENT, PATENT RIGHTS related to the 1101 INVENTION include [**]. As of the EFFECTIVE DATE of this AGREEMENT, PATENT RIGHTS related to the 1215 INVENTION include [**].

c. “Know-How” shall mean any research information, technical information, technical data or other confidential information not in the public domain made or that may be made by one of the inventors of the 1101 INVENTION or the 1215 INVENTION and/or one of them and others working under the supervision of one of them, while students or employees of DUKE prior to or during the term of this AGREEMENT, which relate to and are necessary for the practice of the PATENT RIGHTS in the FIELD. For avoidance of doubt, Know-How shall include all unpatented and unpatentable inventions, technology, cell lines, biological materials, compounds, probes, sequences, and methods necessary for the practice of the PATENT RIGHTS under this AGREEMENT. Know-How shall not, however, include any such materials or information or any uses of such materials and information that DUKE cannot provide to MERIX on either an exclusive or non-exclusive basis because of other legal obligations of DUKE pursuant to sponsored research, clinical research, material transfer, confidentiality or other agreements.

d. “VALID CLAIM” means a claim of an issued patent which has not lapsed or become abandoned or been declared invalid or unenforceable by a court of competent jurisdiction or an administrative agency for which there is no right of appeal or for which the right of appeal is waived.

e. “LICENSED PRODUCT” shall mean any product which is produced or sold by MERIX that utilizes the KNOW-HOW or that infringes one or more VALID CLAIMS of the PATENT RIGHTS, and which is intended for use in, or is used in, the FIELD.

f. “NET SALES” shall mean the total invoiced sales of LICENSED PRODUCTS sold by MERIX, less the following sums actually paid or credited by MERIX as shall be detailed in MERIX’s reports made pursuant to Section 5.02 of this AGREEMENT:

(a) trade, quantity or cash discounts or commissions allowed in amounts customary in the trade;

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(b) any tax, excise or other governmental charge upon or measured by the production, sale, transportation, delivery or use and duties imposed on the import of LICENSED PRODUCTS included in such amount;

(c) outbound transportation charges prepaid or allowed on the cost of shipping to customers, if any; and

(d) credits or allowances, if given or made for LICENSED PRODUCTS, price adjustments, returns, rejections, recalls or destructions (voluntarily made by or requested or made by an appropriate government agency, subdivision or department) of LICENSED PRODUCTS previously delivered.

LICENSED PRODUCTS used by MERIX for its own use in the FIELD, LICENSED PRODUCTS sold to Affiliates, and internal sales for use in service businesses in arms length transactions shall be considered to be NET SALES for purposes of computing royalty obligations, except such LICENSED PRODUCT used for non-revenue producing activity such as promotional items or field trials shall not be considered to be NET SALES.

g. “AFFILIATE” shall mean any entity which controls, is controlled by or is under common control with MERIX. An entity shall be regarded as in control of another entity if it owns or controls more than fifty percent (50%) of the voting power of the entity.

h. “FOUNDERS” shall mean H. Kim Lyerly, Eli Gilboa, Clay Smith, and Bruce Sullenger, the scientific founders of MERIX, and “FOUNDER” shall mean any of these individuals.

i. “OPTIONED INVENTION” shall mean an invention having been made solely or jointly by a FOUNDER while the FOUNDER was employed by DUKE subsequent to the EFFECTIVE DATE and during the term of this AGREEMENT in the field of autoimmune diseases or disorders, infectious diseases or cancer in humans or animals and useful for: (i) active and/or adoptive immunological intervention intended for therapy or prevention; (ii) monitoring of immunological parameters for diagnosis, therapy or the development of candidate interventions; or (iii) discovery of new antigens for diagnosis, monitoring or therapy; provided, however, that such an invention shall not be an OPTIONED INVENTION if DUKE is legally unable to grant MERIX an option for an exclusive license (or if an exclusive license is not legally possible, a non-exclusive license) to such invention under the terms of sponsored research, clinical research, material transfer, confidentiality or other agreements with third parties; and provided furthermore that any invention related to stem cells shall not be an OPTIONED INVENTION. Nothing in the foregoing definition of OPTIONED INVENTION shall be construed as limiting the right of FOUNDERS or DUKE to enter into sponsored research, clinical research, material transfer, confidentiality, or other agreements granting intellectual property rights to any other party, not for profit or for profit, provided that such agreements do not conflict with the exclusive license to PATENT RIGHTS and KNOW-HOW granted in Article 2 herein.

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j. “FOUNDERS’ SHARES” shall mean common stock of MERIX issued or reserved for issue by MERIX prior to closing a round of equity financing with outside investors. The fair market value and price of FOUNDERS’ SHARES shall be deemed to be one cent [$0.01] per share. DUKE and MERIX agree that all FOUNDERS’ SHARES issued shall be dilutable to the same extent upon each stage of subsequent financing of MERIX and that the total number of FOUNDERS’ SHARES, issued or reserved for issuance, will be two million five hundred thousand [2,500,000] shares.

k. “EFFECTIVE DATE” shall mean January 10, 2000.

ARTICLE 2 - LICENSE

2.01 - DUKE hereby grants to the MERIX and MERIX hereby accepts from DUKE, upon the terms and conditions herein specified, an exclusive worldwide license under the PATENT RIGHTS and KNOW-HOW to make, have made, use, import, offer to sell, sell, offer to provide and provide LICENSED PRODUCTS. Such license is worldwide to the full end of the term as provided in Article 11.01 hereof, unless sooner terminated as hereinafter provided. DUKE hereby represents that it has the full right and authority to enter into this AGREEMENT, to grant the licenses provided herein and to perform its other obligations hereunder.

2.02 - MERIX shall have the right to grant sub-licenses. Any such sub-licenses shall be subject to terms of this AGREEMENT. Royalties paid to DUKE for NET SALES of LICENSED PRODUCTS by sublicensees shall be equal to the royalties that would have been paid to DUKE if LICENSED PRODUCTS were sold directly by MERIX. The terms of any non-cash sub-licenses will be negotiated by DUKE and MERIX. MERIX agrees to be responsible for the payment to DUKE of royalties on funds received by MERIX from its sublicensees and for using commercially reasonable efforts to enforce the terms of the sublicense agreements. If, for any reason, this AGREEMENT is terminated, MERIX agrees to assign all such sublicenses directly to DUKE.

2.03 - It is agreed that, notwithstanding any provisions herein, DUKE is free to use the 1101 INVENTION, the 1215 INVENTION and PATENT RIGHTS for its own non-commercial educational, teaching, research and clinical purposes without restriction and without payment of royalties or other fees.

2.04 - Nothing in this AGREEMENT shall be construed to grant to DUKE any rights in the inventions, discoveries, technology, patent rights or other intellectual property developed by or for MERIX or its AFFILIATES or sub-licensees and which are not covered by the PATENT RIGHTS or KNOW-HOW.

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2.05 - Within [**] days following the execution of this AGREEMENT and thereafter during the period of this AGREEMENT, DUKE agrees to provide MERIX with copies of all technical know-how it may have or later obtain relative to the PATENT RIGHTS or KNOW-HOW, and copies of any and all patents or patent applications owned or controlled by DUKE covering the PATENT RIGHTS or KNOW-HOW or the use of the PATENT RIGHTS or KNOW-HOW or processes for the manufacture of the LICENSED PRODUCTS, including all Patent Office actions received and amendments filed, if any, relative thereto.

ARTICLE 3 - OPTION

3.01 - DUKE hereby grants to MERIX an exclusive option to obtain an exclusive, worldwide, royalty bearing license to all new OPTIONED INVENTIONS. DUKE shall notify MERIX within [**] of the date that DUKE learns that an OPTIONED INVENTION has been made. MERIX shall then have a period of [**] days [the “OPTION PERIOD”] to inform DUKE in writing that MERIX wishes to exercise its option to negotiate a license to the OPTIONED INVENTION. If MERIX does not notify DUKE that it wishes to exercise its option within the OPTION PERIOD, or if MERIX informs DUKE that it does not wish to exercise its option, the option will expire at the end of the OPTION PERIOD, and DUKE will be free to dispose of the OPTIONED INVENTIONS in DUKE’s sole discretion. If MERIX notifies DUKE in writing during the OPTION PERIOD that MERIX wishes to exercise its option, DUKE and MERIX will negotiate in good faith for [**] days from the date that DUKE receives notification from MERIX [the “NEGOTIATION PERIOD”] to conclude a license agreement for the OPTIONED INVENTION on commercially reasonable terms and substantially in accordance with Exhibit A hereto. If the parties cannot agree on terms by the end of the NEGOTIATION PERIOD, DUKE will be under no obligation to continue negotiations and will be free to dispose of the OPTIONED INVENTION on terms no more favorable than offered to MERIX.

ARTICLE 4 - CONSIDERATION

4.01 - As consideration for the rights granted by DUKE in this AGREEMENT, MERIX shall transfer to DUKE upon execution of this AGREEMENT, ownership of five hundred thousand [500,000] fully vested, non-voting FOUNDERS’ SHARES, equal to twenty percent [20%] of the total FOUNDERS’ SHARES issued or reserved for issuance by MERIX. At the time that MERIX closes on the sale of capital stock to the public through a registration statement registered under the Securities Act of 1933, as amended, DUKE’s shares will convert to voting shares of common stock.

4.02 - DUKE shall be entitled to have one person reasonably acceptable to MERIX attend all meetings of the Board of Directors of MERIX as an observer for a period of [**] years from the EFFECTIVE DATE of this AGREEMENT.

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4.03 - As further consideration for the rights granted by DUKE in this AGREEMENT, at the times and in the manner set forth hereinafter, MERIX shall pay to DUKE a royalty on NET SALES of LICENSED PRODUCTS. Such royalty shall be at the rate of [**] percent ([**]%) of NET SALES of LICENSED PRODUCTS sold by MERIX, by AFFILIATES, or by sublicensees; provided, however, that MERIX shall not be obliged to pay a total royalty on any LICENSED PRODUCT to all parties in excess of [**] percent ([**]%) of NET SALES. In the event that MERIX’s total royalty obligation on a LICENSED PRODUCT exceeds [**]percent ([**]%) the amount of royalty paid to all parties will be decreased proportionately so that the total royalty obligation is reduced to [**] percent ([**]%); however, in no event shall the royalty paid to DUKE be less than [**] percent ([**]%). For avoidance of doubt, the parties agree that any other royalties due to DUKE for the LICENSED PRODUCTS based on other agreements between DUKE and MERIX shall (including the license for the inventions described in Duke Office of Science and Technology File #[**]) be included in the calculation of total royalties set forth in this paragraph.

4.04 - MERIX will pay to DUKE a minimum annual royalty of [**] dollars ($[**]) per year beginning the calendar year that begins on the second January 1 after the earlier of (1) the approval of the first LICENSED PRODUCT by the FDA or a comparable regulatory authority in a foreign country or (2) the first sale of a LICENSED PRODUCT that does not require FDA approval. Any payments made by MERIX pursuant to Section 4.03 hereof for a particular calendar year shall be credited to the minimum annual royalty for such calendar year.

4.05 - All consideration paid to DUKE under Article 4.01 will be allocated as follows: [**] percent [[**]%] as consideration for the license granted to the 1215 INVENTION and related PATENT RIGHTS under Article 2 herein, [**] percent [[**]%] as consideration for the license granted to the 1101 INVENTION and related PATENT RIGHTS under Article 2 herein, and [**] percent [[**]%] as consideration for the option granted under Article 3 herein.

ARTICLE 5 - RECORDS AND REPORTS

5.01 - MERIX shall render to DUKE prior to February 28th of each year a written account of progress made toward fulfillment of any due diligence requirements and commercialization of PATENT RIGHTS pursuant to Article 6.

5.02 - MERIX shall render to DUKE prior to February 28^th and August 31^st of each year a written account of the NET SALES of LICENSED PRODUCTS subject to royalty hereunder made during the prior six month period ending December 31^st and June 30^th, respectively, and shall simultaneously pay to DUKE the royalties due on such NET SALES in United States Dollars. Reports tendered shall include the calculation of royalties by LICENSED PRODUCT by country in substantially the format provided in Appendix A hereto]. Minimum annual royalties, if any, which are due DUKE for any calendar year, shall be paid by MERIX along with the written report due on February 28^th of each year.

5.03 - MERIX will make all payments on or before the date required by the terms of this AGREEMENT, or within [**] days of any invoice date on invoices received from DUKE. If LICENSEE has not paid any amount due to DUKE in accordance with this Article, DUKE shall increase the amount due (in US Dollars) by an annual percentage rate equal to [**]%. Such increase(s) shall compound monthly until such time as the LICENSEE has met the full financial obligation due at the time of the next payment or invoice due date.

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5.04 - MERIX shall keep full, true and accurate books of accounts and other records containing all particulars which may be necessary to properly ascertain and verify the royalties payable by it hereunder. Upon DUKE’s request, MERIX shall permit an independent Certified Public Accountant selected by DUKE (except one to whom MERIX has some reasonable objection) to have access during ordinary business hours to such of MERIX’s records as may be necessary to determine, in respect of any quarter ending not more than [**] years prior to the date of such request, the correctness of any report and/or payment made under this AGREEMENT. Such Certified Public Accountant shall execute a written nondisclosure agreement reasonably acceptable to MERIX.

5.05 - During the term of this AGREEMENT, representatives of DUKE will meet with representatives of MERIX at times and places mutually agreed upon to discuss the progress and results, as well as ongoing plans, with respect to the evaluation and development of the PATENT RIGHTS licensed to MERIX; provided, however, that should DUKE’s personnel be required by MERIX to consult with MERIX outside of Durham County, North Carolina, MERIX will reimburse reasonable travel and living expenses incident thereto.

ARTICLE 6 - DUE DILIGENCE REQUIREMENTS

6.01 - MERIX shall use reasonable commercial diligence in performing research and development to bring LICENSED PRODUCTS to market through a thorough, vigorous, and diligent program for exploitation of the PATENT RIGHTS, to develop manufacturing capabilities, and to continue active, diligent marketing efforts for LICENSED PRODUCTS throughout the term of this AGREEMENT, and to vigorously sublicense PATENT RIGHTS for applications MERIX will not pursue throughout the life of this AGREEMENT.

6.02 - In addition, MERIX shall raise at least ONE MILLION DOLLARS [$1,000,000] in equity investment prior to or within three months of the EFFECTIVE DATE of this AGREEMENT.

6.03 - DUKE may terminate this AGREEMENT or convert this AGREEMENT to a non-exclusive AGREEMENT if MERIX fails to meet any of the commercialization milestones set forth in Article 6.01 or 6.02 and MERIX has failed to cure such failure within [**] days after receiving written notice from DUKE of such failure.

ARTICLE 7 - PATENTS

7.01 - Upon execution of this License Agreement, MERIX will assume the primary responsibility for applying for, seeking prompt issuance of, and maintaining the Patent Rights during the term of the Agreement. MERIX shall diligently and in a timely manner provide DUKE with copies of all documents relating to the prosecution, maintenance, and validity of the PATENT RIGHTS. MERIX shall consult with DUKE in such prosecution and maintenance, and shall diligently seek strong and broad claims under the Patent Rights and shall not abandon prosecution of any patent application or any of the claims of the Patent Rights without first notifying DUKE in a timely manner of MERIX’s intention and reason therefor, and providing DUKE with reasonable opportunity to assume responsibility for prosecution and maintenance of the patents.

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7.02 - MERIX shall be responsible for and pay all costs and expenses incurred during the term of this Agreement, for the preparation, filing, prosecution, issuance and maintenance of the Patent Rights. MERIX shall not allow Patent Rights to become abandoned due to nonpayment of fees without first affording DUKE the opportunity to assume responsibility for further costs and expenses incurred relating to said Patent Rights.

7.03 - In the event that DUKE assumes responsibility for prosecution and maintenance of the Patent Rights pursuant to Section 7.01 or 7.02 above, MERIX shall provide reasonable technical assistance to DUKE in the further prosecution of the Patent Rights.

7.04 - In the event that this Agreement is terminated pursuant to Article 11 herein, the sole responsibility for applying for, seeking prompt issuance of, and maintaining the Patent Rights shall revert to the DUKE, and DUKE shall pay expenses subsequently incurred for the preparation, filing, prosecution, issuance and maintenance of the Patent Rights. In the event that responsibility for patent prosecution reverts to DUKE as specified in this section 7.04, MERIX shall, at its own expense, transfer all pertinent documents and materials related to the PATENT RIGHTS to DUKE in a timely manner.

ARTICLE 8 - INFRINGEMENT BY THIRD PARTIES

8.01 - Upon learning of the infringement of PATENT RIGHTS by a third party, the party learning of such infringement shall promptly inform the other party in writing of that fact along with any evidence available pertaining to the infringement. MERIX may at its own expense take whatever steps are necessary to stop the infringement and recover damages. In such case, MERIX will keep DUKE informed of the steps taken and the progress of any legal actions taken. MERIX will pay to DUKE royalties pursuant to Article 4.03 on any such damages recovered as consideration for lost sales of LICENSED PRODUCTS that are in excess of legal expenses incurred by MERIX in enforcing its PATENT RIGHTS. If MERIX does not undertake, within [**] days of notice, to enforce the PATENT RIGHTS against the infringing party, DUKE shall have the right, at its own expense to take whatever steps are necessary to stop the infringement and recover damages, and shall be entitled to retain damages so recovered (after reimbursing MERIX for any of its expenses in cooperating with DUKE in prosecuting such infringement).

ARTICLE 9 - GOVERNMENT CLEARANCE AND EXPORT

9.01 - MERIX agrees to use its best efforts to have the LICENSED PRODUCTS cleared for marketing and sale in those countries in which MERIX intends to sell LICENSED PRODUCTS by the responsible government agencies requiring such clearance. Where such clearance requires payment of taxes or fees, MERIX shall maintain full responsibility for that payment, which shall not be creditable against any other amounts due under this AGREEMENT. To accomplish said clearances at the earliest possible date, MERIX agrees to file, according to the usual practice of MERIX, any necessary data with said government agencies.

9.02 - This AGREEMENT is subject to all of the United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities and technology.

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ARTICLE 10 - PUBLICATION

10.01 - MERIX agrees that the right of publication of the 1101 INVENTION and of the 1215 INVENTION and information in related PATENT RIGHTS shall reside in the inventors and other staff of DUKE. DUKE shall use reasonable efforts to provide MERIX a review copy of such publications [**] days in advance of submission for publication or public disclosure, but such prior review by MERIX will be in no way construed as a right to restrict such publication. Such review shall be granted solely so that DUKE and MERIX can perfect patent protection prior to public disclosure. MERIX shall also have the right to publish and/or co-author any publication on the 1101 INVENTION and the 1215 INVENTION based upon data developed by MERIX.

ARTICLE 11 - DURATION AND TERMINATION

11.01 - This AGREEMENT shall become effective upon the EFFECTIVE DATE, and unless sooner terminated in accordance with any of the provisions herein, shall remain in full force and effect for the longer of: (i) the life of the last-to-expire of the patents included in the PATENT RIGHTS or any patents issued on KNOW-HOW; or (ii), so long as one or more FOUNDERS is employed by DUKE, ten (10) years from the EFFECTIVE DATE hereof. Upon the expiration of this AGREEMENT, DUKE shall grant MERIX an exclusive, worldwide, fully paid license, with the right to grant sub-licenses, under the KNOW-HOW to make, have made, use, import, offer to sell, sell, offer to provide and provide LICENSED PRODUCTS.

11.02 - MERIX may terminate this AGREEMENT by giving DUKE written notice at least three (3) months prior to such termination, and thereupon terminate the manufacture, use or sale of LICENSED PRODUCTS.

11.03 - Either party may immediately terminate this AGREEMENT for fraud, willful misconduct, or illegal conduct of the other party that materially adversely affects such party upon written notice of same to that other party. Except as provided above, if either party fails to fulfill any of its material obligations under this AGREEMENT, the non-breaching party may terminate this AGREEMENT, upon written notice to the breaching party, as provided below. Such notice must contain a full description of the event or occurrence constituting a breach of this AGREEMENT. The party receiving notice of the breach shall submit a plan to cure such breach to the non-defaulting party within [**] days of receipt of such notice. The plan shall be subject to the reasonable acceptance, rejection or modification by the non-defaulting party within [**] days of receipt of the plan. The defaulting party shall have the opportunity to cure that breach in accordance with the terms of the accepted plan. If the breach is not cured within that time, the termination will be effective as of the end of the cure period set forth in the accepted plan. A party’s ability to cure a breach will apply only to the first two breaches properly noticed under the terms of this AGREEMENT, regardless of the nature of those breaches. Any subsequent breach by that party will entitle the other party to terminate this AGREEMENT upon proper notice.

11.04 - Upon the termination of this AGREEMENT, MERIX may notify DUKE of the amount of LICENSED PRODUCTS MERIX then has on hand and MERIX shall then have a license to sell that amount of LICENSED PRODUCTS, but no more, provided MERIX shall pay the royalty thereon at the rate and at the time provided for herein.

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11.05 - If during the term of this Agreement, MERIX shall become bankrupt or insolvent or if the business of MERIX shall be placed in the hands of a receiver or trustee, whether by the voluntary act of MERIX or otherwise, or if MERIX shall cease to exist as an active business, this Agreement shall immediately terminate as though with MERIX breach, and DUKE shall have all the remedies and rights available to it for termination with cause; provided, however, that this provision shall not apply to a reorganization of MERIX under Chapter 11 of the United States Bankruptcy Code.

ARTICLE 12 - LAW TO GOVERN

12.01 - This AGREEMENT shall be construed and enforced in accordance with the laws of the State of North Carolina.

ARTICLE 13 - NOTICES

13.01 - Notice hereunder shall be deemed sufficient if personally delivered, if given by registered mail, postage prepaid, or by national overnight courier, charges prepaid, and in each instance addressed to the party to receive such notice at the address given below, or such other address as may hereafter be designated by notice in writing.

DUKE	MERIX
Office of Science and Technology	P.O. Box 14509
Duke University	Research Triangle Park, NC 27709
Room 230, North Building	ATTENTION: CEO
Box 90083
Durham, NC 27708
cc: Office of the University Counsel	cc: Fred D. Hutchison, Esquire
Duke University Medical Center	Hutchison & Mason PLLC
DUMC Box 3024	Suite 100
2400 Pratt Street, Suite 4000	3110 Edwards Mill Road
Durham NC 27710	Raleigh NC 27612

13.02 - Information and transactions exchanged between the parties in relation to financial consideration contemplated under this AGREEMENT, including but not limited to royalty reports and payments, shall be tendered to the following offices of each party respectively:

DUKE	MERIX
Office of Science and Technology	P.O. Box 14509
Attn.: Financial Administrator	Research Triangle Park, NC 27709
Room 230, North Building	ATTENTION: CEO
Box 90083
Durham NC 27708

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ARTICLE 14 - ASSIGNMENT

14.01 - This AGREEMENT shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. However, MERIX may not assign its rights in this AGREEMENT without approval by DUKE, such approval not to be unreasonably withheld; provided, however, that no such approval shall be required from DUKE if this AGREEMENT is assigned in connection with the sale of all or substantially all of the assets or stock of MERIX, whether by merger, acquisition or otherwise.

ARTICLE 15 - INDEMNITY, INSURANCE, REPRESENTATIONS, STATUS

15.01 - MERIX agrees to indemnify, hold harmless and defend DUKE, its officers, employees, and agents, against any and all claims, suits, losses, damages, costs, fees, and expenses asserted by third parties, both government and non-government, resulting from or arising out of the exercise of the license granted under this AGREEMENT. MERIX shall not be responsible for the negligence or intentional wrong doing of DUKE.

15.02 - MERIX shall maintain in force at its sole cost and expense, with reputable insurance companies, general liability insurance and products liability insurance coverage in amounts customary for companies similarly situated in the same industry. DUKE shall have the right to ascertain from time to time that such coverage exists, such right to be exercised in a reasonable manner. In lieu of said coverage, DUKE agrees to consider the existence of an adequate self-insurance program as an acceptable alternative.

15.03 - NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO BE A REPRESENTATION OR WARRANTY BY DUKE OF THE VALIDITY OF ANY OF THE PATENTS OR THE ACCURACY, SAFETY, EFFICACY, OR USEFULNESS, FOR ANY PURPOSE, OF ANY PATENT RIGHTS. DUKE SHALL HAVE NO OBLIGATION, EXPRESS OR IMPLIED, TO SUPERVISE, MONITOR, REVIEW OR OTHERWISE ASSUME RESPONSIBILITY FOR THE PRODUCTION, MANUFACTURE, TESTING, MARKETING OR SALE OF ANY LICENSED PRODUCT, AND DUKE SHALL HAVE NO LIABILITY WHATSOEVER TO MERIX OR ANY THIRD PARTIES FOR OR ON ACCOUNT OF ANY INJURY, LOSS, OR DAMAGE, OF ANY KIND OR NATURE, SUSTAINED BY, OR ANY DAMAGE ASSESSED OR ASSERTED AGAINST, OR ANY OTHER LIABILITY INCURRED BY OR IMPOSED UPON MERIX OR ANY OTHER PERSON OR ENTITY, ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM:

a. the production, use, or sale of any LICENSED PRODUCT;

b. the use of any PATENT RIGHTS by MERIX or its sublicensees; or

c. any advertising or other promotional activities by MERIX with respect to any of the foregoing.

15.04 - Neither party hereto is an agent of the other party for any purpose whatsoever.

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ARTICLE 16 - USE OF A PARTY’S NAME

16.01 - Neither party will, without the prior written consent of the other party:

a. use in advertising, publicity or otherwise, any trade-name, personal name, trademark, trade device, service mark, symbol, or any abbreviation, contraction or simulation thereof owned by the other party; or

b. represent, either directly or indirectly, that any product or service of the other party is a product or service of the representing party or that it is made in accordance with or utilizes the information or documents of the other party.

ARTICLE 17 - SEVERANCE, WAIVER AND ALTERATION

17.01 - Each clause of this AGREEMENT is a distinct and severable clause and if any clause is deemed illegal, void or unenforceable, the validity, legality or enforceability of any other clause or portion of this AGREEMENT will not be affected thereby.

17.02 - The failure of a party in any instance to insist upon the strict performance of the terms of this AGREEMENT will not be construed to be a waiver or relinquishment of any of the terms of this AGREEMENT, either at the time of the party’s failure to insist upon strict performance or at any time in the future, and such terms will continue in full force and effect.

17.03 - Any alteration, modification, or amendment to this AGREEMENT must be in writing and signed by both parties.

ARTICLE 18 - CONFIDENTIALITY

18.01 - During the term of this AGREEMENT and for a period of [**] years following the expiration of termination of this AGREEMENT, DUKE and MERIX each agree to treat any confidential information disclosed to it by the other party to this AGREEMENT with reasonable care and to avoid disclosure of such information to any other person, firm or corporation, except AFFILIATES, and either party shall be liable for unauthorized disclosure or failure to exercise such reasonable care. Neither party shall have an obligation, with respect to confidential information disclosed to it, or any part thereof, which:

(a) is already known to the party at the time of the disclosure;

(b) becomes publicly known without the wrongful act or breach of this AGREEMENT by the party;

(c) is rightfully received by the party from a third party on a non-confidential basis;

(d) is subsequently and independently developed by employees of the party who had no knowledge of the information, as verified by written records; or

(e) is approved for release by written authorization of the party disclosing the information.

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18.02 - DUKE and MERIX agree that any information to be treated as confidential information under this Article 18 must be disclosed in writing or in another tangible medium and must be clearly marked “CONFIDENTIAL”. Information disclosed orally must be summarized and reduced to writing and communicated to the other party within [**] days, and the other party agrees that such disclosed information shall be deemed confidential.

18.03 - Notwithstanding the foregoing, MERIX shall have the right to use and disclose any Confidential Information related to the PATENT RIGHTS and KNOW-HOW to investors, prospective investors, employees and agents with a need to know, collaborators, prospective collaborators and other third parties in the chain of manufacturing and distribution provided that MERIX obtains from such parties written confidentiality agreements the provisions of which are at least as strenuous as those provided in this Article 18. If a party refuses to execute a written confidentiality agreement, MERIX may request from DUKE that such requirement be waived, such consent to waiver not to be unreasonably withheld by DUKE.

ARTICLE 19 - TRANSFER OF MATERIALS

19.01 - Any transfer of materials between DUKE and MERIX in connection with this AGREEMENT shall be made under the terms of the Master Materials Transfer Agreement [MMTA], said MMTA being incorporated in its entirety as Appendix B of the present AGREEMENT.

ARTICLE 20 - TITLES

20.01 - All titles and article headings contained in this AGREEMENT are inserted only as a matter of convenience and reference. They do not define, limit, extend or describe the scope of this AGREEMENT or the intent of any of its provisions.

ARTICLE 21 - ENTIRE UNDERSTANDING

21.01 - This AGREEMENT represents the entire understanding between the parties with respect to the subject matter hereof, and supersedes all other agreements, express or implied, between the parties concerning the 1101 INVENTION, the 1215 INVENTION, and PATENT RIGHTS.

REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.

SIGNATURES ON NEXT PAGE.

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IN WITNESS WHEREOF, the parties have caused these presents to be executed in duplicate as of the date and year first above written.

SEAL	DUKE UNIVERSITY
	By:	/s/ Robert Taber
		Robert Taber
		Director, Office of Science & Technology
	Date:	1-10-2000
SEAL	MERIX BIOSCIENCE, INC.
	By:	/s/ John C. Irick
	Title:	Chief Executive Officer
	Date:	1-10-2000

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Exhibit A to License Agreement for 1101 INVENTION and 1215 INVENTION

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “AGREEMENT”) made and entered into this              day of             , 20    , by and between DUKE UNIVERSITY, a North Carolina not-for-profit corporation, (hereinafter called “DUKE”), having its principal office at Durham, North Carolina 27708, and MERIX BIOSCIENCE, INC. a Delaware corporation organized under the laws of Delaware (hereinafter called “MERIX”), having a mailing address at P.O. Box 14509, Research Triangle Park, North Carolina 27709.

WHEREAS,                                                                                   are inventors of an invention [the “             INVENTION” hereinafter] described in Duke Office of Science and Technology File #             and in related patent applications defined hereinafter; and

WHEREAS, DUKE has the right to grant licenses to the              INVENTION under PATENT RIGHTS (as hereinafter defined), and wishes to have the inventions covered by the PATENT RIGHTS utilized in the public interest; and

[WHEREAS, the              Invention was made with U.S. Government support and, notwithstanding any use of descriptive terms within this AGREEMENT such as “exclusive”, the U. S. Government has certain rights in the              Invention under 37 C.F.R. Section 401; and]

WHEREAS, DUKE represents that it is the sole owner of the entire right, title and interest in and to said inventions and PATENT RIGHTS[, subject to the U.S. Government’s rights specified above]; and

WHEREAS, MERIX represents that it intends to develop and commercialize the Patents Rights so that products made under the PATENT RIGHTS shall become available to the public.

NOW THEREFORE, in consideration of the premises and the faithful performance of the covenants herein contained, IT IS AGREED:

ARTICLE 1 - DEFINITIONS

1.01 - For the purposes of this AGREEMENT, and solely for that purpose, the terms and phrases set forth hereinafter in capital letters shall be defined as follows:

a. “FIELD OF USE 1” shall mean the use of the know-how and patent rights, cell lines, substances and material produced by cell lines and included in PATENT RIGHTS in the field of autoimmune diseases or disorders, infectious diseases or cancer in humans or animals and useful for: (i) active and/or adoptive immunological intervention intended for therapy or prevention; (ii) monitoring of immunological parameters for diagnosis, therapy or the development of candidate interventions; or (iii) discovery of new antigens for diagnosis, monitoring or therapy.

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b. “PATENT RIGHTS” shall mean all U.S. and foreign patent applications filed to protect the              INVENTION and any patent now issued or hereafter issuing on any such patent application, substitutes, continuations, extensions, renewals, reissues, reexaminations, additions, continuations-in-part, divisionals, or reissues thereof and any patent revalidations, registrations, supplementary protection certificates, patents of importation or cautionary notices thereof in connection with the              Invention. As of the EFFECTIVE DATE of this AGREEMENT, PATENT RIGHTS related to the              INVENTION consist of the following: [To Be Completed]

c. “Know-How” shall mean any research information, technical information, technical data or other confidential information not in the public domain made or that may be made by one of the inventors of the              INVENTION and/or one of them and others working under the supervision of one of them, while students or employees of DUKE prior to or during the term of this AGREEMENT, which relate to and are necessary for the practice of the PATENT RIGHTS. For avoidance of doubt, Know-How shall include all unpatented and unpatentable inventions, technology, cell lines, biological materials, compounds, probes, sequences, and methods necessary for the practice of the PATENT RIGHTS under this AGREEMENT. Know-How shall not, however, include any such materials or information or any uses of such materials and information that DUKE cannot provide to MERIX on either an exclusive or non-exclusive basis because of other legal obligations of DUKE pursuant to sponsored research, clinical research, material transfer, confidentiality or other agreements.

d. “VALID CLAIM” means a claim of an issued patent which has not lapsed or become abandoned or been declared invalid or unenforceable by a court of competent jurisdiction or an administrative agency for which there is no right of appeal or for which the right of appeal is waived.

e. “LICENSED PRODUCT” shall mean any product which is produced or sold by MERIX that utilizes the KNOW-HOW or that infringes one or more VALID CLAIMS of the PATENT RIGHTS, and which is intended for use in, or is used in, the FIELD.

f. “NET SALES” shall mean the total invoiced sales of LICENSED PRODUCTS sold by MERIX, less the following sums actually paid or credited by MERIX as shall be detailed in MERIX’s reports made pursuant to Section 5.02 of this AGREEMENT:

(a) trade, quantity or cash discounts or commissions allowed in amounts customary in the trade;

(b) any tax, excise or other governmental charge upon or measured by the production, sale, transportation, delivery or use and duties imposed on the import of LICENSED PRODUCTS included in such amount;

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(c) outbound transportation charges prepaid or allowed on the cost of shipping to customers, if any; and

(d) credits or allowances, if given or made for LICENSED PRODUCTS, price adjustments, returns, rejections, recalls or destructions (voluntarily made by or requested or made by an appropriate government agency, subdivision or department) of LICENSED PRODUCTS previously delivered.

LICENSED PRODUCTS used by MERIX for its own use in the FIELD, LICENSED PRODUCTS sold to Affiliates, and internal sales for use in service businesses in arms length transactions shall be considered to be NET SALES for purposes of computing royalty obligations, except such LICENSED PRODUCT used for non-revenue producing activity such as promotional items or field trials shall not be considered to be NET SALES.

j. “AFFILIATE” shall mean any entity which controls, is controlled by or is under common control with MERIX. An entity shall be regarded as in control of another entity if it owns or controls more than fifty percent (50%) of the voting power of the entity.

k. “FOUNDERS” shall mean H. Kim Lyerly, Eli Gilboa, Clay Smith, and Bruce Sullenger, the scientific founders of MERIX, and “FOUNDER” shall mean any of these individuals.

l. “EFFECTIVE DATE” shall mean                                         .

ARTICLE 2 - LICENSE

2.01 - DUKE hereby grants to MERIX and MERIX hereby accepts from DUKE, upon the terms and conditions herein specified, an exclusive worldwide license under the PATENT RIGHTS and KNOW-HOW to make, have made, use, import, offer to sell, sell, offer to provide and provide LICENSED PRODUCTS. Such license is worldwide to the full end of the term as provided in Article 11.01 hereof, unless sooner terminated as hereinafter provided. DUKE hereby represents that it has the full right and authority to enter into this AGREEMENT, to grant the licenses provided herein and to perform its other obligations hereunder.

2.02 - MERIX shall have the right to grant sub-licenses. Any such sub-licenses shall be subject to terms of this AGREEMENT. Royalties paid to DUKE for NET SALES of LICENSED PRODUCTS by sublicensees shall be equal to the royalties that would have been paid to DUKE if LICENSED PRODUCTS were sold directly by MERIX. The terms of any non-cash sub-licenses will be negotiated by DUKE and MERIX. MERIX agrees to be responsible for the payment to DUKE of royalties on funds received by MERIX from its sublicensees and for using commercially reasonable efforts to enforce the terms of the sublicense agreements. If, for any reason, this AGREEMENT is terminated, MERIX agrees to assign all such sublicenses directly to DUKE.

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2.03 - It is agreed that, notwithstanding any provisions herein, DUKE is free to use the              INVENTION and PATENT RIGHTS for its own non-commercial educational, teaching, research and clinical purposes without restriction and without payment of royalties or other fees.

2.04 - Nothing in this AGREEMENT shall be construed to grant to DUKE any rights in the inventions, discoveries, technology, patent rights or other intellectual property developed by or for MERIX or its AFFILIATES or sub-licensees and which not covered by the PATENT RIGHTS or KNOW-HOW.

2.05 - Within [**] days following the execution of this AGREEMENT and thereafter during the period of this AGREEMENT, DUKE agrees to provide MERIX with copies of all technical know-how it may have or later obtain relative to the PATENT RIGHTS or KNOW-HOW, and copies of any and all patents or patent applications owned or controlled by DUKE covering the PATENT RIGHTS or KNOW-HOW or the use of the PATENT RIGHTS or KNOW-HOW or processes for the manufacture of the LICENSED PRODUCTS, including all Patent Office actions received and amendments filed, if any, relative thereto.

ARTICLE 3 - ROYALTIES ON NET SALES OF LICENSED PRODUCTS

3.01 - As consideration for the rights granted by DUKE in this AGREEMENT, at the times and in the manner set forth hereinafter, MERIX shall pay to DUKE a royalty on NET SALES of LICENSED PRODUCTS. Such royalty shall be at the rate of                      percent [    %] of NET SALES of LICENSED PRODUCTS sold by MERIX, by AFFILIATES, or by sublicensees. [Royalty stacking to be negotiated]

3.02 - MERIX will pay to DUKE a minimum annual royalty of                      dollars ($            ) per year beginning                                         .

ARTICLE 4 - MILESTONE BASED ROYALTIES

4.01 - As further consideration for the rights granted by DUKE in this AGREEMENT, MERIX shall pay to DUKE milestone based royalties within [**] days of the attainment by MERIX, its AFFILIATES, or its sublicensees of the commercial milestones specified below. No such milestone payments shall be credited towards other royalties or minimum royalties due. [To Be Negotiated]

ARTICLE 5 - RECORDS AND REPORTS

5.01 - MERIX shall render to DUKE prior to February 28th of each year a written account of progress made toward fulfillment of any due diligence requirements and commercialization of PATENT RIGHTS pursuant to Article 6.

5.02 - MERIX shall render to DUKE prior to February 28^th and August 31^st of each year a written account of the NET SALES of LICENSED PRODUCTS subject to royalty hereunder made during the prior six month period ending December 31^st and June 30^th, respectively, and shall simultaneously pay to DUKE the royalties due on such NET SALES in United States Dollars. Reports tendered shall include the calculation of royalties by LICENSED PRODUCT by country in substantially the format provided in Appendix A hereto. Minimum annual royalties, if any, which are due DUKE for any calendar year, shall be paid by MERIX along with the written report due on February 28^th of each year.

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5.03 - MERIX will make all payments on or before the date required by the terms of this AGREEMENT, or within [**] days of any invoice date on invoices received from DUKE. If LICENSEE has not paid any amount due to DUKE in accordance with this Article, DUKE shall increase the amount due (in US Dollars) by an annual percentage rate equal to [**]%. Such increase(s) shall compound monthly until such time as the LICENSEE has met the full financial obligation due at the time of the next payment or invoice due date.

5.04 - MERIX shall keep full, true and accurate books of accounts and other records containing all particulars which may be necessary to properly ascertain and verify the royalties payable by it hereunder. Upon DUKE’s request, MERIX shall permit an independent Certified Public Accountant selected by DUKE (except one to whom MERIX has some reasonable objection) to have access during ordinary business hours to such of MERIX’s records as may be necessary to determine, in respect of any quarter ending not more than [**] years prior to the date of such request, the correctness of any report and/or payment made under this AGREEMENT. Such Certified Public Accountant shall execute a written non-disclosure agreement reasonably acceptable to MERIX.

5.05 - During the term of this AGREEMENT, representatives of DUKE will meet with representatives of MERIX at times and places mutually agreed upon to discuss the progress and results, as well as ongoing plans, with respect to the evaluation and development of the PATENT RIGHTS licensed to MERIX; provided, however, that should DUKE’s personnel be required by MERIX to consult with MERIX outside of Durham County, North Carolina, MERIX will reimburse reasonable travel and living expenses incident thereto.

ARTICLE 6 - DUE DILIGENCE REQUIREMENTS

6.01 - MERIX shall use reasonable commercial diligence in performing research and development to bring LICENSED PRODUCTS to market through a thorough, vigorous, and diligent program for exploitation of the PATENT RIGHTS, to develop manufacturing capabilities, and to continue active, diligent marketing efforts for LICENSED PRODUCTS throughout the term of this AGREEMENT, and to vigorously sublicense PATENT RIGHTS for applications MERIX will not pursue throughout the life of this AGREEMENT.

6.02 - [To Be Negotiated]

6.03 - DUKE may terminate this AGREEMENT or convert this AGREEMENT to a non-exclusive AGREEMENT if MERIX fails to meet any of the requirements of this Article and MERIX has failed to cure such failure within [**] days after receiving written notice from DUKE of such failure.

ARTICLE 7 - PATENTS

7.01 - Upon execution of this License Agreement, MERIX will assume the primary responsibility for applying for, seeking prompt issuance of, and maintaining the Patent Rights during the term of the Agreement. MERIX shall diligently and in a timely manner provide DUKE with copies of all documents relating to the prosecution, maintenance, and validity of the PATENT RIGHTS. MERIX shall consult with DUKE in such prosecution and maintenance, and shall diligently seek strong and broad claims under the Patent Rights and shall not abandon prosecution of any patent application or any of the claims of the Patent Rights without first notifying DUKE in a timely manner of MERIX’s intention and reason therefor, and providing DUKE with reasonable opportunity to assume responsibility for prosecution and maintenance of the patents.

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7.02 - MERIX shall be responsible for and pay all costs and expenses incurred during the term of this Agreement, for the preparation, filing, prosecution, issuance and maintenance of the Patent Rights. MERIX shall not allow Patent Rights to become abandoned due to nonpayment of fees without first affording DUKE the opportunity to assume responsibility for further costs and expenses incurred relating to said Patent Rights.

7.03 - In the event that DUKE assumes responsibility for prosecution and maintenance of the Patent Rights pursuant to Section 7.01 or 7.02 above, MERIX shall provide reasonable technical assistance to DUKE in the further prosecution of the Patent Rights.

7.04 - In the event that this Agreement is terminated pursuant to Article 11 herein, the sole responsibility for applying for, seeking prompt issuance of, and maintaining the Patent Rights shall revert to the DUKE, and DUKE shall pay expenses subsequently incurred for the preparation, filing, prosecution, issuance and maintenance of the Patent Rights. In the event that responsibility for patent prosecution reverts to DUKE as specified in this section 7.04, MERIX shall, at its own expense, transfer all pertinent documents and materials related to the PATENT RIGHTS to DUKE in a timely manner.

ARTICLE 8 - INFRINGEMENT BY THIRD PARTIES

8.01 - Upon learning of the infringement of PATENT RIGHTS by a third party, the party learning of such infringement shall promptly inform the other party in writing of that fact along with any evidence available pertaining to the infringement. MERIX may at its own expense take whatever steps are necessary to stop the infringement and recover damages. In such case, MERIX will keep DUKE informed of the steps taken and the progress of any legal actions taken. MERIX will pay to DUKE royalties pursuant to Article 3.01 on any such damages recovered as consideration for lost sales of LICENSED PRODUCTS that are in excess of legal expenses incurred by MERIX in enforcing its PATENT RIGHTS. If MERIX does not undertake, within [**] days of notice, to enforce the PATENT RIGHTS against the infringing party, DUKE shall have the right, at its own expense to take whatever steps are necessary to stop the infringement and recover damages, and shall be entitled to retain damages so recovered (after reimbursing MERIX for any of its expenses in cooperating with DUKE in prosecuting such infringement).

ARTICLE 9 - GOVERNMENT CLEARANCE AND EXPORT

9.01 - LICENSEE agrees to use its best efforts to have the LICENSED PRODUCTS cleared for marketing and sale in those countries in which LICENSEE intends to sell LICENSED PRODUCTS by the responsible government agencies requiring such clearance. Where such clearance requires payment of taxes or fees, LICENSEE shall maintain full responsibility for that payment, which shall not be creditable against any other amounts due under this AGREEMENT. To accomplish said clearances at the earliest possible date, MERIX agrees to file, according to the usual practice of MERIX, any necessary data with said government agencies.

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9.02 - This AGREEMENT is subject to all of the United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities and technology.

ARTICLE 10 - PUBLICATION

10.01 - MERIX agrees that the right of publication of the              INVENTION and information in related PATENT RIGHTS shall reside in the inventors and other staff of DUKE. DUKE shall use reasonable efforts to provide MERIX a review copy of such publications [**] days in advance of submission for publication or public disclosure, but such prior review by MERIX will be in no way construed as a right to restrict such publication. Such review shall be granted solely so that DUKE and MERIX can perfect patent protection prior to public disclosure. MERIX shall also have the right to publish and/or co-author any publication on the              INVENTION based upon data developed by MERIX.

ARTICLE 11 - DURATION AND TERMINATION

11.01 - This AGREEMENT shall become effective upon the EFFECTIVE DATE, and unless sooner terminated in accordance with any of the provisions herein, shall remain in full force and effect for the longer of: (i) the life of the last-to-expire of the patents included in the PATENT RIGHTS or any patents issued on KNOW-HOW; or (ii)              (    ) years from the EFFECTIVE DATE hereof. Upon the expiration of this AGREEMENT, DUKE shall grant MERIX an exclusive, worldwide, fully paid license, with the right to grant sub-licenses, under KNOW-HOW to make, have made, use, import, offer to sell, sell, offer to provide and provide LICENSED PRODUCTS.

11.02 - MERIX may terminate this AGREEMENT by giving DUKE written notice at least three (3) months prior to such termination, and thereupon terminate the manufacture, use or sale of LICENSED PRODUCTS.

11.03 - Either party may immediately terminate this AGREEMENT for fraud, willful misconduct, or illegal conduct of the other party that materially adversely affects such party upon written notice of same to that other party. Except as provided above, if either party fails to fulfill any of its material obligations under this AGREEMENT, the non-breaching party may terminate this AGREEMENT, upon written notice to the breaching party, as provided below. Such notice must contain a full description of the event or occurrence constituting a breach of this AGREEMENT. The party receiving notice of the breach shall submit a plan to cure such breach to the non-defaulting party within [**] days of receipt of such notice. The plan shall be subject to the reasonable acceptance, rejection or modification by the non-defaulting party within [**] days of receipt of the plan. The defaulting party shall have the opportunity to cure that breach in accordance with the terms of the accepted plan. If the breach is not cured within that time, the termination will be effective as of the end of the cure period set forth in the accepted plan. A party’s ability to cure a breach will apply only to the first two breaches properly noticed under the terms of this AGREEMENT, regardless of the nature of those breaches. Any subsequent breach by that party will entitle the other party to terminate this AGREEMENT upon proper notice.

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11.04 - Upon the termination of this AGREEMENT, MERIX may notify DUKE of the amount of LICENSED PRODUCTS MERIX then has on hand and MERIX shall then have a license to sell that amount of LICENSED PRODUCTS, but no more, provided MERIX shall pay the royalty thereon at the rate and at the time provided for herein.

11.05 - If during the term of this Agreement, MERIX shall become bankrupt or insolvent or if the business of MERIX shall be placed in the hands of a receiver or trustee, whether by the voluntary act of MERIX or otherwise, or if MERIX shall cease to exist as an active business, this Agreement shall immediately terminate as though with MERIX breach, and DUKE shall have all the remedies and rights available to it for termination with cause; provided, however, that this provision shall not apply to a reorganization of MERIX under Chapter 11 of the United States Bankruptcy Code.

ARTICLE 12 - LAW TO GOVERN

12.01 - This AGREEMENT shall be construed and enforced in accordance with the laws of the State of North Carolina.

ARTICLE 13 - NOTICES

13.01 - Notice hereunder shall be deemed sufficient if personally delivered, if given by registered mail, postage prepaid, or by national overnight courier, charges prepaid, and in each instance addressed to the party to receive such notice at the address given below, or such other address as may hereafter be designated by notice in writing.

DUKE	MERIX
Office of Science and Technology Duke University Room 230, North Building Box 90083 Durham, NC 27708	P.O. Box 14509 Research Triangle Park, NC 27709 ATTENTION: CEO
cc: Office of the University Counsel Duke University Medical Center DUMC Box 3024 2400 Pratt Street, Suite 4000 Durham NC 27710	cc: Fred D. Hutchison, Esquire Hutchison & Mason PLLC 4011 Westchase Blvd. Suite 400 Raleigh NC 27607

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13.02 - Information and transactions exchanged between the parties in relation to financial consideration contemplated under this AGREEMENT, including but not limited to royalty reports and payments, shall be tendered to the following offices of each party respectively:

DUKE	MERIX
Office of Science and Technology Duke University Room 230, North Building Box 90083 Durham, NC 27708	P.O. Box 14509 Research Triangle Park, NC 27709 ATTENTION: CEO
cc: Office of the University Counsel Duke University Medical Center DUMC Box 3024 2400 Pratt Street, Suite 4000 Durham NC 27710	cc: Fred D. Hutchison, Esquire Hutchison & Mason PLLC 4011 Westchase Blvd. Suite 400 Raleigh NC 27607

ARTICLE 14 - ASSIGNMENT

14.01 - This AGREEMENT shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. However, MERIX may not assign its rights in this AGREEMENT without approval by DUKE, such approval not to be unreasonably withheld; provided, however, that no such approval shall be required from DUKE if this AGREEMENT is assigned in connection with the sale of all or substantially all of the assets or stock of MERIX, whether by merger, acquisition or otherwise.

ARTICLE 15 - INDEMNITY, INSURANCE, REPRESENTATIONS, STATUS

15.01 - MERIX agrees to indemnify, hold harmless and defend DUKE, its officers, employees, and agents, against any and all claims, suits, losses, damages, costs, fees, and expenses asserted by third parties, both government and non-government, resulting from or arising out of the exercise of the license granted under this AGREEMENT. MERIX shall not be responsible for the negligence or intentional wrong doing of DUKE.

15.02 - MERIX shall maintain in force at its sole cost and expense, with reputable insurance companies, general liability insurance and products liability insurance coverage in amounts customary for companies similarly situated in the same industry. DUKE shall have the right to ascertain from time to time that such coverage exists, such right to be exercised in a reasonable manner. In lieu of said coverage, DUKE agrees to consider the existence of an adequate self-insurance program as an acceptable alternative.

15.03 - NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO BE A REPRESENTATION OR WARRANTY BY DUKE OF THE VALIDITY OF ANY OF THE PATENTS OR THE ACCURACY, SAFETY, EFFICACY, OR USEFULNESS, FOR ANY PURPOSE, OF ANY PATENT RIGHTS. DUKE SHALL HAVE NO OBLIGATION, EXPRESS OR IMPLIED, TO SUPERVISE, MONITOR, REVIEW OR OTHERWISE ASSUME RESPONSIBILITY FOR THE PRODUCTION, MANUFACTURE, TESTING, MARKETING OR SALE OF ANY LICENSED PRODUCT, AND DUKE SHALL HAVE NO LIABILITY WHATSOEVER TO MERIX OR ANY THIRD PARTIES FOR OR ON ACCOUNT OF ANY INJURY, LOSS, OR DAMAGE, OF ANY KIND OR NATURE, SUSTAINED BY, OR ANY DAMAGE ASSESSED OR ASSERTED AGAINST, OR ANY OTHER LIABILITY INCURRED BY OR IMPOSED UPON MERIX OR ANY OTHER PERSON OR ENTITY, ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM:

a. the production, use, or sale of any LICENSED PRODUCT;

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b. the use of any PATENT RIGHTS by MERIX or its sublicensees; or

c. any advertising or other promotional activities by MERIX with respect to any of the foregoing.

15.04 - Neither party hereto is an agent of the other party for any purpose whatsoever.

ARTICLE 16 - USE OF A PARTY’S NAME

16.01 - Neither party will, without the prior written consent of the other party:

a. use in advertising, publicity or otherwise, any trade-name, personal name, trademark, trade device, service mark, symbol, or any abbreviation, contraction or simulation thereof owned by the other party; or

b. represent, either directly or indirectly, that any product or service of the other party is a product or service of the representing party or that it is made in accordance with or utilizes the information or documents of the other party.

ARTICLE 17 - SEVERANCE, WAIVER AND ALTERATION

17.01 - Each clause of this AGREEMENT is a distinct and severable clause and if any clause is deemed illegal, void or unenforceable, the validity, legality or enforceability of any other clause or portion of this AGREEMENT will not be affected thereby.

17.02 - The failure of a party in any instance to insist upon the strict performance of the terms of this AGREEMENT will not be construed to be a waiver or relinquishment of any of the terms of this AGREEMENT, either at the time of the party’s failure to insist upon strict performance or at any time in the future, and such terms will continue in full force and effect.

17.03 - Any alteration, modification, or amendment to this AGREEMENT must be in writing and signed by both parties.

ARTICLE 18 - CONFIDENTIALITY

18.01 - During the term of this AGREEMENT and for a period of [**] years following the expiration of termination of this AGREEMENT, DUKE and MERIX each agree to treat any confidential information disclosed to it by the other party to this AGREEMENT with reasonable care and to avoid disclosure of such information to any other person, firm or corporation, except AFFILIATES, and either party shall be liable for unauthorized disclosure or failure to exercise such reasonable care. Neither party shall have an obligation, with respect to confidential information disclosed to it, or any part thereof, which:

(a) is already known to the party at the time of the disclosure;

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(b) becomes publicly known without the wrongful act or breach of this AGREEMENT by the party;

(c) is rightfully received by the party from a third party on a non-confidential basis;

(d) is subsequently and independently developed by employees of the party who had no knowledge of the information, as verified by written records; or

(e) is approved for release by written authorization of the party disclosing the information.

18.02 - DUKE and MERIX agree that any information to be treated as confidential information under this Article 18 must be disclosed in writing or in another tangible medium and must be clearly marked “CONFIDENTIAL”. Information disclosed orally must be summarized and reduced to writing and communicated to the other party within [**] days, and the other party agrees that such disclosed information shall be deemed confidential.

18.03 - Notwithstanding the foregoing, MERIX shall have the right to use and disclose any Confidential Information related to the PATENT RIGHTS and KNOW-HOW to investors, prospective investors, employees and agents with a need to know, collaborators, prospective collaborators and other third parties in the chain of manufacturing and distribution provided that MERIX obtains from such parties written confidentiality agreements the provisions of which are at least as strenuous as those provided in this Article 18. If a party refuses to execute a written confidentiality agreement, MERIX may request from DUKE that such requirement be waived, such consent to waiver not to be unreasonably withheld by DUKE.

ARTICLE 19 - TRANSFER OF MATERIALS

19.01 - Any transfer of materials between DUKE and MERIX in connection with this AGREEMENT shall be made under the terms of the Master Materials Transfer Agreement [MMTA], said MMTA being incorporated in its entirety as Appendix B of the present AGREEMENT.

ARTICLE 20 - TITLES

20.01 - All titles and article headings contained in this AGREEMENT are inserted only as a matter of convenience and reference. They do not define, limit, extend or describe the scope of this AGREEMENT or the intent of any of its provisions.

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ARTICLE 21 - ENTIRE UNDERSTANDING

21.01 - This AGREEMENT represents the entire understanding between the parties with respect to the subject matter hereof, and supersedes all other agreements, express or implied, between the parties concerning the              INVENTION, and PATENT RIGHTS.

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IN WITNESS WHEREOF, the parties have caused these presents to be executed in duplicate as of the date and year first above written.

SEAL	DUKE UNIVERSITY
	By:
		Robert Taber
		Director, Office of Science & Technology
	Date:
SEAL	MERIX BIOSCIENCE, INC.
	By:
	Title:
	Date:

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Appendix A

License Agreement for 1101 INVENTION and 1215 INVENTION

ROYALTY REPORT for period ending             

Duke File #

Country

Product

Sales in <Month>

Sales in <Month>

Sales in <Month>

Sales in <Month>

Sales in <Month>

Sales in <Month>

TOTAL GROSS SALES1

Reductions to Sales2

TOTAL NET SALES

% Royalty Due3

TOTAL ROYALTY DUE

SubTOTAL x Country

SubTOTAL x Country

GRAND TOTAL

Royalty Credits Taken

TOTAL Royalty Credits

ROYALTIES PAID

¹  Includes sales by Affiliates or by sublicensees of Merix.

²  Note that Reductions to Sales are limited by the definition of Net Sales as set forth in Section 1.01(f) of Article 1 of the License Agreement

³  The Percentage of Royalty Due shall be decreased in accordance with Section 4.03 of Article 4 of the License Agreement

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APPENDIX B: MASTER MATERIALS TRANSFER AGREEMENT

MASTER MATERIAL TRANSFER AGREEMENT

between

DUKE UNIVERSITY

Durham, NC 27710

(“DUKE”)

and

MERIX BIOSCIENCE, INC.

Durham, NC

(“MERIX”)

Pursuant to the License Agreement between the parties dated 10 January 2000 for the inventions described in the Duke University Office of Technology file # 1101 and 1215 (the “LICENSE AGREEMENT”) and subject to the terms of the LICENSE AGREEMENT, this Master Material Transfer Agreement (“Agreement”) defines the terms by which either party hereto shall have the right to request reasonable amounts of research materials from the other party which are reasonable, necessary, and useful to the purposes of the LICENSE AGREEMENT (“Original Materials”), such requests not to be unreasonably denied. Hereinafter, the party providing its Original Materials shall be referred to as the “PROVIDING PARTY” and the party receiving the other party’s Original Materials shall be referred to as the “RECEIVING PARTY”. It is understood and agreed that “PROVIDING PARTY” and “RECEIVING PARTY” shall include the Affiliates of MERIX or DUKE as defined below.

For the purposes of this Agreement, the following definitions shall be recognized by both parties:

Progeny: Unmodified descendant from the Original Materials, such as virus from virus, cell from cell, or organism from organism.

Unmodified Derivatives: Substances created by the RECEIVING PARTY which constitute an important unmodified functional sub-unit or expression product of the Original Materials, e.g., subclones of unmodified cell lines, purified or fractionated sub-sets of the Original Materials such as novel plasmids or vectors, proteins expressed by DNA or RNA, or antibodies secreted by a hybridoma.

Material: Original Material plus Progeny and Unmodified Derivatives or any related biological material or associated know-how and data received by Receiving Party from Providing Party. Material shall not include any Modifications (as defined below).

Modifications: Substances created by the RECEIVING PARTY which contain/incorporate any form of the Material (Original Materials, Progeny or Unmodified Derivatives).

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Affiliates: Any corporation or non-corporate entity which controls, is controlled by, or is under common control with a party hereto. A corporation or non-corporate entity, as applicable, shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock of the other corporation or if it possess, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable.

Materials are to be provided under the following terms and conditions:

1) Exchange of Original Materials shall be documented through the use of Material Transfer Record forms, samples of which are appended hereto as Exhibits I and II. Materials are and shall remain the property of the PROVIDING PARTY. Subject to Section 8 of this Agreement, Materials shall be used by the RECEIVING PARTY solely for research and development purposes, including those purposes permitted in the LICENSE AGREEMENT. The Materials shall be used at RECEIVING PARTY’s facilities only unless prior written consent to the transfer of the Materials has been obtained from the Providing Party. RECEIVING PARTY agrees not to transfer the Materials or Modifications to anyone who does not work under its direct supervision at RECEIVING PARTY’s facilities without the prior written consent of PROVIDING PARTY. RECEIVING PARTY agrees to protect Confidential Information supplied by PROVIDING PARTY regarding Materials in accordance with the confidentiality provisions set forth in the LICENSE AGREEMENT.

2) PROVIDING PARTY does not claim ownership of substances and Modifications produced as a result of RECEIVING PARTY’s research with materials that are not included in the definition of Materials above. Notwithstanding the foregoing and subject to Section 5 hereof, PROVIDING PARTY retains ownership of any form of the Materials contained in a Modification.

3) DUKE shall be free to use the results of its research with the Materials for its own teaching, research, educational, clinical and publication purposes without the payment of royalties or other fees to MERIX. Confidential Information shall be governed by the confidentiality provisions contained in the LICENSE AGREEMENT. Should RECEIVING PARTY wish to publish the results of its research from the Materials provided by PROVIDING PARTY, RECEIVING PARTY shall submit in writing to PROVIDING PARTY, for its review and comment, a copy of any proposed publication resulting from the subject research with the Materials at least [**] days prior to the estimated date of publication, and if no response is received from PROVIDING PARTY within [**] days of the date submitted to PROVIDING PARTY, it will be conclusively presumed that the publication may proceed without delay. RECEIVING PARTY shall acknowledge PROVIDING PARTY as the source of the Materials in all publications containing any data or information about the Materials, unless PROVIDING PARTY indicated otherwise and subject to the confidentiality provisions set forth in the LICENSE AGREEMENT. If PROVIDING PARTY determines that the proposed publication contains patentable subject matter or the disclosure of Confidential Information which requires protection, PROVIDING PARTY may require the delay of the publication for a period of time not to exceed [**] days for the purpose of allowing the pursuit of such patent protection or the deletion of Confidential Information. In the case of joint publications, authorship shall be determined by normal academic standards, taking into account the role and contribution of each investigator.

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4) RECEIVING PARTY will inform PROVIDING PARTY, in confidence, of research results related to the Material by personal written communication or by providing PROVIDING PARTY with a draft manuscript describing the results of such research. PROVIDING PARTY shall accept and maintain such results in confidence until published.

5) Except as expressly provided in this Agreement or the LICENSE AGREEMENT, transfer of Materials conveys no rights to RECEIVING PARTY under any patent applications, patents, trade secrets or other proprietary rights of PROVIDING PARTY except as provided in the LICENSE AGREEMENT. In particular, no rights are provided to RECEIVING PARTY for use of the Materials or Modifications for profit-making or commercial purposes except as provided in the LICENSE AGREEMENT. If RECEIVING PARTY desires to use the Materials or Modifications for such commercial purposes, RECEIVING PARTY agrees that it must first negotiate a license or other appropriate agreement with PROVIDING PARTY and third parties as may be required. However, to the extent that PROVIDING PARTY can legally do so, RECEIVING PARTY is hereby granted a non-exclusive, royalty-free license to use Material included in Modifications for RECEIVING PARTY’s own internal noncommercial research purposes. RECEIVING PARTY shall not use PROVIDING PARTY’s Materials or Modifications in research that is subject to consulting or licensing obligations to a third party, unless prior written permission is obtained from PROVIDING PARTY. PROVIDING PARTY shall be free, in its sole discretion, to distribute its Materials to others and to use its Materials for its own purposes to the full extent it may legally do so.

6) If RECEIVING PARTY’S research results in a discovery, an invention, a new use or a product (collectively referred to as “Materials Discovery”), based on, containing, or relating to the Materials or Modifications received from PROVIDING PARTY, RECEIVING PARTY shall promptly and confidentially disclose the Materials Discovery to the PROVIDING PARTY as well as the role, if any, of RECEIVING PARTY, its employees’ and/or agents in the creation of the Materials Discovery. Inventorship of any Materials Discovery shall be determined by patent law or by mutual agreement if the Materials Discovery is not patentable. Title to Materials Discoveries shall reside with MERIX if MERIX personnel are the sole inventors, with DUKE if DUKE personnel are the sole inventors, and will be held jointly if both DUKE and MERIX personnel are inventors. To the extent that DUKE owns the rights of sole or joint inventorship of any Materials Discovery, MERIX is hereby granted an option to acquire an exclusive, worldwide, royalty-bearing license as set forth in the LICENSE AGREEMENT. Notwithstanding the above, PROVIDING PARTY or joint owner of any Materials Discovery shall be free to use any Materials Discovery for its own internal research purposes without the payment of royalties or other fees.

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7) Any Materials delivered pursuant to this Agreement are understood to be experimental in nature, and PROVIDING PARTY MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE MATERIALS OR MODIFCATIONS THEREOF WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHTS.

8) In no event shall PROVIDING PARTY be liable for any use by RECEIVING PARTY, its employees and/or agents of Materials or for any loss, claim, damage, or liability, of any kind or nature, that may arise from or in connection with RECEIVING PARTY’s use, handling, storage, or disposal of the Materials or Modifications, except as such claims, demands, costs or judgment arise from PROVIDING PARTY’s negligence or willful misconduct. Except to the extent prohibited by law, RECEIVING PARTY assumes responsibility for, and agrees to indemnify and hold harmless PROVIDING PARTY and PROVIDING PARTY’s trustees, directors, officers, agents, and employees from and against any liability, loss or damage they may suffer as a result of any claims, demand, costs or judgments against them arising out of RECEIVING PARTY’s use, handling, storage or disposal of the Materials or Modifications, except as such claims, demands, costs, or judgments may also arise from the indemnified party’s negligence or willful misconduct or from PROVIDING PARTY’s publication or distribution of any reports, data or other information relating to said Material.

9) Materials or Modification shall in no event be used in human beings (including for diagnostic purposes), and all research involving the Materials or Modifications (including but not limited to research involving the use of animals and recombinant DNA) shall be conducted in accordance with all federal, state, local and other laws, regulations, and ordinances governing such research, including applicable NIH guidelines, if used in the United States.

10) This Agreement will become effective when signed by both parties and shall terminate upon the termination or expiration of the LICENSE AGREEMENT, unless extended by written mutual agreement between MERIX and DUKE. Upon termination of this Agreement, RECEIVING PARTY will at the direction of PROVIDING PARTY immediately discontinue its use of PROVIDING PARTY’s Materials and will, upon direction of PROVIDING PARTY, return or destroy such Materials promptly upon notice. RECEIVING PARTY will have the option of either destroying Materials and/or Modifications of PROVIDING PARTY’s Materials or remain bound by the terms of this Agreement as they apply to such Materials and/or Modifications, as the case may be. Paragraphs 2, 3, 4, 5, 6, 7, 8, 10 and 11 shall survive termination of this Agreement.

11) Neither party shall use the name of the other party in any advertising, publicity or otherwise without the written consent of the other party.

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12) Neither party may assign this Agreement without the prior written consent of the other party; provided, however, that no such consent shall be required in connection with the sale of all of substantially all the assets or capital stock of a party, whether by merger, sale of stock or assets or otherwise. This Agreement shall be governed by the laws of the State of North Carolina, without reference to its choice of law provisions. The parties hereby submit to the jurisdiction of the courts of North Carolina in all matters concerning this Agreement.

AGREED:

DUKE:	MERIX:
Duke University	Merix Bioscience Inc.
By:	By:
Andrew E. Balber, Ph.D.	Name:
Associate Director	Title:
Office of Science & Technology
Date executed:	Date executed:

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EXHIBIT I

MATERIAL TRANSFER RECORD

Duke University

Durham, NC 27710

(“PROVIDING PARTY”)

to

MERIX BIOSCIENCE, Inc.

Durham, NC

(“RECEIVING PARTY”)

The Original Materials described below are supplied by PROVIDING PARTY to RECEIVING PARTY subject to the terms and conditions of the LICENSE AGREEMENT between Duke University and MERIX, Inc. dated 10 January 2000 for the inventions described in the Duke University Office of Technology Transfer file # 1101 and 1215 (the “LICENSE AGREEMENT”) and the Master Materials Transfer Agreement dated                      between such parties. Duplicate originals of this form shall be executed and one fully executed form shall be given to the Principal Investigator of PROVIDING PARTY and one to the Principal Investigator of RECEIVING PARTY.

Description of Original Materials:

In signing below, PROVIDING PARTY’s Principal Investigator and the RECEIVING PARTY’s Principal Investigator acknowledge that they understand and will abide by the terms and conditions of the LICENSE AGREEMENT and Master Materials Transfer Agreement pursuant to which the Original Materials are provided.

AGREED:

PROVIDING PARTY	RECEIVING PARTY
Principal Investigator	Principal Investigator
Date Material(s) sent	Date Material(s) received

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EXHIBIT II

MATERIAL TRANSFER RECORD

MERIX BIOSCIENCE, Inc.

Durham, NC

(“PROVIDING PARTY”)

to

Duke University

Durham, NC 27710

(“RECEIVING PARTY”)

The Original Materials described below are supplied by PROVIDING PARTY to RECEIVING PARTY subject to the terms and conditions of the License Agreement between Duke University and MERIX BIOSCIENCE, Inc. dated 10 January 2000 for the inventions described in the Duke University Office of Technology Transfer file # 1101 and 1215 (the “LICENSE AGREEMENT”) and the Master Materials Transfer Agreement dated                      between such parties. Duplicate originals of this form shall be executed and one fully executed form shall be given to the Principal Investigator of PROVIDING PARTY and one to the Principal Investigator of RECEIVING PARTY.

Description of Original Materials:

In signing below, PROVIDING PARTY’S Principal Investigator and RECEIVING PARTY’S Principal Investigator acknowledge that they understand and will abide by the terms and conditions of the LICENSE AGREEMENT and Master Materials Transfer Agreement pursuant to which the Original Materials are provided.

AGREED:

PROVIDING PARTY	RECEIVING PARTY
Principal Investigator	Principal Investigator
Date Material(s) sent	Date Material(s) received

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FIRST AMENDMENT TO

EXCLUSIVE LICENSE AGREEMENT

THIS FIRST AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT (the “First Amendment”) is made and dated as of July 28, 2003, by and between MERIX Bioscience, Inc., a Delaware corporation with its principal place of business at 4233 Technology Drive, Durham, NC 27704 (“MERIX”), and Duke University, a North Carolina not-for-profit corporation having its Office of Science and Technology offices located at the Grey Building, 2020 E. Main Street, Durham, NC 27705 (“DUKE”).

WHEREAS, MERIX and DUKE are parties to that certain Exclusive License Agreement dated January 10, 2000 whereby MERIX obtained certain rights in and to patents and know-how described in DUKE’s Office of Science and Technology files #1215 (the “License Agreement”); and

WHEREAS, the parties hereto desire to modify the terms of the License Agreement.

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Defined Terms. Terms that are used herein with initial capital letters and that are not otherwise defined shall have the meanings given to them in the License Agreement.

2. Article 2.02. Article 2.02 of the License Agreement is hereby amended by appending the following clause to the end of such article:

“, and DUKE agrees that all such sublicenses assigned to DUKE shall survive the termination or expiration of this AGREEMENT. DUKE further agrees that any sublicensee of MERIX shall have the right to further sublicense the PATENT RIGHTS, subject to the terms of this AGREEMENT”

3. Article 7.04. The following new Article 7.04 is incorporated into the License Agreement:

“7.04—MERIX shall have the right to delegate some portion of its obligations under this Article 7 to its sublicensees, subject to providing timely notice to DUKE of its intention to do so and further subject to such sublicensee agreeing to assume such obligations. In the event that this AGREEMENT is terminated, such rights and obligations previously assumed by such sublicensees shall survive.”

4. Article 7.05. Exisitng Article 7.04 is re-numbered as Article 7.05, the reference in the article to section 7.04 is amended to be 7.05, and the following language is inserted at the beginning of the first sentence of the article:

“Except as otherwise set forth in Section 7.04,”

5. Article 8.01. Article 8.01 of the License Agreement is hereby amended by inserting the following language following the first complete sentence of the article:

“MERIX shall have the first right to enforce any of the PATENT RIGHTS against any third party against any infringement or alleged infringement thereof.”

6. Article 8.01. Article 8.01 of the License Agreement is hereby further amended by inserting the following language following the third complete sentence of the article:

“MERIX shall have the right, as reasonably required, to name DUKE as a necessary party, or to bring suit in DUKE’s name, in any legal actions taken by MERIX hereunder but only to protect MERIX’ interest in the licensed technology.”

7. Article 8.02. The following new Article 8.02 is incorporated into the License Agreement:

“8.02—MERIX shall have the right to delegate its obligations with respect to some portion of the PATENT RIGHTS under this Article 8 to its sublicensees, subject to providing timely notice to DUKE of its intention to do so and further subject to such sublicensee agreeing to assume such obligations. In the event that this AGREEMENT is terminated, such rights and obligations previously assumed by such sublicensees shall survive.”

8. Effect of First Amendment. The provisions of the License Agreement are amended and modified by the provisions of this First Amendment. If any provisions of the License Agreement are materially different from or inconsistent with any of the provisions of this First Amendment, the provisions of this First Amendment shall control, and the provisions of the License Agreement shall, to the extent of such difference or inconsistency, be deemed to be amended and modified.

9. Single Agreement. This First Amendment and the License Agreement, as amended and modified by the provisions of this First Amendment, shall constitute and be construed as a single agreement.

10. Governing Law. This First Amendment shall be governed by and construed in accordance with the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment as of the date first written above.

DUKE UNIVERSITY
By:	/s/ Robert L. Taber
	Robert L. Taber, Ph.D. Vice Chancellor and Director Office of Science & Technology
MERIX BIOSCIENCE, INC.
By:	/s/ Timothy W. Trost
	Name:  Timothy W. Trost Title:    Vice President & CFO

EX-10.18

Exhibit 10.18

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

EXCLUSIVE LICENSE AGREEMENT - TREATING AUTOIMMUNE DISEASES

This Exclusive License Agreement (this “Agreement”) is made on January 15^th, 2002, by and between BAYLOR RESEARCH INSTITUTE (“Institute”), a nonprofit corporation organized and existing under the laws of the State of Texas, having its principal office at 3434 Live Oak, Dallas, Texas, 75204 (“Institute”), and MERIX Bioscience, Inc., a Delaware corporation (“Licensee”), with its principal offices at 4233 Technology Drive, Durham, North Carolina 27704. This Agreement is effective as of the date hereof (the “Effective Date”).

BACKGROUND

A. Institute is the owner by assignment from the inventors of certain intellectual property developed by Dr. Jacques Banchereau, Anna Karolina Palucka, and Patrick Blanco, currently or previously at Institute relating to treating autoimmune diseases (as described more fully in Attachment 1, the “Intellectual Property”);

B. Institute has the right to grant licenses under said Intellectual Property;

C. Licensee desires to obtain an exclusive worldwide right and license to use and exploit the Intellectual Property; and

D. Institute has determined that the exploitation of the Intellectual Property is in the best interest of Institute and is consistent with its educational and research missions and goals.

NOW, THEREFORE, in consideration of the promises and covenants contained in this Agreement and intending to be legally bound, the parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1. “Affiliate” means any legal entity directly or indirectly controlling, controlled by or under common control with Licensee that has executed (a) this Agreement or (b) a written joinder agreement, in a form reasonably satisfactory to Institute, agreeing to be bound by all of the terms and conditions of this Agreement as if such Affiliate were an original party to this Agreement. For purposes of this Agreement, “control” means the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of a legal entity, or the right to receive more than fifty percent (50%) of the profits or earnings of a legal entity, or the right to control the policy decisions of a legal entity.

1.2. “Agreement” shall have the meaning given in the first paragraph hereof.

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1.3. “Calendar Half” means each six-month period, or any portion thereof, beginning on January 1 and July 1.

1.4. “Common Stock” shall have the meaning given in Section 3.1.2.

1.5. “Confidential Information” means and includes all technical information, inventions, developments, discoveries, software, know-how, methods, techniques, formulae, data, processes and other proprietary ideas, whether or not patentable or copyrightable, regardless whether Institute identifies such information as confidential or proprietary at the time it is delivered or communicated to Licensee.

1.6. “Default” shall have the meaning given in Section 5.3

1.7. “Effective Date” shall have the meaning given in the preamble hereof.

1.8. “Fair Market Value” means the cash consideration that Licensee or its Sublicensee would realize from an unaffiliated, unrelated buyer in an arm’s length sale of an identical item sold in the same quantity and at the same time and place of the transaction.

1.9. “Improvement,” means any modification of a discovery (which discovery has been disclosed in the U.S. patent application for Institute Patent Rights), whether or not patentable, made by Dr, [**] and/or his colleagues, reduced to practice during the term of research sponsored by Licensee under the Research Support and Option Agreement, between the parties and dated August 30, 2001 and in the Field of Use.

1.10 “Indemnified Party” shall have the meaning given in Section 8.2.

1.11. “Field of Use” means research and development, diagnosis, prevention, therapy and monitoring of autoimmune diseases.

1.12. “Liability” and “Liabilities” shall have the meaning given in Section 8.2.

1.13. “License” shall mean the license granted by Institute to Licensee pursuant to Section 2.1.

1.14. “Licensee” shall have the meaning given in the first paragraph of this Agreement.

1.15. “Net Sales” means the consideration or Fair Market Value attributable to the Sale of any Institute Licensed Product(s), less (if initially included in the consideration) qualifying costs directly attributable to such Sale and borne by Licensee, its Affiliates or its Sublicensee. Such qualifying costs shall be limited to the following:

1.15.1 Discounts for quantity purchases, for prompt payments and for wholesalers and distributors;

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1.15.2 Credits or refunds, not exceeding the original invoice amount, for claims or returns;

1.15.3 Prepaid outbound transportation expenses and transportation insurance premiums; and

1.15.4 Sales and use taxes, tariff duties and other fees imposed by a governmental agency.

1.16. “Institute Licensed Product(s)” means products in the Field of Use that are made, made for, used or sold by Licensee or any Sublicensees and that in the absence of this Agreement, the manufacture, sale or use of which would infringe at least one claim of Institute Patent Rights, or require the use of Institute Technical Information or an Improvement.

1.17. “Institute Patent Rights” means all patent rights represented by or issuing from the United States or foreign patents listed in Attachment 1 or the patents issuing from the United States or foreign patent applications listed in Attachment 1, and their foreign counterparts and extensions, including continuation, divisional and re-issue applications

1.18. “Institute Technical Information” means proprietary, unpatented information owned by the Institute at the time of filing a patent application set forth as part of the Patent Rights that is necessary to practice in the Field of Use the inventions disclosed in such patent application and which information is described in Attachment 1.

1.19. “Sale” means any bona fide transaction for which consideration is received for the sale of Institute Licensed Product(s). A Sale of Institute Licensed Product(s) shall be deemed completed at the time Licensee or its Sublicensee recognizes revenues for the sale of such Institute Licensed Product(s).

1.20. “Sell Off Right” shall have the meaning given in Section 5.7.

1.21. [omitted]

1.22. “Sublicense” shall have the meaning given in Section 2.4.1.

1.23. “Sublicensee” shall have the meaning given in Section 2.4.3.

1.24. “Sublicense Revenues” shall have the meaning given in Section 3.1.3.

1.25. “Warrant” shall have the meaning given in Section 3.1.2.

1.26. [omitted]

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1.27. “Trigger Event” means any of the following:

1.27.1 If Licensee becomes insolvent, bankrupt or generally fails to pay its debts as such debts become due; is adjudicated insolvent or bankrupt; admits in writing its inability to pay its debts; or shall suffer a custodian, receiver or trustee for it or substantially all of its property to be appointed and, if appointed without its consent, not be discharged within thirty (30) days; makes an Assignment for the benefit of creditors; or suffers proceedings under any law related to bankruptcy, insolvency, liquidation or the reorganization, readjustment or the release of debtors to be instituted against it and, if contested by it, not dismissed or stayed within ten (10) days;

1.27.2 If proceedings under any law related to bankruptcy, insolvency, liquidation, or the reorganization, readjustment or the release of debtors are instituted or commenced by Licensee;

1.27.3 If any order for relief is entered relating to any of the proceedings described in Sections 1.27.1 or 1.27.2;

1.27.4 If Licensee shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or

1.27.5 If Licensee shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the proceedings described in Sections 1.27.1 through 1.27.4.

ARTICLE 2

LICENSE GRANT

2.1. License Grant. Institute grants to Licensee and its Affiliates for the term of this Agreement a worldwide, royalty-bearing license under the Institute Patent Rights and the Institute Technical Information to make, have made, use, import, sell and offer for sale or otherwise dispose of the Institute Licensed Product(s) in the Field of Use, except that to the extent that any Affiliate exercises any rights granted by Institute hereunder, Licensee remains primarily liable to Institute for the duties and obligations of any Affiliate hereunder, and any act or omission of an Affiliate would be deemed to be a breach by Licensee of this Agreement, provided, however that Licensee shall have no liability hereunder with respect to any act or omission of an assignee if such assignment is effected in accordance with Section 10.2. Institute grants to Licensee the right to grant sublicenses subject only to the limitations set forth in Section 2.4.

Institute further agrees to grant to Licensee and its Affiliates licenses of the scope specified in the paragraph above in respect to any Improvements (as defined in Section 1.9, above).

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2.2. Exclusivity. The License is exclusive for Institute Patent Rights, Institute Technical Information (and for Improvements to the extent they are not embodied in issued patent claims) in the Field of Use, except that Institute may use the Institute Patent Rights, Improvements and Institute Technical Information for its own non-commercial educational and research purposes. On or after the Effective Date, Institute shall have no right to grant a license to the Institute Patent Rights or Institute Technical Information in the Field of Use to any person or entity.

2.3. U.S. Government Rights. Licensee or its Affiliates acknowledge that pursuant to Public Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C. 200-212, the United States government retains certain rights in intellectual property funded in whole or part under any contract, grant or similar agreement with a Federal agency. Pursuant to these laws, the government may impose certain requirements regarding such intellectual property, including, but not limited to the requirement that products resulting from such intellectual property sold in the United States must be substantially manufactured in the United States. The License is expressly subject to all applicable United States government rights as provided in the above-mentioned laws and any regulations issued under those laws, as those laws or regulations may be amended from time to time.

2.4. Sublicense Conditions. The right to sublicense granted to Licensee under Section 2.1 is subject to the following conditions:

2.4.1 Licensee may sublicense the rights granted in this Agreement by written sublicense agreement which agreement shall require that the sublicensee (“Sublicensee”) be subject to the terms and conditions of the license granted to Licensee under this Agreement (each, a “Sublicense”). Licensee may grant to a Sublicensee the right to grant sublicenses.

2.4.2 Within [**] days after Licensee enters into any Sublicense, Licensee shall deliver to Institute a complete copy of the Sublicense written in the English language (receipt of a Sublicense shall not constitute an approval of the Sublicense or a waiver of any of Institute’s rights or Licensee’s obligations under this Agreement).

2.4.3 In the event of a Default under Section 5.3 hereunder, all payments then or thereafter due to Licensee from each of its Sublicensees shall, upon notice from Institute to any such Sublicensee, become owed directly to Institute for the account of Licensee; provided that Institute shall remit to Licensee the amount by which such payments in the aggregate exceed the total amount owed by Licensee to Institute.

2.4.4 Even if Licensee enters into Sublicenses, Licensee remains primarily liable to Institute for all of Licensee’s duties and obligations contained in this Agreement, and any act or omission of a Sublicensee that would be a breach of this Agreement if performed by Licensee shall be deemed to be a breach by Licensee of this Agreement.

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ARTICLE 3

FEES, WARRANTS, RESEARCH GRANT, ROYALTIES

AND MILESTONE PAYMENTS

3.1. Fees, Warrants and Royalties.

3.1.1 Initial Cash Payments. In partial consideration of the License, Licensee shall pay to Institute a non-refundable amount equal to documented attorneys fees, expenses, official fees and other charges incident to the preparation, prosecution and maintenance of Institute Patent Rights incurred prior to the Effective Date by Institute, not to exceed [**] Dollars ($[**]). Licensee shall pay such amounts within [**] days after receipt of documentation reasonably demonstrating such expenses.

3.1.2 [Omitted]

3.1.3 Royalties. In further consideration of the exclusive license granted to Licensee, Licensee shall pay (or cause its Affiliates to pay) to Institute a royalty of [**] percent ([**]%) of the Net Sales of Institute Licensed Products sold by Licensee or its Affiliates, provided, however, that if Licensee determines that it is required to license other technology to produce and sell Institute Licensed Products, then the royalty rate hereunder shall be reduced by [**] percent ([**]%) of the royalty rate due with respect to the other technology, but in no event shall royalties payable to Institute under this Section 3.1.3 be less than [**] percent ([**]%) of the Net Sales of Institute Licensed Products sold by Licensee and its Affiliates.

3.1.4 Sublicense Royalties. In further consideration of the exclusive license granted to Licensee, Licensee shall pay (or cause its Affiliates to pay) to Institute a royalty of [**] percent ([**]%) of the Net Sales of Institute Licensed Products sold by Sublicensees, provided, however, that if Licensee or such Sublicensee determines that it is required to license other technology to produce and sell Institute Licensed Products, then the royalty rate hereunder shall be reduced by [**] percent ([**]%) of the royalty rate due with respect to the other technology, but in no event shall royalties payable to Institute under this Section 3.1.4 be less than [**] percent ([**]%) of the Net Sales of Institute Licensed Products sold by Sublicensees.

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3.1.5 Milestone Payments. In further consideration of the exclusive license granted to Licensee, Licensee shall pay to Institute the following amounts: (a) a milestone payment of [**] Dollars ($[**]) or shares of capital stock of Licensee with a fair market value equal to [**] Dollars ($[**]) (with the form of payment determined by the Licensee in its discretion), payable within [**] days following the filing by the Licensee, its Affiliate or Sublicensee of the first biologics license application, or similar application with the U.S. Food and Drug Administration (the “FDA”) for a clinical application of a product that requires a license to Institute Patent Rights; and (b) a milestone payment of [**] Dollars ($[**]) or shares of capital stock of Licensee with a fair market value equal to [**] Dollars ($[**]) (with the form of payment determined by Licensee in its discretion), payable within [**] days following the approval by the FDA of commercial sale of the first product that requires a license to Institute Patent Rights. For the avoidance of doubt, the parties acknowledge that regardless of the number of inventions licensed by Licensee from Institute, Licensee shall have no obligation to make milestone payments as described in this Section 3.1.5 more than once for each product. These milestone payments shall be in lieu of any payment to Institute of any portion of any up-front, milestone or similar payments to Licensee under any Sublicense. All shares of capital stock of Licensee issued to Institute hereunder shall be registered and freely salable if the capital stock of Licensee is publicly traded on a recognized exchange or over-the-counter, and shall be subject to registration rights, on parity with the founders’ rights, if the stock of Licensee is not then traded on an exchange or over-the-counter market(s).

3.1.6 Payments to Inventors. Institute shall be solely responsible for making any payments due to inventors under any policy or contract applicable to Institute and shall hold Licensee harmless with respect to any such claims.

3.2. Diligence

3.2.1 Licensee shall use its best commercial efforts, taking into account the size and capitalization of Licensee, to file (or cause an Affiliate or Sublicensee to file) a Biologics License Application or similar application with the FDA for a clinical application of a Institute Licensed Product within [**] years from the Effective Date.

3.2.2 Licensee shall provide to Institute, on the first anniversary of the Effective Date and on each anniversary thereafter, written progress reports, setting forth in such detail as Institute may reasonably request the progress of the development, evaluation, testing and commercialization of each Institute Licensed Product. Licensee shall also notify Institute in writing within [**] days after the first commercial sale of each Institute Licensed Product.

3.2.3 Licensee acknowledges the failure to use best commercial efforts to develop, evaluate, test and commercialize the Institute Licensed Products shall be a material breach of this Agreement, provided, however, that Licensee receive prior written notice from Institute and be provided [**] days to cure such failure, and upon curing, there shall be no material breach.

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3.3. Royalty Reports and Records.

3.3.1 Licensee shall deliver to Institute within [**] days after the end of each Calendar Half (or, with respect to Institute Licensed Products sold by Sublicensees, within [**] days after the end of each Calendar Half) a written report, certified by the chief financial officer of Licensee, setting forth the calculation of the royalties due to Institute for such Calendar Half, including, without limitation:

3.3.1.1 Number of Institute Licensed Products involved in Sales, listed by country;

3.3.1.2 Gross consideration for Sales of Institute Licensed Products, including all amounts invoiced, billed, or received;

3.3.1.3 Qualifying costs, as defined in Section 1.15, listed by category of cost;

3.3.1.4 Net Sales of Institute Licensed Products listed by country;

3.3.1.5 Royalties owed to Institute, listed by category, including without limitation earned and Sublicensee derived categories.

3.3.2 Licensee shall pay the royalties due under Section 3.1.3 to Institute within [**] days following the last day of the Calendar Half in which the royalties accrue. Licensee shall send Institute with such royalties the report described in Section 3.3.1. Licensee shall pay the royalties due under Section 3.1.4 to Institute within [**] days following the last day of the Calendar Half in which the royalties accrue. Licensee shall send Institute with such royalties the report described in Section 3.3.1.

3.3.3 Licensee shall maintain and cause its Sublicensees to maintain, complete and accurate books and records that enable the royalties payable under this Agreement to be verified. The records for each Calendar Half shall be maintained for [**] years after the submission of each report under Article 3. Upon reasonable prior notice to Licensee, Licensee shall provide Institute with access to all books and records relating to the Sales of Institute Licensed Products by Licensee and its Sublicensees to conduct a review or audit of those books and records. Access to Licensee’s books and records shall be made available not more than [**] each calendar year, during normal business hours, and during each of [**] years after the expiration or termination of this Agreement. If Licensee has underpaid any royalty due by five percent (5%) or more, then Licensee shall pay to Institute promptly the costs and expenses of Institute and its accountants in connection with their review or audit, in addition to such underpayment.

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3.4. Currency, Place of Payment, Interest, Payment of Expenses.

3.4.1 All dollar amounts referred to in this Agreement are expressed in United States dollars. All payments to Institute under this Agreement shall be made in United States dollars by check payable to “Baylor Research Institute.” If Licensee receives any revenues in currency other than United States dollars, then such revenues shall be converted into United States dollars at the conversion rate for the foreign currency as published in the eastern edition of The Wall Street Journal as of the last business day of the applicable Calendar Half.

3.4.2 Amounts that are not paid when due shall accrue interest from the due date until paid, at a rate equal to [**] percent ([**]%) per month or part thereof (or the maximum allowed by law, if less).

ARTICLE 4

CONFIDENTIALITY

4.1. Non-Disclosure by Licensee. Licensee shall maintain in confidence and agrees not to disclose to any third party any Confidential Information of Institute. Licensee shall ensure that its employees have access to Confidential Information only on a need-to-know basis and are obligated in writing to abide by Licensee’s obligations under this Agreement. The foregoing obligation shall not apply to:

4.1.1 Information that is known to Licensee or independently developed by Licensee prior to the time of disclosure, in each case, to the extent evidenced by written records promptly disclosed to Institute upon receipt of the Confidential Information;

4.1.2 Information disclosed to Licensee by a third party that has a right to make such disclosure;

4.1.3 Information that becomes patented, published or otherwise part of the public domain as a result of acts by Institute or a third person obtaining such information as a matter of right; or

4.1.4 Information that is required to be disclosed by order of United States governmental authority or a court of competent jurisdiction; provided that Licensee shall use best efforts to obtain confidential treatment of such information by the agency or court.

4.2. Limited Non-Disclosure by Institute. Institute shall not be obligated to accept any confidential information from Licensee except for the reports required under this Agreement. Institute shall use the same level of care Institute uses to protect its own confidential information (and in any event, not less than reasonable care) to prevent the disclosure of those reports to any third party other than Institute’s outside legal advisors (subject to exceptions substantially similar to these applicable to Licensee under Section 4.1) who shall be obligated to treat such reports as confidential. Institute shall maintain in confidence and agrees not to disclose to any third party any confidential information received from Licensee. Institute shall ensure that its employees have access to such confidential information only on a need-to-know basis and are obligated in writing to abide by Institute’s obligations under this Agreement. Institute bears no institutional responsibility for maintaining the confidentiality of any other information of Licensee.

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ARTICLE 5

TERM AND TERMINATION

5.1. Term. This Agreement, unless sooner terminated as provided in this Agreement, terminates upon the later of: (a) expiration of the last to expire or become abandoned of the Institute Patent Rights; or (b) twenty (20) years after the Effective Date.

5.2. Termination by Licensee. Licensee may, upon sixty (60) days written notice to Institute, terminate this Agreement by doing all of the following:

5.2.1 Ceasing to make, have made, use, import, sell and offer for sale all Institute Licensed Products; and

5.2.2 Terminating all Sublicenses, and causing all Sublicensees and Affiliates to cease making, having made, using, importing, selling and offering for sale all Institute Licensed Products; and

5.2.3 Paying all monies owed to Institute under this Agreement and the Sponsored Research Agreement.

5.3. Termination by Institute. Institute may terminate this Agreement if any of the following events of default (“Default”) occur:

5.3.1 Licensee is more than thirty (30) days late in paying to Institute any monies due under this Agreement and Licensee does not pay Institute all uncontested amounts within ten (10) business days after Institute’s written demand;

5.3.2 Licensee experiences a Trigger Event;

5.3.3 Licensee or any Affiliate or Sublicensee materially breaches this Agreement (other than a breach solely under Sections 5.3.1 or 5.3.2) and does not cure the breach within [**] days after written notice of the breach or, if such breach is not curable within [**] days, such longer period as may be reasonably required to cure such breach.

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5.4. Effect of Termination. In the event of a termination under Sections 5.2 or 5.3 hereof, all duties of Institute and all rights (but not duties) of Licensee and any Affiliate and/or Sublicensee under this Agreement shall immediately terminate without the necessity of any action being taken either by Institute or by Licensee or any Affiliate or Sublicensee. Upon and after any termination of this Agreement, Licensee and any Affiliate and/or Sublicensee shall refrain from further manufacture, sale, marketing, importation, and/or distribution of Institute Licensed Product(s), except as provided in this Article 5. Licensee acknowledges that termination shall not affect Institute’s rights and privileges as a stockholder of Licensee nor its ownership of shares in Licensee.

5.5. Return of Confidential Information. Upon termination of this Agreement, Licensee and any Affiliate and/or Sublicensee shall, at Institute’s request, return to Institute all Confidential Information (provided that Licensee may retain one copy with the offices of its outside legal counsel), as well as copies of any data generated by Licensee and any Affiliate and/or Sublicensee during the term of this Agreement that will facilitate the development of the technology licensed under this Agreement.

5.6. Inventories. Upon termination of this Agreement, Licensee shall cause physical inventories to be taken immediately of: (a) all completed Institute Licensed Product(s) on hand under the control of Licensee or any Affiliate or Sublicensee; and (b) such Institute Licensed Product(s) as are in the process of manufacture and component parts thereof as of the date of termination of this Agreement, which inventories shall be reduced to writing. Licensee shall deliver copies of such written inventories, verified by an officer of Licensee forthwith to Institute. Institute shall have [**] days after receipt of such verified inventories within which to challenge the inventory and request an audit. Upon [**] days written notice to Licensee, Institute and its agents shall be given access during business hours to the premises of Licensee, its Affiliates and/or Sublicensees for the purpose of conducting an audit. Upon the termination of this Agreement, Licensee shall, at its own expense forthwith remove, efface or destroy all references to Institute from all advertising or other materials used in the promotion of Licensee’s business or the business of any Affiliate or Sublicensee and Licensee and any Affiliate and/or Sublicensee shall not thereafter represent in any manner that it has rights in or to the Institute Patent Rights or Institute Licensed Product(s).

5.7. Sell Off Rights. Notwithstanding the foregoing, if this Agreement terminates other than pursuant to Section 5.3, Licensee and its Affiliates and Sublicensees shall have the right to sell off its inventory of Institute Licensed Product(s) existing on the date of termination of this Agreement (“Sell Off Right”), subject to the royalty obligation of Section 3.1.3 .

5.8. Survival. Licensee’s obligation to pay all monies owed accruing under this Agreement shall survive termination of this Agreement. In addition, the provisions of Article 4 - Confidentiality, Article 5 - Term and Termination, Article 8 - Disclaimer of Warranties; Indemnification, Article 9 - Use of Institute’s Name; Independent Contractor and Article 10 - Additional Provisions shall survive such termination.

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ARTICLE 6

PATENT MAINTENANCE

As of the Effective Date, Licensee will assume the primary responsibility for applying for, seeking prompt issuance of, and maintaining the Institute Patent Rights during the term of this Agreement. Without limiting the generality of the foregoing, Licensee shall be entitled to use patent counsel of its choice and Institute shall use all reasonable efforts to cause Institute’s patent counsel to deliver files to Licensee’s counsel and otherwise to cooperate with Licensee and Licensee’s patent counsel relating to such prosecution. Licensee shall diligently and in a timely manner provide Institute with copies of filings relating to the prosecution, maintenance, and validity of the Institute Patent Rights. Licensee shall consult with Institute in such prosecution and maintenance, and shall diligently seek strong and broad claims under the Institute Patent Rights and shall not abandon prosecution of any Institute Patent Rights without first notifying Institute in a timely manner of Licensee’s intention and reason therefore, and providing Institute with reasonable opportunity to assume responsibility for prosecution and maintenance of the Institute Patent Rights. Licensee shall identify all claims (or potential for claims it is aware of) which are wholly or partially outside of the Field of Use, and abide by all requests of Institute regarding prosecution of claims which are wholly or partly outside of the Field of Use. If the Institute believes, in good faith and after consultation with Licensee, that Licensee is not fulfilling its duties under this Article, then Institute may resume responsibility for prosecution of the patents, and Licensee shall reimburse Institute for all costs expended by Licensee in prosecuting the patents.

ARTICLE 7

INFRINGEMENT AND LITIGATION

7.1. Notification of Infringement. Institute and Licensee are responsible for notifying each other promptly of any infringement of Institute Patent Rights, which may come to their attention. Institute and Licensee shall consult one another in a timely manner concerning any appropriate response to the infringement.

7.2. Prosecution by Licensee. Licensee may prosecute such infringement at its own expense. Licensee shall not settle or compromise any such suit in a manner that imposes any obligations or restrictions on Institute without Institute’s prior written permission, which permission shall not be unreasonably withheld (provided however that no permission shall be required for Licensee to grant a non-royalty bearing Sublicense as part of such settlement if Licensee reasonably determines that such grant is necessary or appropriate to avoid litigation or similar controversy). Financial recoveries from any such litigation will first be applied to reimburse Licensee for its litigation expenditures with additional recoveries being paid to Licensee, subject to a royalty due Institute based on the provisions of Article 3.

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7.3. Prosecution by Institute. If Licensee fails to prosecute any infringement, then Institute may prosecute such infringement at its own expense. In such event, financial recoveries will be entirely retained by Institute.

7.4. Cooperation. In any action to enforce any of the Institute Patent Rights, either party, at the request and expense of the other party shall cooperate to the fullest extent reasonably possible. This provision shall not be construed to require either party to undertake any activities, including legal discovery, at the request of any third party except as may be required by lawful process of a court of competent jurisdiction.

ARTICLE 8

REPRESENTATIONS, DISCLAIMER OF WARRANTIES; INDEMNIFICATION

8.1. Representations.

8.1.1 Institute represents and warrants to Licensee as follows: Institute is the exclusive owner of the Institute Patent Rights and the Institute Technical Information. Institute is not a party to or bound by any license or other agreement that grants any person any rights with respect to the Institute Patent Rights; provided, however, Licensee acknowledges Institute’s written policy for sharing net proceeds on intellectual property with the applicable inventors, for which Institute assumes all responsibility. The grant of the License under this Agreement does not conflict with any agreement to which Institute is a party. Institute has not received any written charge, complaint, claim, demand, or notice alleging that the development and use of the Institute Patent Rights or the Institute Technical Information has interfered with, misappropriated any valid patent claims of third parties. No litigation is pending and no claim has been made against Institute or, to the knowledge of Institute, is threatened, which contests the right of Institute to license to Licensee the Institute Patent Rights or the Institute Technical Information. The knowledge of Institute is limited to the actual knowledge of Dr. [**] and persons employed in Institute’s office of technology transfer and office of the general counsel.

8.1.2 NO OTHER WARRANTIES. THE INSTITUTE PATENT RIGHTS, INSTITUTE TECHNICAL INFORMATION, INSTITUTE LICENSED PRODUCTS AND ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS, AND, INSTITUTE MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO EXCEPT AS SET FORTH IN SECTION 8.1.1. BY WAY OF EXAMPLE BUT NOT OF LIMITATION, INSTITUTE MAKES NO REPRESENTATIONS OR WARRANTIES: (a) OF COMMERCIAL UTILITY; (b) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; OR (c) EXCEPT AS SET FORTH IN SECTION 8.1.1, THAT THE USE OF THE INSTITUTE PATENT RIGHTS, INSTITUTE TECHNICAL INFORMATION, INSTITUTE LICENSED PRODUCTS OR ANY TECHNOLOGY LICENSED UNDER THIS AGREEMENT WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADE SECRET OR TRADEMARK OR OTHER PROPRIETARY OR PROPERTY RIGHTS OF OTHERS. INSTITUTE SHALL NOT BE LIABLE TO LICENSEE, AFFILIATES, LICENSEE’S SUBLICENSEES OR THEIR RESPECTIVE SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT TO: ANY CLAIM ARISING FROM USE OF THE INSTITUTE PATENT RIGHTS, INSTITUTE TECHNICAL INFORMATION, INSTITUTE LICENSED PRODUCTS OR ANY TECHNOLOGY LICENSED UNDER THIS AGREEMENT OR FROM THE MANUFACTURE, USE OR SALE OF INSTITUTE LICENSED PRODUCTS; OR ANY CLAIM FOR LOSS OF PROFITS, LOSS OR INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND EXCEPT TO THE EXTENT THAT ANY SUCH CLAIM IS ATTRIBUTABLE TO A BREACH BY INSTITUTE OF SECTION 8.1.1.

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8.2. Indemnification. Licensee shall indemnify, defend and hold harmless Institute, its trustees, officers, agents and employees (individually, an “Indemnified Party”, and collectively, the “Indemnified Parties”), from and against any and all liability, loss, damage, action, claim or expense suffered or incurred by the Indemnified Parties (including attorneys’ fees and expenses) (individually, a “Liability”, and collectively, the “Liabilities”) that results from or arises out of: (a) the development, use, manufacture, promotion, sale or other disposition of any Institute Technical Information, Institute Patent Rights, or Institute Licensed Products by Licensee, its Affiliates, its assignees, Sublicensees, vendors or other third parties; (b) any breach by Licensee or its Affiliates or Sublicensees of this Agreement; and (c) the enforcement by an Indemnified Party of this Section 8.2. Without limiting the foregoing, Licensee shall defend, indemnify, and hold harmless the Indemnified Parties from and against any Liabilities resulting from:

8.2.1 Any product liability or other claim of any kind related to the use by a third party of a Institute Licensed Product that was manufactured, sold or otherwise disposed by Licensee, its Affiliates, its assignees, Sublicensees or vendors;

8.3.2 A claim by a third party that the Institute Technical Information or Institute Patent Rights or the design, composition, manufacture, use, sale or other disposition of any Institute Licensed Product infringes or violates any patent, copyright, trade secret, trademark or other intellectual property rights of such third party, except to the extent such claim is attributable to a breach of Section 8.1.1; and

8.2.3 Clinical trials or studies conducted by or on behalf of Licensee, its Affiliates, its assignees, Sublicensees or agents relating to the Institute Technical Information, Institute Patent Rights or Institute Licensed Products, including, without limitation, any claim by or on behalf of a human subject of any such clinical trial or study, any claim arising from the procedures specified in any protocol used in any such clinical trial or study, any claim of deviation, authorized or unauthorized, from the protocols of any such clinical trial or study, and any claim resulting from or arising out of the manufacture or quality control by a third party of any substance administered in any clinical trial or study provided, that Licensee shall have no obligation to indemnify any Indemnified Party to the extent that any loss or damage is attributable to the negligence or misconduct of such Indemnified Party or its employees or representatives.

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8.3. Rights of Institute in Liability Action. Licensee is not permitted to settle or compromise any claim or action giving rise to Liabilities in a manner that imposes any restrictions or obligations on Institute without Institute’s prior written consent, which consent shall not be unreasonably withheld. If Licensee fails or declines to assume the defense of any such claim or action within [**] days after notice thereof, then Institute may assume the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related thereto shall be conclusively deemed a liability of Licensee. The indemnification rights of Institute or other Indemnified Party contained herein are in addition to all other rights that such Indemnified Party may have at law or in equity or otherwise.

8.4. Insurance.

8.4.1 Licensee and any Affiliate shall procure and maintain a policy or policies of comprehensive general liability insurance, including broad form and contractual liability, in a minimum amount of $[**] combined single limit per occurrence and in the aggregate as respects personal injury, bodily injury and property damage arising out of such party’s performance of this Agreement.

8.4.2 Licensee and any Affiliate shall, upon commencement of clinical trials involving Institute Licensed Products, procure and maintain a policy or policies of product liability insurance in a minimum amount of $[**] combined single limit per occurrence and in the aggregate as respects bodily injury and property damage arising out of such party’s performance of this Agreement.

8.4.3 The policy or policies of insurance described in this Section 8.4 shall be issued by an insurance carrier with an A.M. Best rating of “A” or better and shall name Institute as an additional insured with respect to Licensee’s performance of this Agreement. Licensee and any Affiliate shall, upon reasonable request, provide Institute with certificates evidencing the insurance coverage required herein and all subsequent renewals thereof. Such certificates shall provide that the insurance carrier(s) notify Institute in writing at least [**] days prior to cancellation or material change in coverage.

8.4.4 Institute may periodically review the adequacy of the minimum limits of liability insurance specified in this Section, and Institute reserves the right to request Licensee and any Affiliate to adjust the liability insurance coverages. Licensee will consider any reasonable request to adjust the liability insurance coverages. The specified minimum insurance amounts do not constitute a limitation on the obligation of Licensee and any Affiliate to indemnify Institute under this Agreement.

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ARTICLE 9

USE OF INSTITUTE’S NAME

Licensee and its Affiliates, employees, Sublicensees and agents shall not use, and Licensee shall not permit its Sublicensees to use, Institute’s name or any adaptation thereof, or any Institute seal, logotype, trademark, or service mark, or the name, mark, or logotype of any Institute representative or organization in any way without the prior written consent of Institute in it sole discretion. Institute hereby consents to the disclosure of the existence and terms of this Agreement by Licensee in the ordinary course of Licensee’s business, including without limitation the disclosure hereof to current and prospective Sublicensees, investors, research collaborators, and strategic partners.

Licensee acknowledges Institute, Baylor Health Care System, and Baylor University Medical Center are not affiliated with Baylor University or Baylor College of Medicine, and Licensee will make no reference to the University or College of Medicine in any publications without the prior written consent of such separate organization.

ARTICLE 10

ADDITIONAL PROVISIONS

10.1. No Agency. Nothing in this Agreement shall be deemed to establish a relationship of principal and agent between Institute and Licensee or its Affiliates or Sublicensees, nor any of their agents or employees for any purpose whatsoever, nor shall this Agreement be construed as creating any other form of legal association or arrangement which would impose liability upon one party for the act or failure to act of the other party.

10.2. Assignment. Licensee together with its Affiliates and Sublicensees are not permitted to assign this Agreement or any part of it, either directly or by merger or other operation of law, without the prior written consent of Institute, which consent shall not be unreasonably withheld, provided that no such consent shall be required if (a) this Agreement is assigned in connection with the sale of all or substantially all of the assets or stock of Licensee, whether by merger, acquisition or otherwise or (b) this Agreement is assigned to an Affiliate of Licensee or transferred to a partnership, limited liability company, joint venture or similar enterprise in which Licensee has rights to receive at least [**]% of the profits. Any prohibited assignment of this Agreement or the rights hereunder shall be null and void. No assignment effected without Institute’s consent relieves Licensee, its Affiliates, and/or Sublicensees of responsibility for the performance of any accrued obligations that Licensee, its Affiliates and/or Sublicensees has prior to such assignment.

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10.3. No Waiver. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other subsequent breach or condition, whether of like or different nature.

10.4. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be delivered in person or sent overnight delivery by Federal Express or by certified or registered mail, return receipt requested, or telexed in the case of non-U.S. residents, and shall be deemed to have been given when hand delivered, one (1) day after mailing when mailed by overnight courier (e.g. Federal Express or Express Mail) or five (5) days after mailing by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):

If to Institute:

Baylor Research Institute

3434 Live Oak

Dallas, Texas, 75204.

Attention: President

With a required copy to:

Baylor Research Institute

3434 Live Oak

Dallas, Texas, 75204.

Attention: General Counsel

If to Licensee:

MERIX Bioscience, Inc.

4233 Technology Drive

Durham, North Carolina 27704

Attention: Chief Executive Officer

With a required copy to:

Hutchison & Mason PLLC

3110 Edwards Mill Road, Suite 100

Raleigh, North Carolina 27612

Attention: Fred D. Hutchison, Esq.

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or to such other names or addresses as Licensee or Institute, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section 10.4.

10.5. Governing Law and Arbitration. This Agreement shall be construed and governed in accordance with the laws of the State of North Carolina, without giving effect to conflict of law provisions of any jurisdiction. In the event that a party to this Agreement perceives the existence of a dispute with the other party concerning any right or duty provided for herein, the parties will, as soon as practicable, confer in an attempt to resolve the dispute. Except as to issues relating to the validity, enforceability or final determination of infringement of any patent contained in the Institute Patent Rights licensed hereunder, any and all claims, disputes or controversies arising under, out of, or in connection with this Agreement, which have not been resolved in good faith negotiations between the parties, shall be resolved by a board of three (3) arbitrators in accordance with the rules, then in effect, of the American Arbitration Association. If the Arbitration is brought by Institute, it shall take place in Durham, North Carolina, and if brought by Licensee, it shall take place in Dallas, Texas. Such independent board shall be composed of three (3) panelists of sufficient education, scientific experience, and national reputation to address such issues. The board shall be composed of one arbitrator selected by Institute, one selected by Licensee and one selected by Licensee and Institute. If Licensee and Institute cannot agree upon the third arbitrator within [**] days after the notice of arbitration, the third arbitrator shall be selected by the American Arbitration Association in accordance with its rules. The decision of such panel shall be final and binding upon the parties and enforceable in any court of competent jurisdiction.

10.6. No Discrimination. Institute and Licensee and its Affiliates shall not discriminate against any employee or applicant for employment because of race, color, sex, sexual or affectional preference, age, religion, national or ethnic origin, handicap, or because he or she is a disabled veteran or a veteran of the Vietnam Era and Licensee shall include in each Sublicense a commitment by each Sublicensee to comply with all applicable employment discrimination laws.

10.7. Compliance with Laws. Institute, Licensee, its Affiliates and Sublicensees shall comply with all prevailing laws, rules and regulations that apply to its activities or obligations under this Agreement, including, but not limited to, all applicable laws and regulations regarding “conflicts of interest” and institutional review imposed by the FDA, the U.S. Office of Human Research Protections, and otherwise. Without limiting the foregoing, it is understood that this Agreement may be subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities, articles and information, including the Arms Export Control Act as amended in the Export Administration Act of 1979, and that the parties’ obligations are contingent upon compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by Licensee, its Affiliates and/or Sublicensees that Licensee shall not export data or commodities to certain foreign countries without prior approval of such agency. Institute neither represents that a license is not required nor that, if required, it will issue.

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10.8. Binding Nature of Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, except that any assignment by Licensee must comply with Section 10.2 to be effective.

10.9. Counterparts, Headings and Exhibits. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The headings used in this Agreement are for convenience only and are not to be considered in construing or interpreting any term or provision of this Agreement. All Schedules and Exhibits hereto are hereby incorporated in this Agreement and made a part hereof.

10.10. Integration and Amendment. This Agreement, the Warrant, the Stockholders Agreement, and the Sponsored Research Agreement embody the entire agreement and understanding among the parties hereto related to its subject matter and supersede all prior agreements and understandings relating to the subject matter hereof or thereof. This Agreement may not be changed, modified, extended, or terminated except by written amendment executed by an authorized representative of Institute and Licensee.

10.11. Severability. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, then such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein.

10.12. Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided that if the final day of any time period falls on a Saturday, Sunday or holiday on which Federal banks are or may elect to be closed, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or such holiday.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have caused this Agreement to be executed by their duly authorized representatives.

BAYLOR RESEARCH INSTITUTE		MERIX BIOSCIENCE, INC.
By:	/s/ Michael Ramsay	By:	/s/ Stephen Elliston
Name:	Michael Ramsay, M.D.	Name:	Stephen Elliston
Title:	President	Title:	VP Business Development

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LIST OF ATTACHMENTS

Attachment 1 - Patent Application

[**]

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EX-10.19

Exhibit 10.19

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

EXCLUSIVE LICENSE AGREEMENT (Anti-Interferon Alpha Monoclonal Antibodies)

This Exclusive License Agreement (this “Agreement”) is made on November 17, 2005, by and between BAYLOR RESEARCH INSTITUTE (“Institute”), a nonprofit corporation organized and existing under the laws of the State of Texas, having its principal office at 3434 Live Oak, Dallas, Texas, 75204, and Argos Therapeutics, Inc., a Delaware corporation formerly known as MERIX Bioscience, Inc., a Delaware corporation (“Licensee”), with its principal offices at 4233 Technology Drive, Durham, North Carolina 27704. This Agreement is effective as of the date hereof (the “Effective Date”).

BACKGROUND

A. Institute is the owner by assignment from the inventors of certain intellectual property developed by Dr. [**] (collectively, the “Inventors”), currently or previously at Institute relating to Anti-Interferon Alpha Monoclonal Antibodies and Methods for Use (as described more fully in Attachment 1, the “Intellectual Property”);

B. Licensee has provided substantial support for the research giving rise to the Intellectual Property;

C. Institute has the right to grant licenses under said Intellectual Property;

D. Licensee desires to obtain an exclusive worldwide right and license to use and exploit the Intellectual Property; and

E. Institute has determined that the exploitation of the Intellectual Property is in the best interest of Institute and is consistent with its educational and research missions and goals.

NOW, THEREFORE, in consideration of the promises and covenants contained in this Agreement and intending to be legally bound, the parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1. “Affiliate” means any legal entity directly or indirectly controlling, controlled by or under common control with Licensee that has executed (a) this Agreement or (b) a written joinder agreement, in a form reasonably satisfactory to Institute, agreeing to be bound by all of the terms and conditions of this Agreement as if such Affiliate were an original party to this Agreement. For purposes of this Agreement, “control” means the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of a legal entity, or the right to receive more than fifty percent (50%) of the profits or earnings of a legal entity, or the right to control the policy decisions of a legal entity.

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1.2. “Agreement” shall have the meaning given in the first paragraph hereof.

1.3. “Calendar Half” means each six-month period, or any portion thereof, beginning on January 1 and July 1.

1.4. “Commercially Reasonable Efforts” shall mean the efforts and resources normally used by such party with respect to a product owned by such party or to which such party has similar rights that is of similar market potential at a similar stage in the development or life of such product, taking into account issues of safety, efficacy, the competitiveness of the marketplace, the proprietary position of the product, the regulatory structure involved and profitability of the product.

1.5. “Confidential Information” means and includes all technical information, inventions, developments, discoveries, software, know-how, methods, techniques, formulae, data, processes and other proprietary ideas, whether or not patentable or copyrightable, regardless whether Institute identifies such information as confidential or proprietary at the time it is delivered or communicated to Licensee.

1.6. “Default” shall have the meaning given in Section 5.3

1.7. “Effective Date” shall have the meaning given in the preamble hereof.

1.8. “Fair Market Value” means the cash consideration that Licensee or its Sublicensee would realize from an unaffiliated, unrelated buyer in an arm’s length sale of an identical item sold in the same quantity and at the same time and place of the transaction.

1.9. “Indemnified Party” shall have the meaning given in Section 8.2.

1.10. “Field of Use” means all uses, including without limitation for prevention, diagnosis, treatment, and monitoring of human diseases and disorders.

1.11. “Liability” and “Liabilities” shall have the meaning given in Section 8.2.

1.12. “License” shall mean the license granted by Institute to Licensee pursuant to Section 2.1.

1.13. “Licensee” shall have the meaning given in the first paragraph of this Agreement.

1.14. “Net Sales” means the consideration or Fair Market Value attributable to the Sale of any Institute Licensed Product(s), less (if initially included in the consideration) qualifying costs directly attributable to such Sale and borne by Licensee, its Affiliates or its Sublicensee. Such qualifying costs shall be limited to the following:

1.14.1 Discounts for quantity purchases, for prompt payments and for wholesalers and distributors;

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1.14.2 Credits or refunds, not exceeding the original invoice amount, for claims or returns;

1.14.3 Prepaid outbound transportation expenses and transportation insurance premiums; and

1.14.4 Sales and use taxes, tariff duties and other fees imposed by a governmental agency.

1.14.15 If an Institute Licensed Product is sold in combination with one or more other product or component that is not an Institute Licensed Product, the portion of “Net Sales” from the Institute Licensed Product will be calculated by multiplying actual Net Sales for such combination product by the fraction A/(A+B) where A is the invoice price if the Institute Licensed Product is sold separately, and B is the total invoice price of any other active component or components, or devices, in the combination if sold separately, or, if either of the products are not sold separately, than the allocation shall be made in good faith by Licensee and disclosed to Institute.

1.15. “Institute Licensed Product(s)” means products that are made, made for, used or sold by Licensee or any Sublicensees and that in the absence of this Agreement, the manufacture, sale or use of which would infringe at least one claim of Institute Patent Rights, or require the use of Institute Technical Information .

1.16. “Institute Patent Rights” means all patent rights represented by or issuing from the United States and foreign patents listed in Attachment 1, patents claiming priority to the United States or foreign patent applications listed in Attachment 1, and foreign counterparts and extensions, including continuation, divisional and re-issue applications.

1.17. “Institute Technical Information” means proprietary, unpatented information owned by the Institute at the time of filing a patent application set forth as part of the Institute Patent Rights that is necessary to practice in the Field of Use the inventions disclosed or claimed in such patent application described in Attachment 1.

1.18. “Sale” means any bona fide transaction for which consideration is received for the sale of Institute Licensed Product(s). A Sale of Institute Licensed Product(s) shall be deemed completed at the time Licensee or its Sublicensee recognizes revenues for the sale of such Institute Licensed Product(s).

1.19. “Sell Off Right” shall have the meaning given in Section 5.7.

1.20. [omitted]

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1.21. “Sublicense” shall have the meaning given in Section 2.4.1.

1.22. “Sublicensee” shall have the meaning given in Section 2.4.3.

1.23. “Sublicense Revenues” shall have the meaning given in Section 3.1.3.

1.24. [omitted]

1.25. [omitted]

1.26. “Trigger Event” means any of the following:

1.26.1 If Licensee becomes insolvent, bankrupt or generally fails to pay its debts as such debts become due; is adjudicated insolvent or bankrupt; admits in writing its inability to pay its debts; or shall suffer a custodian, receiver or trustee for it or substantially all of its property to be appointed and, if appointed without its consent, not be discharged within thirty (30) days; makes an Assignment for the benefit of creditors; or suffers proceedings under any law related to bankruptcy, insolvency, liquidation or the reorganization, readjustment or the release of debtors to be instituted against it and, if contested by it, not dismissed or stayed within ten (10) days;

1.26.2 If proceedings under any law related to bankruptcy, insolvency, liquidation, or the reorganization, readjustment or the release of debtors are instituted or commenced by Licensee;

1.26.3 If any order for relief is entered relating to any of the proceedings described in Sections 1.26.1 or 1.26.2;

1.26.4 If Licensee shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or

1.26.5 If Licensee shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the proceedings described in Sections 1.26.1 through 1.26.4.

ARTICLE 2

LICENSE GRANT

2.1. License Grant. Institute grants to Licensee and its Affiliates for the term of this Agreement a worldwide, royalty-bearing license under the Institute Patent Rights and the Institute Technical Information to make, have made, use, import, sell and offer for sale or otherwise dispose of the Institute Licensed Product(s) in the Field of Use, except that to the extent that any Affiliate exercises any rights granted by Institute hereunder, Licensee remains primarily liable to Institute for the duties and obligations of any Affiliate hereunder, and any act or omission of an Affiliate would be deemed to be a breach by Licensee of this Agreement, provided, however that Licensee shall have no liability hereunder with respect to any act or omission of an assignee if such assignment is effected in accordance with Section 10.2. Institute grants to Licensee the right to grant sublicenses subject only to the limitations set forth in Section 2.4.

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2.2. Exclusivity. The License is exclusive for Institute Patent Rights, Institute Technical Information in the Field of Use, except that Institute may use the Institute Patent Rights and Institute Technical Information for its own non-commercial educational and research purposes. For clarification, the reserved rights do not include the right to engage in human clinical trials involving the use of materials that are the subject of the Institute Patent Rights without the consent of Licensee. On or after the Effective Date, Institute shall have no right to grant a license to the Institute Patent Rights or Institute Technical Information in the Field of Use to any person or entity.

2.3. U.S. Government Rights. Licensee or its Affiliates acknowledge that pursuant to Public Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C. 200-212, the United States government retains certain rights in intellectual property funded in whole or part under any contract, grant or similar agreement with a Federal agency. Pursuant to these laws, the government may impose certain requirements regarding such intellectual property, including but not limited to the requirement that products resulting from such intellectual property sold in the United States must be substantially manufactured in the United States. The License is expressly subject to all applicable United States government rights as provided in the above-mentioned laws and any regulations issued under those laws, as those laws or regulations may be amended from time to time.

2.4. Sublicense Conditions. The right to sublicense granted to Licensee under Section 2.1 is subject to the following conditions:

2.4.1 Licensee may sublicense the rights granted in this Agreement by written sublicense agreement which agreement shall require that the sublicensee (“Sublicensee”) be subject to the terms and conditions of the license granted to Licensee under this Agreement (each, a “Sublicense”). Licensee may grant to a Sublicensee the right to grant sublicenses.

2.4.2 Within [**] days after Licensee enters into any Sublicense, Licensee shall deliver to Institute a complete copy of the Sublicense written in the English language (receipt of a Sublicense shall not constitute an approval of the Sublicense or a waiver of any of Institute’s rights or Licensee’s obligations under this Agreement).

2.4.3 In the event of a Default under Section 5.3 hereunder, all payments then or thereafter due to Licensee from each of its Sublicensees shall, upon notice from Institute to any such Sublicensee, become owed directly to Institute for the account of Licensee; provided that Institute shall remit to Licensee the amount by which such payments in the aggregate exceed the total amount owed by Licensee to Institute.

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2.4.4 Licensee remains primarily liable to Institute for all of Licensee’s duties and obligations contained in this Agreement, and any act or omission of a Sublicensee that would be a breach of this Agreement if performed by Licensee shall be deemed to be a breach by Licensee of this Agreement. Notwithstanding the foregoing, if Licensee either (a) obtains Institute’s consent to grant a particular sublicense or (b) exercises commercially reasonable efforts to cause a breaching sublicensee to cure a breach, then Institute shall not have the right to terminate this Agreement on the basis of such a breach by a sublicensee but shall retain all other remedies.

ARTICLE 3

FEES, ROYALTIES AND MILESTONE PAYMENTS

3.1. Fees and Royalties.

3.1.1 Initial Cash Payments. In partial consideration of the License, Licensee shall pay to Institute a non-refundable amount equal to documented attorneys fees, expenses, official fees and other charges incident to the preparation, prosecution and maintenance of Institute Patent Rights incurred prior to the Effective Date by Institute, not to exceed [**] Dollars ($[**]). Licensee shall pay such amounts within [**] days after receipt of documentation reasonably demonstrating such expenses.

3.1.2 [Omitted]

3.1.3 Royalties. In further consideration of the exclusive license granted to Licensee, Licensee shall pay (or cause its Affiliates to pay) to Institute a royalty of [**] percent ([**] %) of the Net Sales of Institute Licensed Products sold by Licensee or its Affiliates, provided, however, that if Licensee determines that it is required to license other intellectual property rights to produce, use and/or sell Institute Licensed Products, then the royalty rate hereunder shall be reduced by [**] percent ([**]%) of the royalty due (before giving effect to a reduction for royalties payable to Institute or other third party licensors) with respect to the other intellectual property rights, but in no event shall royalties payable to Institute under this Section 3.1.3 be less than [**] percent ([**] %) of the Net Sales of Institute Licensed Products sold by Licensee and its Affiliates. For clarification and without limitation, royalty obligations under any other agreement between Licensee and Institute shall not be taken into account in determining the amount, if any, of any royalty reduction under this Section.

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3.1.4 Sublicense Royalties. In further consideration of the exclusive license granted to Licensee, Licensee shall pay (or cause its Affiliates to pay) to Institute a royalty of [**] percent ([**] %) of the Net Sales of Institute Licensed Products sold by Sublicensees, provided, however, that if Licensee or such Sublicensee determines that it is required to license other intellectual property rights to produce, use and/or sell Institute Licensed Products, then the royalty rate hereunder shall be reduced by [**] percent ([**]%) of the royalty rate due (before giving effect to a reduction for royalties payable to Institute or other third party licensors) with respect to the other intellectual property rights, but in no event shall royalties payable to Institute under this Section 3.1.4 be less than [**] percent ([**]%) of the Net Sales of Institute Licensed Products sold by Sublicensees. In the event that a Sublicense provides for a commercially reasonable manner of calculating net sales of Institute Licensed Products and such manner is different from the manner of calculating Net Sales hereunder, then the royalty payable with respect to Parties sold by Sublicensees shall be calculated as provided for in the Sublicense. For clarification by way of example, if a sublicensee requires a calculation of “Net Sales” based on its language regarding deductions, transfer pricing and such, then Licensee can accept that calculation and pay royalties to Institute based on the same method used for paying royalties to Licensee. For clarification and without limitation, royalty obligations under any other agreement between Licensee and Institute shall not be taken into account in determining the amount, if any, of any royalty reduction under this Section.

3.1.5 Milestone Payments. In further consideration of the exclusive license granted to Licensee, Licensee shall pay to Institute the following amounts: (a) a milestone payment of [**] Dollars ($[**]) or shares of capital stock of Licensee with a fair market value equal to [**] Dollars ($[**]) (with the form of payment determined by the Licensee in its discretion), payable within [**] days following the filing by the Licensee, its Affiliate or Sublicensee of the first biologics license application, or similar application with the U.S. Food and Drug Administration (the “FDA”) for a clinical application of a product that requires a license to Institute Patent Rights; and (b) a milestone payment of [**] Dollars ($[**]) or shares of capital stock of Licensee with a fair market value equal to [**] Dollars ($[**]) (with the form of payment determined by Licensee in its discretion), payable within [**] days following the approval by the FDA of commercial sale of the first product that requires a license to Institute Patent Rights. For the avoidance of doubt, the parties acknowledge that regardless of the number of inventions licensed by Licensee from Institute under this and/or any other agreement, Licensee’s total obligation to make milestone payments to Institute shall be limited to the amounts described in this Section 3.1.5 and Licensee shall have no obligation to make milestone payments more than once for each product. For clarification by way of example, any and all Institute Licensed Products that include as an active agent a monoclonal antibody that acts as an antagonist to alpha interferon shall be deemed to be one and the same product regardless of the indication of use, country in which the product is marketed or sold and regardless of whether one or more other active agents are combined with such monoclonal antibody. These milestone payments shall be in lieu of any payment to Institute of any portion of any up-front, milestone or similar payments to Licensee under any Sublicense. All shares of capital stock of Licensee issued to Institute hereunder shall be registered and freely salable if the capital stock of Licensee is publicly traded on a recognized exchange or over-the-counter, and shall be subject to registration rights, on parity with the founders’ rights, if the stock of Licensee is not then traded on an exchange or over-the-counter market(s).

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3.1.6 Payments to Inventors. Institute shall be solely responsible for making any payments due to inventors under any policy or contract applicable to Institute and shall hold Licensee harmless with respect to any such claims.

3.2. Diligence

3.2.1 Licensee shall use commercially reasonable efforts, taking into account the size and capitalization of Licensee, to file (or cause an Affiliate or Sublicensee to file) a Biologics License Application or similar application with the FDA for a clinical application of an Institute Licensed Product within [**] years from the Effective Date.

3.2.2 Licensee shall provide to Institute, on the first anniversary of the Effective Date and on each anniversary thereafter, written progress reports, setting forth in such detail as Institute may reasonably request the progress of the development, evaluation, testing and commercialization of each Institute Licensed Product. Licensee shall also notify Institute in writing within [**] days after the first commercial sale of each Institute Licensed Product.

3.2.3 Licensee acknowledges the failure to use commercially reasonable efforts to develop, evaluate, test and commercialize at least one the Institute Licensed Products shall be a material breach of this Agreement, provided, however, that Licensee receive prior written notice from Institute and be provided [**] days to cure such failure, and upon curing, there shall be no material breach.

3.2.4 If Licensee grants a sublicense under this Agreement to a pharmaceutical or biotechnology company which alone, or together with its Affiliates, has annual revenues of at least $[**] during the year of or the year preceding the grant of the sublicense, then Licensee will be deemed to have satisfied its obligations under this Section 3.2 if the Sublicensee agrees to use Commercially Reasonable Efforts to develop, market and sell an Institute Licensed Product.

3.3. Royalty Reports and Records.

3.3.1 Licensee shall deliver to Institute within [**] days after the end of each Calendar Half (or, with respect to Institute Licensed Products sold by Sublicensees, within [**] days after the end of each Calendar Half) a written report, certified by the chief financial officer of Licensee, setting forth the calculation of the royalties due to Institute for such Calendar Half, including, without limitation:

3.3.1.1 Number of Institute Licensed Products involved in Sales, listed by country;

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3.3.1.2 Gross consideration for Sales of Institute Licensed Products, including all amounts invoiced, billed, or received;

3.3.1.3 Qualifying costs, as defined in Section 1.14, listed by category of cost;

3.3.1.4 Net Sales of Institute Licensed Products listed by country;

3.3.1.5 Royalties owed to Institute, listed by category, including without limitation earned and Sublicensee derived categories.

3.3.2 Licensee shall pay the royalties due under Section 3.1.3 to Institute within [**] days following the last day of the Calendar Half in which the royalties accrue. Licensee shall send Institute with such royalties the report described in Section 3.3.1. Licensee shall pay the royalties due under Section 3.1.4 to Institute within [**] days following the last day of the Calendar Half in which the royalties accrue. Licensee shall send Institute with such royalties the report described in Section 3.3.1.

3.3.3 Licensee shall maintain and cause its Sublicensees to maintain, complete and accurate books and records that enable the royalties payable under this Agreement to be verified. The records for each Calendar Half shall be maintained for [**] years after the submission of each report under Article 3. Upon reasonable prior notice to Licensee, Licensee shall provide Institute with access to all books and records relating to the Sales of Institute Licensed Products by Licensee and its Sublicensees to conduct a review or audit of those books and records. Access to Licensee’s books and records shall be made available not more than [**] each calendar year, during normal business hours, and during each of [**] years after the expiration or termination of this Agreement. If Licensee has underpaid any royalty due by five percent (5%) or more, then Licensee shall pay to Institute promptly the costs and expenses of Institute and its accountants in connection with their review or audit, in addition to such underpayment.

3.4. Currency, Place of Payment, Interest, Payment of Expenses.

3.4.1 All dollar amounts referred to in this Agreement are expressed in United States dollars. All payments to Institute under this Agreement shall be made in United States dollars by check payable to “Baylor Research Institute.” If Licensee receives any revenues in currency other than United States dollars, then such revenues shall be converted into United States dollars at the conversion rate for the foreign currency as published in the eastern edition of The Wall Street Journal as of the last business day of the applicable Calendar Half.

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3.4.2 Amounts that are not paid when due shall accrue interest from the due date until paid, at a rate equal to [**] percent ([**]%) per month or part thereof (or the maximum allowed by law, if less).

ARTICLE 4

CONFIDENTIALITY

4.1. Non-Disclosure by Licensee. Licensee shall maintain in confidence and agrees not to disclose to any third party any Confidential Information of Institute. Licensee shall ensure that its employees have access to Confidential Information only on a need-to-know basis and are obligated in writing to abide by Licensee’s obligations under this Agreement. The foregoing obligation shall not apply to:

4.1.1 Information that is known to Licensee or independently developed by Licensee prior to the time of disclosure, in each case, to the extent evidenced by written records promptly disclosed to Institute upon receipt of the Confidential Information;

4.1.2 Information disclosed to Licensee by a third party that has a right to make such disclosure;

4.1.3 Information that becomes patented, published or otherwise part of the public domain as a result of acts by Institute or a third person obtaining such information as a matter of right; or

4.1.4 Information that is required to be disclosed by order of United States governmental authority, for example, obtaining regulatory approvals related thereto, or a court of competent jurisdiction; provided that Licensee shall use best efforts to obtain confidential treatment of such information by the agency or court.

4.1.5 Notwithstanding the foregoing, Licensee shall have the right to disclose information related to the Institute Patent Rights and Institute Technical Information to the extent reasonably necessary or appropriate for purposes of researching, developing, making and marketing Institute Licensed Products. Before disclosing any Institute Patent Rights and Institute Technical Information the Licensee shall enter into a written confidentiality Agreement with any such party that is commensurate with the Licensee’s Confidentiality obligations under this Agreement.

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4.2. Limited Non-Disclosure by Institute. Institute shall not be obligated to accept any confidential information from Licensee except for the reports required under this Agreement. Institute shall use the same level of care Institute uses to protect its own confidential information (and in any event, not less than reasonable care) to prevent the disclosure of those reports to any third party other than Institute’s outside legal advisors (subject to exceptions substantially similar to these applicable to Licensee under Section 4.1) who shall be obligated to treat such reports as confidential. Institute shall maintain in confidence and agrees not to disclose to any third party any confidential information received from Licensee. Institute shall ensure that its employees have access to such confidential information only on a need-to-know basis and are obligated in writing to abide by Institute’s obligations under this Agreement. Institute bears no institutional responsibility for maintaining the confidentiality of any other information of Licensee.

ARTICLE 5

TERM AND TERMINATION

5.1. Term. This Agreement, unless sooner terminated as provided in this Agreement, terminates upon the later of: (a) expiration of the last to expire or become abandoned of the Institute Patent Rights; or (b) twenty (20) years after the Effective Date.

5.2. Termination by Licensee. Licensee may, upon sixty (60) days written notice to Institute, terminate this Agreement by doing all of the following:

5.2.1 Ceasing to make, have made, use, import, sell and offer for sale all Institute Licensed Products; and

5.2.2 Terminating all Sublicenses, and causing all Sublicensees and Affiliates to cease making, having made, using, importing, selling and offering for sale all Institute Licensed Products; and

5.2.3 Paying all monies owed to Institute under this Agreement.

5.3. Termination by Institute. Institute may terminate this Agreement if any of the following events of default (“Default”) occur:

5.3.1 Licensee is more than thirty (30) days late in paying to Institute any monies due under this Agreement and Licensee does not pay Institute all uncontested amounts within ten (10) business days after Institute’s written demand;

5.3.2 Licensee experiences a Trigger Event;

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5.3.3 Licensee or any Affiliate or Sublicensee materially breaches this Agreement (other than a breach solely under Sections 5.3.1 or 5.3.2) and does not cure the breach within [**] days after written notice of the breach or, if such breach is not curable within [**] days, such longer period as may be reasonably required to cure such breach.

5.4. Effect of Termination. In the event of a termination under Sections 5.2 or 5.3 hereof, all duties of Institute and all rights (but not duties) of Licensee and any Affiliate shall immediately terminate without the necessity of any action being taken either by Institute or by Licensee or any Affiliate. Upon and after any termination of this Agreement, Licensee and any Affiliate shall refrain from further manufacture, sale, marketing, importation and/or distribution of Institute Licensed Product(s), except as provided in this Article 5. Licensee acknowledges that termination shall not affect Institute’s rights and privileges as a stockholder of Licensee nor its ownership of shares in Licensee. If, for any reason, this Agreement is terminated, Institute agrees that all sublicenses granted by Licensee shall survive the termination or expiration of this Agreement.

5.5. Return of Confidential Information. Upon termination of this Agreement, Licensee and any Affiliate and/or Sublicensee shall, at Institute’s request, return to Institute all Confidential Information (provided that Licensee may retain one copy with the offices of its outside legal counsel), as well as copies of any data generated by Licensee and any Affiliate and/or Sublicensee during the term of this Agreement that will facilitate the development of the technology licensed under this Agreement.

5.6. Inventories. Upon termination of this Agreement, Licensee shall cause physical inventories to be taken immediately of: (a) all completed Institute Licensed Product(s) on hand under the control of Licensee or any Affiliate or Sublicensee; and (b) such Institute Licensed Product(s) as are in the process of manufacture and component parts thereof as of the date of termination of this Agreement, which inventories shall be reduced to writing. Licensee shall deliver copies of such written inventories, verified by an officer of Licensee forthwith to Institute. Institute shall have [**] days after receipt of such verified inventories within which to challenge the inventory and request an audit. Upon [**] days written notice to Licensee, Institute and its agents shall be given access during business hours to the premises of Licensee, its Affiliates and/or Sublicensees for the purpose of conducting an audit. Upon the termination of this Agreement, Licensee shall, at its own expense forthwith remove, efface or destroy all references to Institute from all advertising or other materials used in the promotion of Licensee’s business or the business of any Affiliate or Sublicensee and Licensee and any Affiliate and/or Sublicensee shall not thereafter represent in any manner that it has rights in or to the Institute Patent Rights or Institute Licensed Product(s).

5.7. Sell Off Rights. Notwithstanding the foregoing, if this Agreement terminates other than pursuant to Section 5.3, Licensee and its Affiliates and Sublicensees shall have the right to sell off its inventory of Institute Licensed Product(s) existing on the date of termination of this Agreement (“Sell Off Right”), subject to the royalty obligation of Section 3.1.3.

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5.8. Survival. Licensee’s obligation to pay all monies owed accruing under this Agreement shall survive termination of this Agreement. In addition, the provisions of Article 4 - Confidentiality, Article 5 - Term and Termination, Article 8 - Disclaimer of Warranties; Indemnification, Article 9 - Use of Institute’s Name; Independent Contractor and Article 10 - Additional Provisions shall survive such termination.

ARTICLE 6

PATENT MAINTENANCE

As of the Effective Date, Licensee will assume the primary responsibility for applying for, seeking prompt issuance of, and maintaining the Institute Patent Rights during the term of this Agreement. Without limiting the generality of the foregoing, Licensee shall be entitled to use patent counsel of its choice and Institute shall use all reasonable efforts to cause Institute’s patent counsel to deliver files to Licensee’s counsel and otherwise to cooperate with Licensee and Licensee’s patent counsel relating to such prosecution. Licensee shall diligently and in a timely manner provide Institute with copies of filings relating to the prosecution, maintenance, and validity of the Institute Patent Rights. Licensee shall consult with Institute in such prosecution and maintenance, and shall diligently seek strong and broad claims under the Institute Patent Rights and shall not abandon prosecution of any Institute Patent Rights without first notifying Institute in a timely manner of Licensee’s intention and reason therefore, and providing Institute with reasonable opportunity to assume responsibility for prosecution and maintenance of the Institute Patent Rights. If the Institute believes, in good faith and after consultation with Licensee, that Licensee is not fulfilling its duties under this Article, then Institute may resume responsibility for prosecution of the patents, and Licensee shall reimburse Institute for all costs expended by Institute in prosecuting the patents.

ARTICLE 7

INFRINGEMENT AND LITIGATION

7.1. Notification of Infringement. Institute and Licensee are responsible for notifying each other promptly of any infringement of Institute Patent Rights which may come to their attention. Institute and Licensee shall consult one another in a timely manner concerning any appropriate response to the infringement.

7.2. Prosecution by Licensee. Licensee may prosecute such infringement at its own expense. Licensee shall not settle or compromise any such suit in a manner that imposes any obligations or restrictions on Institute without Institute’s prior written permission, which permission shall not be unreasonably withheld (provided however that no permission shall be required for Licensee to grant a non-royalty bearing Sublicense as part of such settlement if Licensee reasonably determines that such grant is necessary or appropriate to avoid litigation or similar controversy). Financial recoveries from any such litigation will first be applied to reimburse Licensee for its litigation expenditures with additional recoveries being paid to Licensee, subject to a royalty due Institute based on the provisions of Article 3.

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7.3. Prosecution by Institute. If Licensee fails to prosecute any infringement, then Institute may prosecute such infringement at its own expense. In such event, financial recoveries will be entirely retained by Institute.

7.4. Cooperation. In any action to enforce any of the Institute Patent Rights, either party, at the request and expense of the other party shall cooperate to the fullest extent reasonably possible, including without limitation being joined as a necessary party to litigation. This provision shall not be construed to require either party to undertake any activities, including legal discovery, at the request of any third party except as may be required by lawful process of a court of competent jurisdiction.

ARTICLE 8

REPRESENTATIONS, DISCLAIMER OF WARRANTIES; INDEMNIFICATION

8.1. Representations.

8.1.1 Institute represents and warrants to Licensee as follows: Institute is the exclusive owner of the Institute Patent Rights and the Institute Technical Information. Institute is not a party to or bound by any license or other agreement that grants any person any rights with respect to the Institute Patent Rights; provided, however, Licensee acknowledges Institute’s written policy for sharing net proceeds on intellectual property with the applicable inventors, for which Institute assumes all responsibility. The grant of the License under this Agreement does not conflict with any agreement to which Institute is a party. Institute has not received any written charge, complaint, claim, demand or notice alleging that the development and use of the Institute Patent Rights or the Institute Technical Information has interfered with, misappropriated any valid patent claims of third parties. No litigation is pending and no claim has been made against Institute or, to the knowledge of Institute, is threatened, which contests the right of Institute to license to Licensee the Institute Patent Rights or the Institute Technical Information.

8.1.2 To the Parties best knowledge, all of the Institute Technical Information in existence as of the Effective Date is identified on Attachment I. If, during the term of this Agreement, either party becomes aware of information that it believes meets the definition of Institute Technical Information except for the fact that it is not identified on Attachment I, the discovering party will notify the other party and the parties will jointly determine whether to amend Attachment I to identify the additional information The knowledge of Institute is limited to the actual knowledge of the Inventors and persons employed in Institute’s Office of Technology Transfer and Office of the General Counsel.

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8.1.3 NO OTHER WARRANTIES. THE INSTITUTE PATENT RIGHTS, INSTITUTE TECHNICAL INFORMATION, INSTITUTE LICENSED PRODUCTS AND ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS, AND, INSTITUTE MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO EXCEPT AS SET FORTH IN SECTION 8.1.1. BY WAY OF EXAMPLE BUT NOT OF LIMITATION, INSTITUTE MAKES NO REPRESENTATIONS OR WARRANTIES: (a) OF COMMERCIAL UTILITY; (b) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; OR (c) EXCEPT AS SET FORTH IN SECTION 8.1.1, THAT THE USE OF THE INSTITUTE PATENT RIGHTS, INSTITUTE TECHNICAL INFORMATION, INSTITUTE LICENSED PRODUCTS OR ANY TECHNOLOGY LICENSED UNDER THIS AGREEMENT WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADE SECRET OR TRADEMARK OR OTHER PROPRIETARY OR PROPERTY RIGHTS OF OTHERS. INSTITUTE SHALL NOT BE LIABLE TO LICENSEE, AFFILIATES, LICENSEE’S SUBLICENSEES OR THEIR RESPECTIVE SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT TO: ANY CLAIM ARISING FROM USE OF THE INSTITUTE PATENT RIGHTS, INSTITUTE TECHNICAL INFORMATION, INSTITUTE LICENSED PRODUCTS OR ANY TECHNOLOGY LICENSED UNDER THIS AGREEMENT OR FROM THE MANUFACTURE, USE OR SALE OF INSTITUTE LICENSED PRODUCTS; OR ANY CLAIM FOR LOSS OF PROFITS, LOSS OR INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND EXCEPT TO THE EXTENT THAT ANY SUCH CLAIM IS ATTRIBUTABLE TO A BREACH BY INSTITUTE OF SECTION 8.1.1.

8.2. Indemnification. Licensee shall indemnify, defend and hold harmless Institute, its trustees, officers, agents and employees (individually, an “Indemnified Party”, and collectively, the “Indemnified Parties”), from and against any and all liability, loss, damage, action, claim or expense suffered or incurred by the Indemnified Parties (including attorneys’ fees and expenses) (individually, a “Liability”, and collectively, the “Liabilities”) that results from or arises out of: (a) the development, use, manufacture, promotion, sale or other disposition of any Institute Technical Information, Institute Patent Rights, or Institute Licensed Products by Licensee, its Affiliates, its assignees, Sublicensees, vendors or other third parties; (b) any breach by Licensee or its Affiliates or Sublicensees of this Agreement; and (c) the enforcement by an Indemnified Party of this Section 8.2. Without limiting the foregoing, Licensee shall defend, indemnify and hold harmless the Indemnified Parties from and against any Liabilities resulting from:

8.2.1 Any product liability or other claim of any kind related to the use by a third party of a Institute Licensed Product that was manufactured, sold or otherwise disposed by Licensee, its Affiliates, its assignees, Sublicensees or vendors;

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8.3.2 A claim by a third party that the Institute Technical Information or Institute Patent Rights or the design, composition, manufacture, use, sale or other disposition of any Institute Licensed Product infringes or violates any patent, copyright, trade secret, trademark or other intellectual property rights of such third party, except to the extent such claim is attributable to a breach of Section 8.1.1; and

8.2.3 Clinical trials or studies conducted by or on behalf of Licensee, its Affiliates, its assignees, Sublicensees or agents relating to the Institute Technical Information, Institute Patent Rights or Institute Licensed Products, including, without limitation, any claim by or on behalf of a human subject of any such clinical trial or study, any claim arising from the procedures specified in any protocol used in any such clinical trial or study, any claim of deviation, authorized or unauthorized, from the protocols of any such clinical trial or study, and any claim resulting from or arising out of the manufacture or quality control by a third party of any substance administered in any clinical trial or study provided, that Licensee shall have no obligation to indemnify any Indemnified Party to the extent that any loss or damage is attributable to the negligence or misconduct of such Indemnified Party or its employees or representatives.

8.3. Rights of Institute in Liability Action. Licensee is not permitted to settle or compromise any claim or action giving rise to Liabilities in a manner that imposes any restrictions or obligations on Institute without Institute’s prior written consent, which consent shall not be unreasonably withheld. If Licensee fails or declines to assume the defense of any such claim or action within [**] days after notice thereof, then Institute may assume the defense of such claim or action for the account and at the risk of Licensee, and any Liabilities related thereto shall be conclusively deemed a liability of Licensee. The indemnification rights of Institute or other Indemnified Party contained herein are in addition to all other rights that such Indemnified Party may have at law or in equity or otherwise.

8.4. Insurance.

8.4.1 Licensee and any Affiliate shall procure and maintain a policy or policies of comprehensive general liability insurance, including broad form and contractual liability, in a minimum amount of $[**] combined single limit per occurrence and in the aggregate as respects personal injury, bodily injury and property damage arising out of such party’s performance of this Agreement.

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8.4.2 Licensee and any Affiliate shall, upon commencement of clinical trials involving Institute Licensed Products, procure and maintain a policy or policies of product liability insurance in a minimum amount of $[**] combined single limit per occurrence and in the aggregate as respects bodily injury and property damage arising out of such party’s performance of this Agreement.

8.4.3 The policy or policies of insurance described in this Section 8.4 shall be issued by an insurance carrier with an A.M. Best rating of “A” or better and shall name Institute as an additional insured with respect to Licensee’s performance of this Agreement. Licensee and any Affiliate shall, upon reasonable request, provide Institute with certificates evidencing the insurance coverage required herein and all subsequent renewals thereof. Such certificates shall provide that the insurance carrier(s) notify Institute in writing at least [**] days prior to cancellation or material change in coverage.

8.4.4 Institute may periodically review the adequacy of the minimum limits of liability insurance specified in this Section, and Institute reserves the right to request Licensee and any Affiliate to adjust the liability insurance coverages. Licensee will consider any reasonable request to adjust the liability insurance coverages. The specified minimum insurance amounts do not constitute a limitation on the obligation of Licensee and any Affiliate to indemnify Institute under this Agreement.

ARTICLE 9

USE OF INSTITUTE’S NAME

Licensee and its Affiliates, employees, Sublicensees and agents shall not use, and Licensee shall not permit its Sublicensees to use, Institute’s name or any adaptation thereof, or any Institute seal, logotype, trademark, or service mark, or the name, mark, or logotype of any Institute representative or organization in any way without the prior written consent of Institute in it sole discretion. Institute hereby consents to the disclosure of the existence and terms of this Agreement by Licensee in the ordinary course of Licensee’s business, including without limitation the disclosure hereof to current and prospective Sublicensees, investors, research collaborators and strategic partners.

Licensee acknowledges that Institute, Baylor Health Care System, and Baylor University Medical Center are not affiliated with Baylor University or Baylor College of Medicine, and Licensee will make no reference to the University or College of Medicine in any publications without the prior written consent of such separate organization.

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ARTICLE 10

ADDITIONAL PROVISIONS

10.1. No Agency. Nothing in this Agreement shall be deemed to establish a relationship of principal and agent between Institute and Licensee or its Affiliates or Sublicensees, nor any of their agents or employees for any purpose whatsoever, nor shall this Agreement be construed as creating any other form of legal association or arrangement which would impose liability upon one party for the act or failure to act of the other party.

10.2. Assignment. Licensee together with its Affiliates are not permitted to assign this Agreement or any part of it, either directly or by merger or other operation of law, without the prior written consent of Institute, which consent shall not be unreasonably withheld, provided that no such consent shall be required if (a) this Agreement is assigned in connection with the sale of all or substantially all of the assets or stock of Licensee, whether by merger, acquisition or otherwise or (b) this Agreement is assigned to an Affiliate of Licensee or transferred to a partnership, limited liability company, joint venture or similar enterprise in which Licensee has rights to receive at least [**]% of the profits. Institute is not permitted to assign this Agreement or any part of it, either directly or by merger or other operation of law, without the prior written consent of Licensee, which consent shall not be unreasonably withheld provided that no such consent shall be required if this Agreement is assigned to a nonprofit institution under common control with Institute. Any prohibited assignment of this Agreement or the rights hereunder shall be null and void. No assignment effected without Institute’s consent relieves Licensee, its Affiliates and/or Sublicensees of responsibility for the performance of any accrued obligations that Licensee, its Affiliates and/or Sublicensees has prior to such assignment.

10.3. No Waiver. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other subsequent breach or condition, whether of like or different nature.

10.4. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be delivered in person or sent overnight delivery by Federal Express or by certified or registered mail, return receipt requested, or telexed in the case of non-U.S. residents, and shall be deemed to have been given when hand delivered, one (1) day after mailing when mailed by overnight courier (e.g. Federal Express or Express Mail) or five (5) days after mailing by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):

If to Institute:

Baylor Research Institute

3434 Live Oak

Dallas, Texas, 75204.

Attention: President

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With a required copy to:

Baylor Research Institute

3434 Live Oak

Dallas, Texas, 75204.

Attention: General Counsel

If to Licensee:

Argos Therapeutics, Inc.

4233 Technology Drive

Durham, North Carolina 27704

Attention: Chief Executive Officer

With a required copy to:

Hutchison & Mason PLLC

5410 Trinity Road, Suite 400

Raleigh, North Carolina 27607-3815

Attention: William N. Wofford Esq.

or to such other names or addresses as Licensee or Institute, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section 10.4.

10.5. Governing Law and Arbitration. This Agreement shall be construed and governed in accordance with the laws of the State of North Carolina, without giving effect to conflict of law provisions of any jurisdiction. In the event that a party to this Agreement perceives the existence of a dispute with the other party concerning any right or duty provided for herein, the parties will, as soon as practicable, confer in an attempt to resolve the dispute. Except as to issues relating to the validity, enforceability or final determination of infringement of any patent contained in the Institute Patent Rights licensed hereunder, any and all claims, disputes or controversies arising under, out of, or in connection with this Agreement, which have not been resolved in good faith negotiations between the parties, shall be resolved by a board of three (3) arbitrators in accordance with the rules, then in effect, of the American Arbitration Association. If the Arbitration is brought by Institute, it shall take place in Durham, North Carolina, and if brought by Licensee, it shall take place in Dallas, Texas. Such independent board shall be composed of three (3) panelists of sufficient education, scientific experience and national reputation to address such issues. The board shall be composed of one arbitrator selected by Institute, one selected by Licensee and one selected by Licensee and Institute. If Licensee and Institute cannot agree upon the third arbitrator within [**] days after the notice of arbitration, the third arbitrator shall be selected by the American Arbitration Association in accordance with its rules. The decision of such panel shall be final and binding upon the parties and enforceable in any court of competent jurisdiction.

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10.6. No Discrimination. Institute and Licensee and its Affiliates shall not discriminate against any employee or applicant for employment because of race, color, sex, sexual or affectional preference, age, religion, national or ethnic origin, handicap, or because he or she is a disabled veteran or a veteran of the Vietnam Era and Licensee shall include in each Sublicense a commitment by each Sublicensee to comply with all applicable employment discrimination laws.

10.7. Compliance with Laws. Institute, Licensee, its Affiliates and Sublicensees shall comply with all prevailing laws, rules and regulations that apply to its activities or obligations under this Agreement, including, but not limited to, all applicable laws and regulations regarding “conflicts of interest” and institutional review imposed by the FDA, the U.S. Office of Human Research Protections, and otherwise. Without limiting the foregoing, it is understood that this Agreement may be subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities, articles and information, including the Arms Export Control Act as amended in the Export Administration Act of 1979, and that the parties’ obligations are contingent upon compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by Licensee, its Affiliates and/or Sublicensees that Licensee shall not export data or commodities to certain foreign countries without prior approval of such agency. Institute neither represents that a license is not required nor that, if required, it will issue.

10.8. Binding Nature of Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, except that any assignment by Licensee must comply with Section 10.2 to be effective.

10.9. Counterparts, Headings and Exhibits. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The headings used in this Agreement are for convenience only and are not to be considered in construing or interpreting any term or provision of this Agreement. All Schedules and Exhibits hereto are hereby incorporated in this Agreement and made a part hereof.

10.10. Integration and Amendment. This Agreement embodies the entire agreement and understanding among the parties hereto and supersedes all prior agreements and understandings of the parties relating to the Institute Patent Rights and Institute Licensed Product(s). This Agreement does not supersede or alter any other written agreements executed by the parties, including but not limited to the Research and Support Agreement and Amendments thereto and the Research License Agreement -LUPUS. This Agreement may not be changed, modified, extended or terminated except by written amendment executed by an authorized representative of Institute and Licensee.

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10.11. Severability. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, then such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein.

10.12. Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided that if the final day of any time period falls on a Saturday, Sunday or holiday on which Federal banks are or may elect to be closed, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or such holiday.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have caused this Agreement to be executed by their duly authorized representatives.

BAYLOR RESEARCH INSTITUTE		ARGOS THERAPEUTICS, INC.
By:	/s/ William R. Duncan	By:	/s/ Frederick Miesowicz
Name:	William R. Duncan, Ph.D.	Name:	Frederick Miesowicz
Title:	Chief Operating Officer	Title:	Vice Pres., Business Development

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Attachment 1 - List of Patents and Patent Applications

Patent(s)

NO.	Patent Application Name	Patent Number/ Country	Application No.	Assignee/Owner	Filing Date
1	[**]	[**]	[**]	[**]	[**]

Institute Technical Information

None known

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AMENDMENT TO LICENSE AGREEMENT-(Anti-Interferon Alpha Monoclonal Antibodies)

This Amendment to the Exclusive License Agreement (“Amendment”) is made on February 9, 2006 (the “Amendment Date”) by and between BAYLOR RESEARCH INSTITUTE (“Institute”), a nonprofit corporation organized and existing under the laws of the State of Texas, having its principal office at 3434 Live Oak, Dallas, Texas, 75204, and Argos Therapeutics, Inc., a Delaware corporation formerly known as MERIX Bioscience, Inc., a Delaware corporation (“Licensee”), with its principal offices at 4233 Technology Drive, Durham, North Carolina 27704.

Recitals

WHEREAS, Institute and Licensee have previously entered into an Exclusive License Agreement dated November 17, 2005 regarding U.S Patent Application [**] entitled “Anti-Interferon Alpha Monoclonal Antibodies and Method for Use” and related intellectual property (the “Agreement”);

WHEREAS, both parties desire to modify and amend the Agreement to facilitate commercialization of products thereunder, including development and commercialization by Novo Nordisk A/S, a Danish public limited company (“Novo”) established and existing under Danish law, under a sublicense to Licensee’s rights under the Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to the following:

1. Section 2.1 (License Grant)

Section 2.1 is hereby amended by inserting the following sentence at the end of the first paragraph: “As of the Amendment Date, to the knowledge of Institute and Licensee, there is no Institute Technical Information.”

2. Section 2.4.2 (Sublicense Conditions)

Section 2.4.2 is hereby replaced with the following:

“Within [**] days after Licensee enters into any Sublicense, Licensee shall deliver to Institute a complete copy of the Sublicense with financial terms redacted. Institute shall review any such Sublicense and has [**] days from the receipt of such Sublicense to notify Licensee if it has found the Sublicense to be inconsistent with the rights granted under the License. If any such inconsistency is found, Institute and Licensee shall work diligently to resolve the discrepancy.”

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3. Section 3.1.4 (Sublicense Royalties)

Section 3.1.4 is hereby amended by the addition of the following sentences: “In the event that a Sublicense provides for a commercially reasonable manner of calculating net sales of Institute Licensed Products and such manner is different from the manner of calculating Net Sales hereunder, then the royalty payable with respect to Institute Licensed Product sold by Sublicensees shall be calculated as provided for in the Sublicense. For clarification by way of example, if a sublicensee requires a calculation of “Net Sales” based on its language regarding deductions, transfer pricing and such, then Licensee can accept that calculation and pay royalties to Institute based on the same method used for paying royalties to Licensee. Without limiting the generality of the foregoing, the royalties payable to Institute pursuant to the Sublicense granted to Novo may be based on the definition for “Net Sales Value” shown on Annex I. For clarification and without limitation, royalty obligations under the license agreement of January 15, 2002 (as amended as of the Amendment Date) between Licensee and Institute shall not be taken into account in determining the amount, if any, of any royalty reduction under this Section.

4. Section 3.2.1 (Diligence)

Section 3.2.1 is hereby amended to read as follows:

It is the express intent of the Parties to work diligently to human clinical trials of the subject matter of this Agreement at the earliest possible time, as such, LICENSEE and its Sublicencees shall use Reasonable Endeavors (as defined in Annex I), taking into account the size and capitalization of LICENSEE, to achieve (or cause an Affiliate or Sublicensee to achieve) dosing of the first subject with an Institute Licensed Product in a Phase 1 Trial by [**].

5. Section 3.2.3 (Diligence)

Section 3.2.3 is hereby amended by deleting “commercially reasonable efforts” and replacing it with “Reasonable Endeavours”.

6. Section 3.2 (Diligence)

Section 3.2.4 is hereby amended by deleting “Commercially Reasonable Efforts” and replacing it with “Reasonable Endeavours”.

7. Section 4.2

Section 4.2 is hereby amended to read as follows:

Institute shall not be obligated to accept any confidential information from Licensee or any Sublicensee except for the reports required under this Agreement. Institute shall use the same level of care Institute uses to protect its own confidential information (and in any event, not less than reasonable care) to prevent the disclosure of those reports to any third party other than Institute’s outside legal advisors (subject to exceptions substantially similar to these applicable to Licensee under Section 4.1) who shall be obligated to treat such reports as confidential. Institute shall maintain in confidence and agrees not to disclose to any third party any confidential information received from Licensee or any Sublicensee. Institute shall ensure that its employees have access to such confidential information only on a need-to-know basis and are obligated in writing to abide by Institute’s obligations under this Agreement. Institute bears no institutional responsibility for maintaining the confidentiality of any other information of Licensee or any Sublicensee.

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8. Section 5.4 (Effect of Termination)

Section 5.4 is hereby amended by deleting it in its entirety and replacing it with the following new Section 5.4:

“5.4 Effect of Termination. In the event of a termination under Sections 5.2 or 5.3 hereof, all duties of Institute and all rights (but not duties) of Licensee and any Affiliate shall immediately terminate without the necessity of any action being taken either by Institute or by Licensee or any Affiliate. Upon and after any termination of this Agreement, Licensee and any Affiliate shall refrain from further manufacture, sale, marketing, importation and/or distribution of Institute Licensed Product(s), except as provided in this Article 5. Licensee acknowledges that termination shall not affect Institute’s rights and privileges as a stockholder of Licensee nor its ownership of shares in Licensee. If, for any reason, this Agreement is terminated, Institute agrees that: i) all Sublicenses granted by Licensee shall survive the termination or expiration of this Agreement and Institute shall grant directly to Sublicensee a license to Institute Patent Rights and Institute Technical Information on terms that are no less favorable to the Sublicensee than those set forth in the Sublicense; and ii) Sublicensee shall be able to continue making, using, selling, offering for sale and/or importing Institute Licensed Product under the license granted directly to Sublicensee by Institute under 5.4i).”

9. Section 5.5

Section 5.5 is hereby amended to read as follows:

Upon termination of this Agreement, Licensee and any Affiliate shall, at Institute’s request, return to Institute all Confidential Information (provided that Licensee may retain one copy with the offices of its outside legal counsel).

10. Section 5.6

Section 5.6 is hereby amended to read as follows:

Upon termination of this Agreement, Licensee shall cause physical inventories to be taken immediately of: (a) all completed Institute Licensed Product(s) on hand under the control of Licensee or any Affiliate; and (b) such Institute Licensed Product(s) as are in the process of manufacture and component parts thereof as of the date of termination of this Agreement, which inventories shall be reduced to writing. Licensee shall deliver copies of such written inventories, verified by an officer of Licensee forthwith to Institute. Institute shall have [**] days after receipt of such verified inventories within which to challenge the inventory and request an audit. Upon [**] days written notice to Licensee, Institute and its agents shall be given access during business hours to the premises of Licensee and its Affiliates for the purpose of conducting an audit. Upon the termination of this Agreement, Licensee shall, at its own expense forthwith remove, efface or destroy all references to Institute from all advertising or other materials used in the promotion of Licensee’s business or the business of any Affiliate and Licensee and any Affiliate shall not thereafter represent in any manner that it has rights in or to the Institute Patent Rights or Institute Licensed Product(s).

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11. Section 5.7

Section 5.7 is hereby amended to i) delete “and Sublicensees” on the second line and ii) add the following sentence “Pursuant to 5.4ii), if this Agreement is terminated, the provisions of this section shall not apply to Sublicensee and Sublicensee shall be able to continue making, using, selling, offering for sale and/or importing Institute Licensed Product under the license granted directly to Sublicensee by Institute under 5.4i)”.

12. Section 6 (Patent Maintenance)

Section 6 is hereby amended by i) inserting the following phrase immediately prior to the end of the first sentence “including the preparation, filing and prosecution of any applications for patent term restoration under the U.S. Drug Price Competition and Patent Term Restoration Act and/or European, Japanese and other foreign counterparts thereof” and ii) inserting the following phrase immediately prior to the end of the second sentence: “, and in addition, Licensee shall have the right, at its sole discretion, to elect which patent in Institute Patent Rights, if any, patent term restoration shall be applied for in each country and Institute shall cooperate in applying for an extension of the term of any patent in the Institute Patent Rights if appropriate under the U.S. Drug Price Competition and Patent Term Restoration Act and/or European, Japanese and other foreign counterparts thereof. Licensee or a Sublicensee shall prepare all documents for such applications, and Institute shall, if necessary, execute such documents and take any other additional action as Licensee reasonably requests in connection therewith, including authorizing the Licensee or a Sublicensee to act as the Institute’s agent before any patent authority in seeking restoration of the term of a patent in the Institute Patent Rights. Institute shall not seek patent term restoration of any patent in Institute Patent Rights without Licensee’s and Sublicensee’s prior written approval.”

Section 6 is hereby further amended by inserting at the end of the paragraph the following sentence, “Any rights provided by Institute to Licensee under this Section 6 may be granted by Licensee to a Sublicensee and upon such grant, it shall be as if Institute had directly provided such rights to the Sublicensee and with respect to such rights, Institute shall have the same obligations to such Sublicensee as it has towards the Licensee under this Section 6 and Sublicensee shall have the same obligations and duties under this Section 6, including but not limited to, reimbursement of Institute’s costs, as the Licensee.”

13. Section 7 (Infringement and litigation)

Section 7.2 is hereby amended to add the following at the end of Section 7.2: “If Institute is required under applicable law to join any such legal action initiated by Licensee or if the failure of Institute to be a party to such suit, action, or proceeding would in the opinion of counsel to Licensee risk dismissal thereof, Institute shall execute all papers and perform such other acts as may be reasonably required to permit the litigation to be initiated or conducted (including initiating a suit before a court or tribunal at Licensee’s request or permitting Licensee to initiate a legal action under this clause in the name of Institute and Licensee), and Licensee shall reimburse Institute for its expenses relating to its joining thereto and participation therein. If Institute is required to be joined as a party in any such action, then upon the request of Licensee, Institute shall waive any objection to such joiner on the grounds of personal jurisdiction, venue, or forum non conveniens. Any rights provided by Institute to Licensee under this Article 7.2 may be granted by Licensee to a Sublicensee and upon such grant, it shall be as if Institute had directly provided such rights to the Sublicensee and with respect to such rights, Institute shall have the same obligations to such Sublicensee as it has towards the Licensee under this Section 7 and Sublicensee shall have the same obligations and duties under this Section 7, including but not limited to, reimbursement of Institute’s costs, as the Licensee.”

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14. Section 8.1.1 (Representations)

Section 8.1.1 is hereby amended to add the following sentence:

“The representations and warranties made on the Effective Date are accurate as of the Amendment Date, provided, however that Licensee acknowledges that the Institute Patent Rights were developed with the financial support of the Alliance for Lupus Research and are subject to the “Patent and Intellectual Property Policy of the Alliance for Lupus Research”, a copy of which has been provided to Licensee by Institute.”

15. Section 8.4 (Insurance)

Section 8.4 is hereby amended by the addition of the following Section 8.4.5

“8.4.5 An undertaking by a Qualified Sublicensee to obtain and maintain appropriate insurance coverage with reputable and financially secure insurance carriers to cover it activities related to Institute Licensed Products shall satisfy the obligations of Licensee under Section 8.4.1 to 8.4.4 with respect to such sublicense.”

16. No other Amendments

Except as specifically modified herein, the Agreement shall remain in full force and effect as originally executed.

17. Entire Agreement

The Agreement, as amended by this Amendment, constitutes and contains the entire understanding and agreement of the parties respecting the subject matter hereof and cancel and supersede any and all prior negotiations, understandings and agreements between the parties.

[signature page follows]

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IN WITNESS THEREOF, the parties have executed this Amendment in two or more counterparts, each as an original and all together as one instrument, as of the date of the last signature written below.

ARGOS THERAPEUTICS, INC.		BAYLOR RESEARCH INSTITUTE
By:	/s/ Jeff Abbey	By:	/s/ Michael Ramsay
Name:	Jeff Abbey	Name:	Michael Ramsay
Title:	Vice President, Business Development	Title:	President, Baylor Research Institute

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Annex I

“Net Sales Value” of an Institute Licensed Product means in the case of an arms’ length sale the gross amount invoiced by LICENSEE, Novo, its Affiliates or the relevant sublicensee to any third party (not being a sublicensee) less any and all of the following:

(a) transport, freight, and insurance charges added to the sales price and set forth separately as such on the total amount invoiced;

(b) trade, cash and/or quantity discounts;

(c) refunds, credits, returns, rebates or allowances;

(d) discounts which are in the nature of refunds, rebates or allowances;

(e) credits, if any, on account of retroactive price reductions;

(f) duties; or

(g) value added (or like) tax to the extent identified on the invoice.

“Reasonable Endeavors” means the application of ongoing, consistent, diligent efforts and resources by Licensee, Novo or another Sublicensee to Develop and Commercialize one or more Institute Licensed Products. It is understood that the level of effort and resources shall be consistent with its actions in respect of a product or compound owned or controlled by the applicable party which the applicable party intends in good faith to Develop and Commercialize and which is of similar market potential and at a similar stage in its development or product life, taking into account, without limitation, with respect to a product issues of safety and efficacy, product profile, the proprietary position of the product, the then current competitive environment for the product and the likely timing of the product’s entry into the market, the regulatory environment of the product, and other relevant scientific, technical and commercial factors. Notwithstanding the foregoing, to the extent that the performance of a party’s responsibilities to use Reasonable Endeavors is adversely affected by another party’s failure to perform its related responsibilities, such party will not be deemed to have failed to use its Reasonable Endeavors in performing such responsibilities.

Commercialization” or “Commercialize” means activities directed to obtaining pricing and reimbursement approvals, marketing, promoting, detailing, distributing, importing, exporting or selling a product.

“Develop” or “Development” means research, discovery, modification and preclinical and clinical drug and/or biological development activities, including test method development and stability testing, toxicology, formulation, quality assurance/quality control development, statistical analysis, clinical studies and regulatory affairs, approval and registration in each case, of a product.

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EX-10.20

Exhibit 10.20

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (“Agreement”) is effective as of March 6, 2004 (“Effective Date”), by and between Merix Bioscience, Inc., a Delaware corporation with principal offices at 4233 Technology Drive, Durham, North Carolina 27704 (“MERIX”), and Geron Corporation, a Delaware corporation with offices at 230 Constitution Drive, Menlo Park, California 94025 (“GERON”). MERIX and GERON are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

R E C I T A L S

A. MERIX has developed or has rights to certain patents and patent applications covering the isolation and activation of antigen presenting cells, including dendritic cells, with both uncharacterized antigens and Defined Antigens (as defined below) of interest for use in human therapies.

B. GERON wishes to develop and commercialize therapeutic products for the treatment of cancer utilizing dendritic cells with Defined Antigens, including without limitation telomerase, on the terms and conditions set forth herein.

C. MERIX desires to grant GERON a license under MERIX’s rights in such patents and patent applications to enable GERON to develop and commercialize such products on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the premises and of the covenants herein contained, the Parties mutually agree as follows:

ARTICLE 1. DEFINITIONS

For purposes of this Agreement, the terms defined in this Article shall have the meanings specified below. Certain other capitalized terms are defined elsewhere in this Agreement.

1.1. “Affiliate” shall mean any corporation or other entity which controls, is controlled by, or is under common control with a Party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the corporation or other entity.

1.2 “Defined Antigen” shall mean any antigen of known identity that is substantially free of Uncharacterized Antigens.

1.3. “Confidential Information” shall have the meaning ascribed to it in Section 6.1 below.

1.4 “Control” or “Controlled” means with respect to any Patent Rights, the possession (whether by license, other than pursuant to this Agreement, or by ownership) by Geron or Merix as the case may be of the ability to grant to the other party access and/or a license as provided herein under such Patent Right without violating the terms of any presently existing agreement or other presently existing arrangement with any third party.

1.5. “Effective Date” shall mean the date first appearing above.

1.6. “Field” shall mean the treatment or prophylaxis of cancer.

1.7. “GERON Improvements” shall mean any Patent Rights claiming or covering methods or compositions of matter that directly affect the isolation, synthesis, development, manufacture or use of a Merix Product in the Field that are owned or Controlled by GERON during the first [**] years after the Effective Date of this Agreement. However, Geron Improvements shall not include any Patent Rights claiming or covering methods or compositions of matter that directly affect the isolation, synthesis, development, manufacture or use of (1) telomerase or (2) embryonic stem cells or cells derived from isolated embryonic stem cells.

1.8. “MERIX Improvements” shall mean any Patent Rights claiming or covering methods or compositions of matter that directly affect the isolation, synthesis, development, manufacture or use of a Product in the Field that are owned or Controlled by MERIX during the first [**] years after the Effective Date of this Agreement.

1.9. “MERIX Patent Rights” shall mean all Patent Rights owned or Controlled by MERIX as of the Effective Date, excluding those listed on the attached Exhibit C; provided, however, that if within thirty (30) days after the Effective Date, GERON has reasonably articulated in writing to MERIX a good faith and scientifically plausible application of the technology disclosed in the specifications of any patent application listed in Section C.2. of Exhibit C for the development, manufacture or sale of Products in the Field, then such patent application shall be deemed deleted from Exhibit C.

1.10. “MERIX Product” shall mean any products, vaccines or therapies utilizing or containing a dendritic cell with one or more antigens, including without limitation Defined Antigens or Uncharacterized Antigens.

1.11. “MERIX Technology” shall mean all Technology owned or Controlled by MERIX as of the Effective Date.

1.12. “Patent Rights” shall mean United States and foreign patents, patent applications, provisional patent applications, certificates of invention and applications therefor, divisions, continuations or continuations-in-part, or continuing prosecution applications, together with any extensions, registrations, confirmations, reissues, re-examinations, renewals or supplementary protection certificates and other forms of government-issued patent protection directed to the inventions claimed in the foregoing.

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1.13. “Products” shall mean any products, vaccines or therapies utilizing or containing a dendritic cell with one or more Defined Antigens, but expressly excluding any use or incorporation of exogenously added Uncharacterized Antigens. “Product” does not include any product, vaccine or therapy utilizing or containing total tumor RNA or any fractional preparation thereof.

1.14. “Sublicensees” shall mean any Third Party (excluding the other Party and its Affiliates) that is sublicensed any Technology rights by a Party pursuant to Section 4.1 or 4.3 of this Agreement.

1.15. “Technology” shall mean inventions, trade secrets, copyrights, know-how, data and other intellectual property of any kind, other than Patent Rights.

1.16. “Territory” shall mean worldwide.

1.17. “Third Party” shall mean any entity other than MERIX, GERON or their respective Affiliates.

1.18. “Third Party Licenses” shall mean the license agreements listed on the attached Exhibit A, together with any other license agreements entered into by a Party and covering any of its Improvements licensed hereunder to the other Party pursuant to Section 4.2.

1.19 “Uncharacterized Antigens” shall mean any unknown or uncharacterized antigen. For avoidance of doubt, a preparation, or any fractional preparation, of total tumor RNA is a preparation that contains exogenous Uncharacterized Antigens.

ARTICLE 2. OBLIGATIONS OF THE PARTIES

2.1. General. Each Party hereby agrees to use commercially reasonable and diligent efforts to perform the duties delegated to it pursuant to this Agreement.

2.2. Facilities and People. GERON acknowledges and agrees that it shall have no interest in or access to any MERIX facilities or personnel except as the Parties may agree on an arms length basis as reflected in a separate written agreement. Neither GERON nor any of its Affiliates shall solicit any Merix employees or any of [**] or [**] for employment or collaboration with or on behalf of GERON or its Affiliates. Notwithstanding the foregoing, MERIX shall release [**] and [**] (the “Named Researchers”) from any noncompetition obligations owing by them to MERIX as of the Effective Date to permit such Named Researchers, should they desire, to consult or collaborate with GERON or its Affiliates; provided, however, that MERIX and such Named Researcher will modify the compensation paid and other terms and conditions under their existing arrangements. For up to ninety (90) days following the Effective Date, MERIX will use reasonable commercial efforts to (1) facilitate the establishment of relationships between the Named Researchers and GERON and (2) facilitate the transfer of technical know-how from the Named Researchers to Geron.

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ARTICLE 3. CONSIDERATION

3.1. Issuance of Geron Common Stock. In consideration for the license rights in Article 4 below, GERON shall issue to MERIX at no cost 5.0 million shares of GERON Common Stock (“Shares”) at the end of the first business day following execution of this Agreement, which Shares shall be subject to the terms and conditions of the Stock Purchase Agreement attached hereto as Exhibit B.

ARTICLE 4. LICENSE GRANTS AND INTELLECTUAL PROPERTY

4.1. License to MERIX Technology and MERIX Patents.

(a) License to Geron. Subject to the terms and conditions of this Agreement, MERIX hereby grants to GERON a co-exclusive (with MERIX), worldwide, fully paid up license, with the right to grant sublicenses solely as permitted in Section 4.1 (c), under MERIX’s interest in the MERIX Patent Rights and the MERIX Technology solely to develop, make, have made, use, import and export, offer for sale and sell Products in the Field.

(b) Restriction on Further Licensing by Merix. Merix shall grant no further licenses or sublicenses under the MERIX Patent Rights or MERIX Technology to any third party to develop, make, have made, use, import or export, offer for sale or sale of Products in the Field, except (a) for research and development purposes to academic or other nonprofit organizations, or (b) pursuant to a bona fide active development or commercialization collaboration with one or more commercial entities.

(c) Geron’s Right to Sublicense. Geron shall be permitted to grant sublicenses under the MERIX Patent Rights or MERIX Technology to any third party to develop, make, have made, use, import or export, offer for sale or sale of Products in the Field, provided each such sublicense is (a) a sublicense for research and development purposes to an academic or other nonprofit organization, or (b) pursuant to a bona fide active development or commercialization collaboration with one or more commercial entities. All sublicenses granted under this Section 4.1(c) shall comply with the provisions of this Agreement and any relevant Third Party License.

4.2 License to Improvements.

(a) By MERIX. Subject to terms and conditions of this Agreement, MERIX hereby grants to GERON a nonexclusive, worldwide, fully paid up license, with the right to grant sublicenses solely as permitted in Section 4.2(c), under MERIX’s interest in the MERIX Improvements solely to develop, make, have made, use, import and export, offer for sale and sell Products in the Field.

(b) By GERON. Subject to terms and conditions of this Agreement, GERON hereby grants to MERIX a nonexclusive, worldwide, fully paid up license, with the right to grant sublicenses solely as permitted in Section 4.2(c), under GERON’s interest in the GERON Improvements solely to develop, make, have made, use, import and export, offer for sale and sell Merix Products in the Field.

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(c) Rights to Sublicense. Neither Party shall have the right to sublicense any of the rights granted to it under this Section 4.2 except (a) for research and development purposes to academic or other nonprofit organization, or (b) pursuant to a bona fide active development or commercialization collaboration with one or more commercial entities in connection with the development or commercialization of clinical or commercial vaccines, products or other therapies. All sublicenses granted under this Section 4.2(c) shall comply with the provisions of this Agreement and any relevant Third Party License.

4.3 Third Party Licenses.

(a) The licenses granted in this Article 4 include sublicenses to certain Technology and Patent Rights granted under Third Party Licenses. GERON acknowledges receipt of copies of all such Third Party Licenses entered into by MERIX as of the Effective Date, the terms and conditions of which shall be deemed Confidential Information of MERIX. Each Party agrees that, to benefit under this Agreement from any such sublicense, each Party must abide by the terms and conditions of such Third Party Licenses even where the terms and conditions of the same conflict with one or more terms and conditions of this Agreement. Each Party shall be solely responsible for all payment obligations (including milestone payments and running royalties) arising from its exploitation of such Third Party Technology or Patent Rights pursuant to the terms of applicable Third Party Licenses; provided, however, that with respect to milestone payments owing under those Third Party Licenses existing as of the Effective Date, MERIX shall pay up to the first $1.0 million of those milestone payments owing during the first five (5) years after the Effective Date from GERON’s permitted exercise of sublicense rights thereunder, and Geron shall be responsible for all other milestone payments with respect to its permitted exercise of sublicense rights thereunder.

(b) MERIX shall be responsible for making payments required by the Third Party Licenses with respect to receipt of the Shares.

(c) Each Party agrees to comply in all material respects with all its obligations and duties under the Third Party Licenses, as may be amended from time to time, including, without limitation, any provisions necessary to prevent such agreement from being terminated or to prevent any exclusive license granted thereunder to be converted to a nonexclusive license. Each Party agrees that if, during the Term, a Party sublicensed by the other Party under any Third Party License breaches or defaults on any of the obligations under the Third Party License or receives notice that it is alleged to be in breach or default of any such Third Party License (“Breaching Party”), the Breaching Party shall promptly notify the other Party, and such other Party shall be permitted to cure such breach or default, in accordance with the terms and conditions of the relevant Third Party License, or otherwise resolve such breach or default directly with the relevant Third Party at the expense of the Breaching Party. Without limiting the foregoing, in the event that a Breaching Party has not cured any actual material breach of any Third Party License within earlier of (a) thirty (30) days after receipt of any notification of such breach or default or (b) five (5) days prior the expiration of the cure period in the relevant Third Party License, the other Party may, in addition to its rights under the preceding sentence, terminate its sublicense to the Breaching Party of any rights under the Third Party License.

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(d) MERIX agrees that it will not agree to any amendment to any Third Party License without GERON’s prior written consent, which consent will not be withheld or delayed if such amendment does not materially conflict with any aspect of this Agreement or materially change GERON’s rights under such Third Party License.

4.4. Patent Prosecution and Maintenance.

(a) As between the Parties, each Party shall be responsible, at its own expense, for preparing, filing, prosecuting and maintaining patent applications and patents relating to Patent Rights owned or Controlled by such Party, and conducting any interferences, re-examinations, reissues or oppositions relating to such Patent Rights. MERIX shall provide GERON with complete copies of the file histories of each patent or patent application in the MERIX Patent Rights within 30 days of the Effective Date. MERIX shall keep GERON reasonably apprised of the status of each MERIX Patent Right for which MERIX has prosecution rights, and shall take into account GERON’s input with respect to patent prosecution strategy and draft applications and shall give reasonable consideration to any suggestions or recommendations of GERON concerning the preparation, filing, prosecution, maintenance and defense thereof. To facilitate GERON’s input on these matters, MERIX shall provide to GERON copies of all on-going patent prosecution (including, without limitation copies of Office actions and responses) within 30 days of receipt or filing.

GERON has identified the prosecution of the following four overseas patent applications as being of particular concern and importance: [**] and [**]. MERIX agrees that GERON may, at GERON’s expense, arrange for the filing and prosecution of divisional patent applications corresponding to these cases with claims directed to the loading of dendritic cells with tumor-specific RNA, subject to (i) any requirements in any applicable Third Party Licenses, and (ii) GERON undertaking, with respect to the prosecution of such patent applications, the same obligations for MERIX’s benefit that MERIX has agreed to provide to GERON pursuant to the last two sentences of the first paragraph of this Section 4.4(a).

In the event that either Party elects to allow any MERIX Improvements, GERON Improvements or other patent application or counterpart patent covering or claiming the development, manufacture use or sale of Products in the Field to lapse or become abandoned, and provided further that no other patent applications or patents claiming the same or substantially similar subject matter are then pending or issued, then the Party shall make reasonable efforts to promptly notify the other Party of such election at least thirty days before such lapse or abandonment, and the other Party shall thereupon have the right, but not the obligation, to assume responsibility for the prosecution thereof, subject to the terms of any applicable Third Party License.

(b) Each Party shall promptly notify the other Party of its knowledge of any potential infringement of the MERIX Patent Rights by a Third Party. MERIX will have the initial right, at its sole expense, but not the obligation, to take reasonable legal action necessary to protect the MERIX Patent Rights against infringement by Third Parties, or to defend any declaratory judgment or other action concerning the MERIX Patent Rights. GERON agrees to render such assistance, at MERIX’s expense, as MERIX may reasonably request in pursuing such legal action, including permitting to be joined as a party-plaintiff. The distribution of recoveries, damages and other awards or settlements accruing from such actions shall be as follows: first, MERIX shall be reimbursed for all costs incurred in the litigation; and second, MERIX shall retain the remainder; provided, however, that GERON shall be entitled to retain that portion of the remainder that is attributable to GERON’s lost profits. Any disagreement as to the proportionate distribution of monies shall be resolved by the Dispute Resolution mechanism of Section 9.6.

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(c) In the event that MERIX is unsuccessful in persuading the alleged infringer to desist or fails to have initiated an infringement action within one-hundred eighty (180) days after GERON first notifies MERIX in writing of the basis for such action, GERON shall have the right, but not the obligation, to prosecute such infringement solely in the Field under its sole control and at its sole expense. MERIX agrees to render such assistance, at GERON’s expense, as GERON may reasonably request in pursuing such legal action, including permitting to be joined as a party-plaintiff. The distribution of recoveries, damages and other awards or settlements accruing from such actions shall be as follows: first, GERON shall be reimbursed for all costs incurred in the litigation; and second, GERON shall retain the remainder; provided, however, that MERIX shall be entitled to retain that portion of the remainder that is attributable to MERIX’s lost profits. Any disagreement as to the proportionate distribution of monies shall be resolved by the Dispute Resolution mechanism of Section 9.6.

(d) The Party controlling an action involving any infringement in the Field shall consider in good faith the interests of the other Party in so doing, and shall not settle or consent to an adverse judgment in any such action which a reasonable person would know would have a material adverse effect on the rights or interests of the other Party without the prior express written consent of such other Party.

4.5. No Other License Rights. Except as otherwise expressly provided in this Agreement, under no circumstances shall a Party hereto, as a result of this Agreement, obtain any ownership interest in or license or other right to the Patent Rights or Technology of the other Party, including items owned, Controlled or developed by any Third Party, or transferred by one Party to the other Party at any time pursuant to this Agreement.

4.6 Audit Rights. Each Party shall permit, and cause its Affiliates and Sublicensees to permit, independent accountants retained by the other Party to have access to its records and books for the sole purpose of verifying its compliance with the license grants and restrictions in this Article 4, including without limitation compliance with the exploitation of any rights sublicensed under a Third Party License. Such examination shall be conducted during regular business hours and upon reasonable notice, at the requesting Party’s own expense and no more than once in each calendar year during the term of this Agreement and once during the four (4) calendar years following the termination hereof.

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ARTICLE 5. REPRESENTATIONS, WARRANTIES AND

LIMITATIONS; COMPLIANCE

5.1. Mutual Representations and Warranties. Each Party warrants and represents to the other that it has the legal right and power to enter into this Agreement, to extend the rights granted to the other in this Agreement free of any lien or encumbrance, and to perform fully its obligations hereunder, that this Agreement and the signatories hereto have been duly authorized, that this Agreement is a valid and binding agreement of such Party, enforceable in accordance with its terms and that this Agreement does not violate the terms of any standstill or other contract to which such Party is a party that is in effect as of the Effective Date.

5.2 Representations and Warranties by MERIX. MERIX warrants and represents that as of the Effective Date that: (a) it has not received any notice or claim disputing, nor to MERIX’s actual knowledge is there any dispute concerning, the ownership of any MERIX Patent Rights; (b) it has not received any notice or claim alleging, nor to MERIX’s actual knowledge is there any valid basis for a claim, that any of the MERIX Patent Rights are invalid; and (c) it has provided GERON with copies of all existing Third Party Licenses, together with any amendments thereto.

5.3. Disclaimer of Representations and Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT: (i) MERIX MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY PATENT RIGHTS, TECHNOLOGY, OR CONFIDENTIAL INFORMATION, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY PATENT RIGHTS OR TECHNOLOGY, OR THE NON-INFRINGEMENT OF ANY THIRD PARTY PATENTS OR PROPRIETARY RIGHTS AND (ii) ALL UNIFORM COMMERCIAL CODE WARRANTIES ARE EXPRESSLY DISCLAIMED.

5.4. Compliance. Each Party shall comply, and shall require its Affiliates and Sublicensees to comply, with all applicable laws and regulations relative to its obligations hereunder.

ARTICLE 6. CONFIDENTIALITY

6.1. Confidential Information.

(a) As used in this Agreement, the term “Confidential Information” means any technical or business information furnished by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) in connection with this Agreement and specifically designated as confidential. Such Confidential Information may include, without limitation, the trade secrets, know-how, inventions, formulations, compositions, technical data or specifications, testing methods, business or financial information, research and development activities, product and marketing plans, and customer and supplier information. Confidential Information that is disclosed in writing shall be marked with the legend “CONFIDENTIAL.” Confidential Information that is disclosed orally or visually shall be documented in a written notice prepared by the Disclosing Party and delivered to the Receiving Party within thirty (30) days of the date of disclosure. Such notice shall summarize the Confidential Information disclosed to the Receiving Party and reference the time and place of disclosure.

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(b) The Receiving Party shall and shall cause its employees engaged in the performance of this Agreement to: (i) maintain all Confidential Information in strict confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential nature of such Confidential Information and who need to know such Confidential Information to perform this Agreement; (ii) use all Confidential Information solely for purposes performing this Agreement; and (iii) reproduce the Confidential Information only to the extent necessary to perform this Agreement, with all such reproductions being considered Confidential Information.

(c) The obligations of the Receiving Party under Section 6.1(b) shall not apply to Confidential Information to the extent that the Receiving Party can demonstrate by competent evidence that such applicable Confidential Information: (i) was in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party; (iii) was independently developed or discovered by the Receiving Party without resort to such Confidential Information; (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a Third Party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to such Confidential Information; or (v) is required to be disclosed to comply with applicable laws or regulations, or with a court or administrative order, provided that the Disclosing Party receives, to the extent practicable, prior written notice of such disclosure and that the Receiving Party takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure.

(d) Upon the termination by either Party of this Agreement, the Receiving Party shall return to the Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of the Receiving Party, except for one copy which may be kept in the Receiving Party’s legal archives. The obligations set forth in this Article 6 shall remain in effect for a period of five (5) years after receipt of the Confidential Information by the Receiving Party. GERON further agrees to return to MERIX within thirty (30) days of the Effective Date all Confidential Information of MERIX except to the extent such information directly relates to rights licensed under this Agreement.

6.2. Terms of this Agreement. The Parties agree that the public announcement of the execution of this Agreement shall be in the form of a mutually acceptable press release and, from and after the publication date of such press release, each Party shall be entitled to make or publish any statement limited to the contents of such press release. The Parties further agree to seek confidential treatment for the filing of this Agreement with the Securities and Exchange Commission, if such filing is required, and shall agree upon the content of the request for confidential treatment made by each Party in respect of such filing. Except as permitted by the foregoing provisions or as otherwise required by law, MERIX and GERON each agree not to disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other Party, except for any disclosure in confidence to a Party’s accountants, counsel and existing and prospective sources of funding.

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ARTICLE 7. INDEMNIFICATION

7.1. Indemnity Obligations.

(a) GERON agrees to defend, indemnify and hold MERIX, its Affiliates and their respective directors, officers, employees and agents and their respective successors, heirs and assigns, harmless from and against any losses, costs, claims, damages, liabilities or expenses (including reasonable attorneys’ and professional fees and other expenses of litigation) (collectively, “Liabilities”) arising out of or in connection with Third Party claims, suits, actions, demands or judgments, including, without limitation, personal injury and product liability matters, suits, actions, or demands relating to (i) any Product developed, manufactured, used, sold or otherwise distributed by or on behalf of GERON, its Affiliates, Sublicensees, or other designees (including without limitation, product liability claims), (ii) as a result of a breach by GERON of any of its representations and warranties made hereunder, (iii) the use of the MERIX Technology, MERIX Patent Rights or MERIX Improvements by GERON and its Affiliates and Sublicensees pursuant to this Agreement or (iv) the breach by GERON, its Affiliates or Sublicensees of its obligations relating to Third Party Licenses, except in each case to the extent such Liabilities resulted from the gross negligence or intentional misconduct on the part of MERIX.

(b) MERIX agrees to defend, indemnify and hold GERON, its Affiliates and their respective directors, officers, employees and agents and their respective successors, heirs and assigns, harmless from and against any losses, costs, claims, damages, liabilities or expenses (including reasonable attorneys’ and professional fees and other expenses of litigation) (collectively, “Liabilities”) arising out of or in connection with Third Party claims, suits, actions, demands or judgments, including, without limitation, personal injury and product liability matters, suits, actions, or demands relating to (i) any Merix Product developed, manufactured, used, sold or otherwise distributed by or on behalf of MERIX, its Affiliates, Sublicensees, or other designees (including without limitation, product liability claims), (ii) as a result of a breach by MERIX of any of its representations and warranties made hereunder, (iii) the use of the GERON Technology, GERON Patent Rights or GERON Improvements by MERIX and its Affiliates and Sublicensees pursuant to this Agreement, or (iv) the breach by MERIX, its Affiliates or Sublicensees of its obligations relating to Third Party Licenses, except in each case to the extent such Liabilities resulted from the gross negligence or intentional misconduct on the part of GERON.

7.2. Procedure. In the event that a party (an “Indemnitee”) intends to claim indemnification under this Article 7, such party shall promptly notify the indemnifying Party of any Liability in respect of which the Indemnitee intends to claim such indemnification, and the indemnifying Party shall assume the defense thereof with mutually satisfactory counsel; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying Party, if representation of such Indemnitee by the counsel retained by the indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. The Indemnitee under this Article 7 shall cooperate fully with the indemnifying Party and its legal representatives in the investigation of any Liability covered by this Agreement.

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7.3. Limitation of Liability. IT IS AGREED BY THE PARTIES THAT NO PARTY SHALL BE LIABLE TO ANOTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME. NOTWITHSTANDING THE FOREGOING, THE PARTIES EACH ACKNOWDGE THAT A BREACH BY EITHER PARTY OF THE TERMS OF A THIRD PARTY LICENSE COULD RESULT IN THE TERMINATION OR MODIFICATION OF SUCH LICENSE AND THAT SUCH EVENT COULD HAVE A MATERIAL ADVERSE EFFECT ON SUCH PARTY. ACCORDINGLY, THE LIMITATION ON LIABILITY IN THIS SECTION SHALL NOT APPLY TO LOSSES RESULT FROM SUCH A BREACH.

ARTICLE 8. TERM AND TERMINATION

8.1 Term. The term of this Agreement shall commence on the Effective Date and continue until the expiration of all Patent Rights licensed hereunder.

8.2. Termination. This Agreement may be terminated in the following circumstances:

(a) Upon Breach. Upon any material breach of this Agreement by either Party (in such capacity, the “Breaching Party”), the other Party may terminate this Agreement by providing sixty (60) days written notice to the Breaching Party, specifying the material breach. The termination shall become effective at the end of the sixty (60) day period unless: (i) the Breaching Party cures such breach during such sixty (60) day period, (ii) if such breach is not susceptible to cure within sixty (60) days of the receipt of written notice of the breach, the Breaching Party is diligently pursuing a cure (unless such breach, by its nature, is incurable, in which case the Agreement may be terminated immediately), or (iii) the Breaching Party has commenced dispute resolution pursuant to Section 9.6 (in which event, such termination shall not be effective unless the Arbitration Panel determines that the Party in breach has materially breached or defaulted in the performance of any of its material obligations hereunder); provided, however, in the case of a failure to pay any amount due hereunder, such default may be the basis of termination fifteen (15) business days following the date that notice of such default was provided to the Breaching Party.

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(b) Upon Bankruptcy. Either Party may terminate this Agreement immediately if the other Party: (i) applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) becomes unable, or admits in writing its inability, to pay its debts generally as they mature, (iii) makes a general assignment for the benefit of its creditors, (iv) is dissolved or liquidated in full or in part, (v) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consents to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, (vi) takes any action for the purpose of effecting any of the foregoing, or (vii) becomes the subject of an involuntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect that is not dismissed within sixty (60) calendar days of commencement.

8.3. Accrued Rights and Obligations. Termination or expiration of this Agreement for any reason shall not release any Party hereto from any liability which, at the time of such termination or expiration, has already accrued to the other Party or which is attributable to a period prior to such termination or expiration, nor preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity which accrued or are based upon any event occurring prior to such termination or expiration.

8.4. Survival. The provisions of Articles 2.2, 4.6, 6 and 7 shall survive the expiration or termination of this Agreement.

8.5 Selective Surrender of Licensed Patents. GERON may provide written notice to MERIX that it no longer wishes to maintain a license to certain of the MERIX Patent Rights, MERIX Technology or the MERIX Improvements. Such a notice shall constitute an immediate surrender of GERON’s rights to those Patent Rights, Technology or Improvements, and GERON’s license thereto shall cease. However, all other rights held by GERON under this Agreement shall be unaffected.

8.6 Selective Surrender of Licensed Patents. MERIX may provide written notice to GERON that it no longer wishes to maintain a license to certain of the GERON Improvements or GERON Technology. Such a notice shall constitute an immediate surrender of MERIX’ rights to those Improvements or Technology, and MERIX’ license thereto shall cease. However, all other rights held by MERIX under this Agreement shall be unaffected.

ARTICLE 9. MISCELLANEOUS

9.1. Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including without limitation, fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other Party.

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9.2. Assignment. This Agreement may not be assigned or otherwise transferred by any Party without the consent of the other Party; provided, however, that each Party may, without such consent, assign its rights and obligations under this Agreement (a) in connection with a corporate reorganization, to any member of an affiliated group, all or substantially all of the equity interest of which is owned and controlled by such Party or its direct or indirect parent corporation, or (b) in connection with a merger, consolidation or sale of substantially all of such Party’s assets (or substantially all of its assets relating to cancer immunotherapy) to an unrelated Third Party; provided, however, that such Party’s rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not be transferred separate from all or substantially all of its other business assets, including those business assets that are the subject of this Agreement. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement.

9.3. Severability. Each Party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid provisions.

9.4. Notices. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by personal delivery or courier) or courier, postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon receipt by the addressee.

If to GERON:	Geron Corporation
	230 Constitution Drive
	Menlo Park, CA 94025 USA
	Attention: President
	Facsimile: (650) 473-7750
If to MERIX:	Merix Bioscience, Inc.
	4233 Technology Drive
	Durham, NC 27704
	Attention: President
	Facsimile: 919 287-6336

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With a copy to	Hutchison & Mason PLLC
	3110 Edwards Mill Road, Suite 100
	Raleigh, NC 27612
	Attention: William N. Wofford
	Facsimile: 919-829-9696

9.5. Governing Law and Venue. This Agreement shall be governed by and construed under the laws of the State of New York, without regard to its conflicts of law principles.

9.6. Dispute Resolution.

(a) General. Any disputes arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by any Party of its obligations hereunder, whether before or after termination of this Agreement (a “Dispute”), which is not settled by the Parties within thirty (30) days after notice of such Dispute is given by one Party to the other in writing shall be referred to the Chief Executive Officer of MERIX and the Chief Executive Officer of GERON, its counsel or such other designees who are authorized to settle such Disputes on behalf of their respective companies (the “Senior Executives”). The Senior Executives will meet for negotiations within thirty (30) days of the end of the 30-day negotiation period referred to above, at a time and place mutually acceptable to both Senior Executives. If the Dispute has not been resolved within thirty (30) days after the end of the 30-day negotiation period referred to above (which period may be extended by mutual agreement), subject to any rights to injunctive relief and unless otherwise specifically provided for herein, any Dispute will be finally resolved by binding arbitration as provided in Section 9.6(b) below.

(b) Arbitration. Any arbitration hereunder shall be conducted under the commercial rules of the American Arbitration Association. Each such arbitration shall be conducted in the English language by a panel of three arbitrators (the “Arbitration Panel”). Each of MERIX and GERON shall appoint one arbitrator to the Arbitration Panel and the third arbitrator shall be appointed by the two arbitrators appointed by MERIX and GERON. The Arbitration Panel shall be convened upon delivery of written notice by one Party to the other following expiration of the time periods provided in Section 9.6(a) that the notifying Party intends to institute arbitration proceedings. Any such arbitration shall be held in the vicinity of the non-requesting Party. The Arbitration Panel shall have the authority to grant specific performance, and to allocate between the Parties the costs of arbitration in such equitable manner as it shall determine. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be.

9.7. Entire Agreement. This Agreement and the Parties’ confidentiality agreement executed on or about January 5, 2004, contains the entire understanding of the Parties with respect to the subject matter hereof. All other express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties hereto.

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9.8. Headings. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof.

9.9. Independent Contractors. It is expressly agreed that each of the Parties shall be independent contractors and that the relationship between the Parties shall not constitute a partnership, joint venture or agency. No Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so.

9.10. Waiver. The waiver by either Party hereto of any right hereunder or the failure to perform or a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.

9.11 Government Approvals. GERON shall be responsible for securing any governmental approvals or authorizations required to give effect to the transactions contemplated by this Agreement.

9.12. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed this License Agreement as of the date first set forth above.

GERON CORPORATION
By:	/s/ Thomas B. Okarma
Name:	Thomas B. Okarma
Title:	President & CEO
MERIX BIOSCIENCE, INC.
By:	/s/ Jeffrey D. Abbey
Name:	Jeffrey D. Abbey
Title:	VP Business Development

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EXHIBIT A

THIRD PARTY LICENSE AGREEMENTS

EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND THE ROCKEFELLER UNIVERSITY EFFECTIVE AS OF JUNE 27, 2001, as amended as of June 29, 2001.

PATENT ASSIGNMENT AGREEMENT dated as of June 26, 2001 between Merix and Gerold Schuler.

EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND DUKE UNIVERSITY EFFECTIVE AS OF January 10, 2000, as amended as of July 28, 2003.

EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND DUKE UNIVERSITY EFFECTIVE AS OF October 11, 2002, as amended as of as of July 28, 2003 (regarding anti-angiogenesis; Duke File #1972).

EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND DUKE UNIVERSITY EFFECTIVE AS OF October 11, 2002 as amended as of as of July 28, 2003 (regarding oligonucleotide mimetics/enhancement of CD4+T cell response; Duke Files 1969 and 2109).

EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND DUKE UNIVERSITY EFFECTIVE AS OF October 11, 2002, as amended as of as of July 28, 2003 (regarding [**]).

*EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND DUKE UNIVERSITY EFFECTIVE AS OF October 11, 2002, as amended as of July 28, 2003 (regarding [**]).

PATENT ASSIGNMENT AGREEMENT dated as of August 1, 2002 between Merix and Gerold Schuler (regarding cryoconservation and generation of dendritic cells in closed systems).

*PATENT ASSIGNMENT AGREEMENT dated as of August 1, 2002 between Merix and Gerold Schuler (regarding CD4+ CD25+ Reg T cells).

*EXCLUSIVE LICENSE AGREEMENT BETWEEN MERIX AND THE ROCKEFELLER UNIVERSITY EFFECTIVE AS OF MAY 15, 2002 (EBV antigen)

* GERON’s sublicense rights under these Third Party Licenses extend only to those Patent Rights not deemed Excluded Patent Rights in Exhibit C.

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EXHIBIT B

COMMON STOCK PURCHASE AGREEMENT

This COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of March 6, 2004 (the “Effective Date”), by and between GERON CORPORATION, a Delaware corporation having its principal place of business at 230 Constitution Drive, Menlo Park, California 94025 (“Geron”), and MERIX BIOSCIENCE, a Delaware corporation having its principal place of business at 4223 Technology Drive, Durham, North Carolina 27704(“Merix”).

A. Geron and Merix are, concurrent with entering into the Agreement, entering into a License Agreement, dated as of March 6, 2004 (the “License Agreement”), under which Merix has agreed to license Geron, on a co-exclusive basis, certain intellectual property controlled by Merix in the Field, as defined in the License Agreement.

B. Geron has agreed to issue to Merix, as consideration for the license rights contemplated by Article 4 of the License Agreement, an aggregate of five million (5,000,000) shares of Geron’s Common Stock (the “Shares”) pursuant to the terms and conditions hereof.

THE PARTIES AGREE AS FOLLOWS:

1. ISSUANCE OF SHARES.

1.1 As payment for the license rights granted by Merix to Geron described in Article 4 of the License Agreement, Geron will issue and deliver certificates evidencing five million (5,000,000) Shares. Upon issuance and delivery of the certificate(s) for the Shares, all Shares shall be duly authorized and validly issued and represent fully paid shares of Geron’s Common Stock.

2. CLOSING; DELIVERY.

2.1 The consummation of the transaction contemplated by this Agreement (a “Closing”) shall be held at such time and place as is mutually agreed upon between the parties, but in any event no later than Saturday, March 6, 2004 (the “Closing Date”). Before the close of business New York Time on March 8, 2004, Geron shall deliver to Merix one or more certificates representing all of the Shares, which Shares shall be issued in the name of Merix or its designee and in such denominations as Merix shall specify.

2.2 Geron’s obligations to issue and deliver the stock certificate(s) representing the Shares to Merix at the Closing shall be subject to the following conditions, which may be waived by Geron:

2.2.1 the covenants and obligations that Merix is required to perform or to comply with pursuant to this Agreement, at or prior to the Closing, must have been duly performed and complied with in all material respects;

2.2.2 the representations and warranties made by Merix herein shall be true and correct in all material respects as of the Closing Date, and

2.2.3 the License Agreement shall have been duly executed and delivered by Merix.

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2.3 Merix’s obligation to accept delivery of the stock certificate(s) representing the shares at the closing shall be subject to the following conditions, any one or more of which may be waived by Merix:

2.3.1 the covenants and obligations that Geron is required to perform or to comply with pursuant to this Agreement, at or prior to the Closing, must have been duly performed and complied with in all material respects;

2.3.2 Geron shall have available under its Certificate of Incorporation sufficient authorized shares of Common Stock to issue the Shares to Merix;

2.3.3 the representation and warranties made by the Geron herein shall be true and correct in all material respects as of any Closing Date; and

2.3.4 the License Agreement shall have been duly executed and delivered by Geron.

3. RESTRICTIONS ON RESALE OF SHARES.

3.1 Legends. Merix understands and acknowledges that the Shares are not registered under the Securities Act of 1933, as amended (the “Act”), and that under the Act and other applicable laws Merix may be required to hold such Shares for an indefinite period of time. Each stock certificate representing Shares shall bear the following legends:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). ANY TRANSFER OF SUCH SECURITIES SHALL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO GERON, SUCH REGISTRATION IS UNNECESSARY FOR SUCH TRANSFER TO COMPLY WITH THE ACT. THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF THE COMMON STOCK PURCHASE AGREEMENT, DATED AS OF MARCH 6, 2004. A COPY OF THE AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF GERON.”

3.2 Limits on Sales. Merix agrees that if it decides to resell some or all of the Shares, it will do so only in an appropriate manner based upon whether the shares are registered or unregistered, e.g., on the Nasdaq National Market or in a Rule 144A or 144 compliant transaction. Subject to the foregoing restrictions, on or after June 8, 2004, Merix may, subject to the registration statement required to be filed pursuant to Section 4 hereof being declared effective, liquidate the Shares through the use of an investment banker or brokerage firm of Merix’ choosing, subject to the following limitation: Merix shall only liquidate, in any thirty (30)-day period, the greater of (a) 600,000 shares, or (b) each trading day, public market sales not exceeding ten percent (10%) of the average of Geron’s 10-day reported trailing trading volume as of the date of sale; provided, that Merix may liquidate shares beyond such limits if such sales are made on an uptick when Geron’s stock price is on an upward trend.

3.3 Removal of Legends. Any legend endorsed on a certificate evidencing the Shares shall be removed, and Geron shall issue a certificate without such legend to the holder of such Shares, if such Shares are being sold pursuant to an effective registration statement under the Act or pursuant to Rule 144 promulgated thereunder, and the purchaser thereof may immediately resell such Shares without restriction and without registration; provided, however, that in the case of a sale pursuant to Rule 144, such holder of Shares shall provide such information as is reasonably requested by Geron to ensure that such Shares may be sold in reliance on Rule 144.

3.4 Amendment to February 11, 2004 Stock Purchase Agreement. Each of Geron and Merix agree that the Closing (as defined in the Stock Purchase Agreement, dated as of February 11, 2004, between Geron and Merix (the “2/11 SPA”)) shall not occur on March 15, 2004. In addition, (i) the 2/11 SPA shall be terminated, and be of no further force and effect, on the date which is the 91st day following the effective date of the Registration Statement (as defined herein) (the “Termination Date”); and (iii) the $3,999,999.52 paid by Geron to Merix in anticipation of such Closing shall be returned to Geron on the Termination Date.

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4. REGISTRATION RIGHTS

4.1 As soon as practicable, but in no event later than 20 days following the Closing Date (the “Filing Date Deadline”), Geron agrees to file with the Securities and Exchange Commission (the “Commission”), a registration statement under the Act (the “Registration Statement”), on Form S-3, so as to permit a non-underwritten public offering and resale of the Shares under the Act by Merix. Geron agrees to use its commercially reasonable best effects to cause the Registration Statement to be effective as soon as possible. Geron will notify Merix of the effectiveness of the Registration Statement within one (1) business day of receiving notice from the Commission.

4.2 This Section 4.2 shall apply to Geron’s obligation under Section 4.1 hereof to file the Registration Statement with the Commission. Subject to the provisions below, Geron and Merix agree that Merix will suffer damages if the Registration Statement is not filed on or prior to the Filing Date Deadline. Geron and Merix further agree that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, if the Registration Statement is not filed on or prior to the Filing Date Deadline (a “Failure to File Event”), then Geron shall pay to Merix as liquidated damages for any such failure and not as a penalty an amount equal to 1.0% of the imputed purchase price for the Shares (based on the closing price of Geron’s Common Stock on the Closing Date ($9.24 per share)) acquired by Merix pursuant to this Agreement for each full thirty (30) day period (pro rata on a 360-day basis) following a Failure to File Event until such Failure to File Event has been cured. Such liquidated damages shall be payable monthly, at the election of Geron, in (x) cash by wire transfer of immediately available funds or (y) that number of shares of Common Stock equal to (A) the amount owed to Merix pursuant to this Section 4.2 divided by (B) $9.24 (rounding up to the nearest whole share).

4.3 In connection with Geron’s obligation under Section 4.1:

(a) Geron will maintain the Registration Statement and any post-effective amendment thereto filed under this Section 4 effective under the Act until the earliest of (i) the date that none of the Shares covered by such Registration Statement are issued and outstanding, (ii) the date that all of the Shares have been sold pursuant to such Registration Statement, (iii) the date that all Shares have been otherwise transferred to persons who may trade such shares without restriction under the Act, and Geron has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend, or (iv) the date all Shares may be sold at any time, without volume or manner of sale limitations pursuant to Rule 144(k) or any similar provision then in effect under the Act in the opinion of counsel to Geron, which counsel shall be reasonably acceptable to Merix.

(b) Geron shall prepare and file with the SEC such amendments and supplements to the Registration Statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all Shares covered by the Registration Statement; provided, however, that before filing a registration statement or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, Geron will furnish to one counsel to be designated by Merix participating in the planned offering (“Designated Counsel”), copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to the reasonable review and reasonable comment of such counsel.

(c) Geron shall promptly notify Merix, at any time when the prospectus included in or relating to the Registration Statement (the “Prospectus”) is required to be delivered under the Act, of the happening of any event as a result of which the Prospectus contains an untrue statement of a material fact or omits any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, thereafter, Geron will promptly prepare (and, when completed, give notice to Merix) a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Shares pursuant to the Registration Statement, such Prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that upon such notification by Geron of the foregoing and instructing Merix to cease to offer and sell Shares, Merix will use commercially reasonable efforts to cease its offer and sale of Shares until Geron has notified Merix that it has prepared a supplement or amendment to such Prospectus and delivered copies of such supplement or amendment to Merix (it being understood and agreed by Geron that the foregoing proviso shall in no way diminish or otherwise impair Geron’s obligation to promptly prepare a Prospectus amendment or supplement as above provided in this Section 5(c) and deliver copies of same as above provided in Section 5(b) hereof).

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(d) Geron, at its expense, shall furnish to Merix with respect to the Shares registered under the Registration Statement such reasonable number of copies of the RegistrationStatement, prospectuses and preliminary prospectuses in conformity with the requirements of the Act and such other documents as Merix may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Shares by Merix, provided, however, that the obligation of Geron to deliver copies of prospectuses or preliminary prospectuses to Merix shall be subject to the receipt by Geron of reasonable assurances from Merix that Merix will comply with the applicable provisions of the Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses or preliminary prospectuses.

(e) Merix will cooperate with Geron in all respects in connection with this Agreement, including timely supplying all information reasonably requested by Geron (which shall include all information regarding Merix and proposed manner of sale of the Shares required to be disclosed in any Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Shares and entering into and performing their obligations under any underwriting agreement, if the offering is an underwritten offering, in usual and customary form, with the managing underwriter or underwriters of such underwritten offering. Nothing in this Agreement shall obligate Merix to consent to be named as an underwriter in any Registration Statement.

(f) Geron shall use commercially reasonable efforts to register and qualify the Shares covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably appropriate in the opinion of Geron and the managing underwriters, if any, or if reasonably requested by Merix; provided that Geron shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; and provided further that (notwithstanding anything in this Agreement to the contrary with respect to the bearing of expenses) if any jurisdiction in which any of such Shares shall be qualified shall require that expenses incurred in connection with the qualification therein of any such Shares be borne by Merix, then Merix shall, to the extent required by such jurisdiction, pay their pro rata share of such qualification expenses.

(g) Geron shall promptly notify (i) Merix (A) any time when the Registration Statement, the Prospectus or any Prospectus supplement related thereto or post effective amendment has been filed, and with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (B) of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation of any proceedings by any person to such effect, and promptly use all commercially reasonable efforts to obtain the release of such suspension, (C) of the receipt by Geron of any notification with respect to the suspension of the qualification of any Shares for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose, (D) when a Prospectus relating to the registration of the Shares is required to be delivered under the Act, or (E) of the happening of any event as a result of which the Prospectus included, as then in effect, includes any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and (ii) Designated Counsel of any request by the Commission for amendments or supplements to the Registration Statement or Prospectus or for additional information. If the notification relates to an event described in Section 4(c), Geron shall in accordance with Section 4(b), promptly prepare and furnish to Merix, if any, selling Shares covered by such Registration Statement, a reasonable number of copies of a Prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Shares, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading.

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(h) Geron shall provide a transfer agent and registrar for all Shares registered pursuant to this Agreement and a CUSIP number for all such Shares, in each case not later than the effective date of registration and, at the time of the sale of the Shares pursuant to an effective Registration Statement, use commercially reasonable efforts to cause the transfer agent to remove restrictive legends on the securities covered by such Registration Statement.

(i) Geron shall comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as reasonably practicable after the

effective date of the Registration Statement (and in any event within sixteen (16) months thereafter), an earnings statement (which need not be audited) covering the period of at least twelve (12) consecutive months beginning with the first day of Geron’s first calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(j) All fees, disbursements and out-of-pocket expenses and costs incurred by Geron in connection with the preparation and filing of the Registration Statement under Section 4.1 and in complying with applicable securities and Blue Sky laws (including, without limitation, all attorneys’ fees of Geron) shall be borne by Geron. Merix will bear the cost of all fees and expenses of Merix’ counsel.

(k) With a view to making available to Merix the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the Commission that may at the time permit Merix to sell the Shares to the public without registration, Geron covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earliest of (A) such date as all of the Shares may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as all of the Shares shall have been resold; and (ii) file with the Commission in a timely manner all reports and other documents required of Geron under the Act and under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

5. INDEMNIFICATION.

5.1 Geron agrees to indemnify and hold harmless Merix (and each person, if any, who controls Merix within the meaning of Section 15 of the Act, and each officer and director of Merix) against any and all losses, claims, damages or liabilities (or actions or proceedings in respect thereof), joint or several, directly or indirectly based upon or arising out of (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus, final prospectus or summary prospectus contained therein or used in connection with the offering of the Shares, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and Geron will reimburse each such indemnified party for any legal or any other expenses reasonably incurred by them in connection with investigating, preparing, pursuing or defending any such loss, claim, damage, liability, action or proceeding, except insofar as any such loss, claim, damage, liability, action, proceeding or expense (A) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to Geron by Merix or such other person expressly for use in the preparation thereof, (B) the failure of Merix to comply with its covenants and agreements contained in Sections 7.2 or 7.6.2 hereof or (C) any misstatement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Merix prior to the pertinent sale or sales by Merix. Such indemnity shall remain in full force and effect, regardless of any investigation made by such indemnified party and shall survive the transfer of the Shares by Merix.

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5.2 Merix agrees to indemnify and hold harmless Geron (and each person, if any, who controls Geron within the meaning of Section 15 of the Act, each officer of Geron who signs the Registration Statement and each director of Geron) from and against losses, claims, damages or liabilities (or actions or proceedings in respect thereof), joint or several, directly or indirectly based upon or arising out of, (i) any failure of Merix to comply with the covenants and agreements contained in Sections 7.2 and 7.6.2 hereof or (ii) any untrue statement of a material fact contained in the Registration Statement or any omission of a material fact required to be stated in the Registration Statement or necessary in order to make the statements in the Registration Statement not misleading if such untrue statement or omission was made in reliance upon and in conformity with written information furnished to Geron by or on behalf of Merix specifically for use in preparation of the Registration Statement; provided, however, that Merix shall not be liable in any such case for (A) any untrue statement or omission in the Registration Statement, prospectus, or other such document which statement is corrected by Merix and delivered to Geron prior to the sale from which such loss occurred, (B) any untrue statement or omission in any prospectus which is corrected by Merix in any subsequent prospectus, or supplement or amendment thereto, and delivered to Geron prior to the sale or sales from which a loss or liability arose, or (C) any failure by Geron to fulfill any of its obligations under Section 5.1 hereof.

5.3 Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 5, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 5 (except to the extent that such omission materially and adversely affects the indemnifying party’s ability to define such action) or from any liability otherwise than under this Section 5. Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expense subsequently incurred by such indemnified person in connection with the defense thereof, provided, however, that if there exists or shall exist a conflict of interest that would make inappropriate, in the reasonable opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person; provided, however, that no indemnifying person shall be responsible for the fees and expenses of more than on separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect to any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement. No indemnifying person shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could have been a party and indemnification could have been sought hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding.

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5.4 If the indemnification provided for in this Section 5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, claim, damage, liability or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. If, however, the allocation provided in the first sentence of this paragraph is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 5.4 were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 5.4. The amount paid or payable in respect of any claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending such loss, claim, damage or liability. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 5.4 to the contrary, Merix shall not be required pursuant to this Section 5.4 to contribute any amount in excess of the net proceeds received by Merix from the sale of Shares in the offering to which the loss, claims, damage or liability relates, less the amount of any indemnification payment previously made by such indemnifying party pursuant to this Section 5.

5.5 The provisions of this Section 5 shall survive the termination of this Agreement.

6. REPRESENTATIONS AND ACKNOWLEDGEMENT OF GERON.

Geron hereby represents, warrants and covenants to Merix as follow:

6.1 Organization, Good Standing and Qualification. Geron is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as presently proposed to be conducted. Geron is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

6.2 Authorization. All corporate action on the party of Geron, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement , the performance of all obligations of Geron hereunder and thereunder and the authorization, issuance and delivery of the Shares has been taken or will be taken prior to the Closing, and this Agreement, when executed and delivered will constitute valid and legally binding obligations of Geron, enforceable against Geron in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors’ rights generally, as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

6.3 Valid Issuance of Common Stock. The Shares, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly authorized and issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws.

6.4 Legal Proceedings and Orders. There is no action, suit, proceeding or investigation pending or threatened against Geron that questions the validity of this Agreement or the License Agreement or the right of Geron to enter into this Agreement or the License Agreement or to consummate these transactions contemplated hereby or thereby, nor is Geron aware of any basis for any of the foregoing. Geron is neither a party nor subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that would affect the ability of Geron to enter into this Agreement or the License Agreement or to consummate the transactions contemplated hereby or thereby.

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6.5 SEC Documents. Geron has made available to Merix a true and complete copy of Geron’s Annual Report on Form 10-K for the year ended December 31, 2003, and any definitive proxy and other statements filed by Geron with the SEC since that date (all such materials required to be furnished to Merix pursuant to this sentence being called, collectively, including any amendments thereto, the “SEC Documents”). Since January 1, 2004, Geron has timely made all filings required to be made by it under the Exchange Act , and the securities laws of any state, and any rules and regulations promulgated thereunder. The SEC Documents comply in all material respects with the requirements of the Exchange Act or the Act, as applicable, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, as of their respective filing dates, except to the extent corrected by a subsequently filed SEC Document filed prior to the date hereof. Geron represents and warrants that, as of the date of this Agreement, it meets the requirements for the use of Form S-3 for registration of the resale by Merix of the Shares, and it will use its commercially reasonable efforts to continue to meet such requirements during the period in which it takes to have the Registration Statement declared effective. Since December 31, 2003, (i) there has been no development or change (actual or threatened), individually or in the aggregate, having a material adverse effect on Geron or its business, and (ii) Geron has conducted its business only in the ordinary course consistent with past practice. Geron has no material indebtedness, obligations or liabilities (whether accrued, absolute, contingent or otherwise, and whether due or to become due) which were not fully reflected in, reserved against or otherwise described in the SEC Documents, or incurred in the ordinary course of business consistent with Geron’s past practices.

6.6 Consents. Except for filings under federal and applicable state securities laws and except for Permits (as defined below), the absence of which either individually or in the aggregate would not have a material adverse effect on Geron, all permits, consents, approvals, orders, authorizations of, or declarations to (collectively, “Permits”) or filings with any federal, state, local or foreign court, governmental or regulatory authority, or other person (including third party consents) required on the part of Geron in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein have been obtained or will be obtained prior to the Closing Date, and will be effective as of the Closing Date.

6.7 No Conflict. The execution and delivery of this Agreement by Geron and the consummation of the transaction contemplated hereby (including, without limitation, the issuance of the Shares) will not (x) conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of Geron’s Amended and Restated Certificate of Incorporation or bylaws of Geron or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to Geron, any of its subsidiaries or their respective properties or assets or (y) result in the creation of any lien, security interest, charge or encumbrance upon Geron’s or any of its subsidiaries’ assets, properties or outstanding capital stock.

6.8 Nasdaq National Market. The Common Stock is listed on The Nasdaq National Market, and there are no proceedings to revoke or suspend such listing. The issuance of the Shares will not contravene any NASDAQ Marketplace Rule. The Common Stock is registered pursuant to Section 12(g) of the Exchange Act. Geron has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from The Nasdaq National Market. Geron has not received any notification that, and has no knowledge that, the Commission or the NASD is contemplating terminating such listing or registration. The issuance of the Shares does not require stockholder approval, including, without limitation, as may be required pursuant to the Nasdaq Marketplace Rules. Geron shall cause all of the Registrable Shares to be listed on the Nasdaq National Market.

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6.9 Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit or proceeding or, to Geron’s knowledge, any investigation, pending, or to Geron’s knowledge, threatened by or before any governmental body against Geron, its subsidiaries, its activities, properties or assets or any officer, director, or employee of Geron in connection with such officer’s, director’s or employee’s relationship with, or actions taken on behalf of Geron and in which an unfavorable outcome, ruling or finding in any said matter, or for all matters taken as a whole, might have a material adverse effect on Geron. Geron is not a party to, or subject to the provisions of any order, writ or injunction, judgment or decree of any court or government agency or instrumentality.

6.10 Compliance with Securities Laws. Assuming the accuracy of the representations and warranties of Merix set forth in Section 7 hereof, the offer and sale by Geron of the Shares are exempt from the registration and prospectus delivery requirements of the Act. Other than pursuant to an effective registration statement under the Act, Geron has not issued, offered or sold any shares of Common Stock (including for this purpose any securities of the same or a similar class as the Common Stock) within the six (6) month period preceding the date hereof or taken any other action, or failed to take any action, that, in any such case, would cause the offering of the shares pursuant to this Agreement to be integrated with prior offerings by Geron for purposes of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the NASD, as applicable. Geron shall not directly or indirectly take, and shall not permit any of its directors, officers or affiliates directly or indirectly to take, any action (including, without limitation, any offering or sale to any person of he Shares or any Common Stock) that will make unavailable the exemption from registration under the Securities Act being relied upon by Geron for the issuance to Merix of the Shares as contemplated by this Agreement, including, without limitation, the filing of a registration statement under the Act.

6.11 Disclosure. Neither this Agreement nor the SEC Documents taken together contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

7. REPRESENTATIONS AND ACKNOWLEDGMENTS OF MERIX.

Merix hereby represents, warrants, acknowledges and agrees that:

7.1 Authorization. All corporate action on the party of Merix, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of Merix hereunder has been taken or will be taken prior to the Closing, and this Agreement, when executed and delivered will constitute valid and legally binding obligations of Merix, enforceable against Merix in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors’ rights generally, as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

7.2 Investment. Merix is acquiring the Shares for Merix’s own account, and not directly or indirectly for the account of any other person. Merix is acquiring the Shares for investment and not with a view to distribution or resale thereof, except in compliance with the Act and any applicable state law regulating securities.

7.3 Access to Information. Merix has consulted with its own attorney, accountant, or investment advisor as Merix has deemed advisable with respect to the investment and has determined its suitability for Merix. Merix has had the opportunity to ask questions of, and to receive answers from, appropriate executive officers of Geron with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial condition and results of operations of Geron. Merix has had access to such financial and other information as is necessary in order for Merix to make a fully informed decision as to investment in Geron, and has had the opportunity to obtain any additional information necessary to verify any of such information to which Merix has had access. Merix acknowledges that neither Geron nor any of its officers, directors, employees, agents, representatives, or advisors have made any representation or warranty other than those specifically expressed herein.

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7.4 Business and Financial Expertise. Merix further represents and warrants that it has such business or financial expertise as to be able to evaluate its investment in Geron and purchase of the Shares.

7.5 Speculative Investment. Merix acknowledges that the investment in Geron represented by the Shares is highly speculative in nature and is subject to a high degree of risk of loss in whole or in part; the amount of such investment is within Merix’s risk capital means and is not so great in relation to Merix’s total financial resources as would jeopardize the financial needs of Merix in the event such investment were lost in whole or in part.

7.6 Unregistered Securities. Merix acknowledges that:

7.6.1 Merix must bear the economic risk of investment for an indefinite period of time because the Shares have not been registered under the Act and therefore cannot and will not be sold unless they are subsequently registered under the Act or an exemption from such registration is available. Geron has made no agreements, covenants or undertakings whatsoever to register any of the Shares under the Act, except as provided in Section 4 above. Geron has made no representations, warranties or covenants whatsoever as to whether any exemption from the Act, including, without limitation, any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 under the Act, will become available and any such exemption pursuant to Rule 144, if available at all, will not be available unless: (i) a public trading market then exists in Geron’s common stock, (ii) Geron has complied with the information requirements of Rule 144, and (iii) all other terms and conditions of Rule 144 have been satisfied.

7.6.2 Transfer of the Shares has not been registered or qualified under any applicable state law regulating securities and, therefore, the Shares cannot and will not be sold unless they are subsequently registered or qualified under any such act or an exemption therefrom is available. Geron has made no agreements, covenants or undertakings whatsoever to register or qualify any of the Shares under any such act. Geron has made no representations, warranties or covenants whatsoever as to whether any exemption from any such act will become available.

7.6.3 Merix hereby certifies that it is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D under the Act.

8. TAX ADVICE. Merix acknowledges that Merix has not relied and will not rely upon Geron or Geron’s counsel with respect to any tax consequences related to the ownership, purchase, or disposition of the Shares. Merix assumes full responsibility for all such consequences and for the preparation and filing of all tax returns and elections which may or must be filed in connection with the Shares.

9. NOTICES. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given on the date of delivery if delivered personally or by facsimile, or one day, not including Saturdays, Sundays, or national holidays, after sending if sent by national overnight delivery service, or five days, not including Saturdays, Sundays, or national holidays, after mailing if mailed by first class United States mail, certified or registered with return receipt requested, postage prepaid, and addressed as follows:

To Geron at:	Geron Corporation
	230 Constitution Drive
	Menlo Park, California 94025
	Attention: General Counsel
	Telephone:            (650) 473-7700
	Facsimile:              (650) 473-7750

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With a copy to:	Latham & Watkins LLP
	135 Commonwealth Drive
	Menlo Park, CA 94025
	Attention: Alan C. Mendelson
	Facsimile: (650) 463-2600
To Merix at:	Merix Bioscience, Inc.
	4233 Technology Drive
	Durham, NC 27704
	Attention: President
	Facsimile: 919 287-6336
With a copy to	Hutchison & Mason PLLC
	3110 Edwards Mill Road, Suite 100
	Raleigh, NC 27612
	Attention: William N. Wofford
	Facsimile: 919-829-9696

10. BINDING EFFECT. This Agreement shall be binding upon the heirs, legal representatives and successors of Geron and of Merix.

11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

12. INVALID PROVISIONS. In the event that any provision of this Agreement is found to be invalid or otherwise unenforceable by a court or other tribunal of competent jurisdiction, such invalidity or unenforceability shall not be construed as rendering any other provision contained herein invalid or unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid and unenforceable provision was not contained herein.

13. COUNTERPARTS. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

14. AMENDMENTS. This Agreement or any provision hereof may be changed, waived, or terminated only by a statement in writing signed by the party against whom such change, waiver or termination is sought to be enforced.

15. FUTURE COOPERATION. Each of the parties hereto agrees to cooperate at all times from and after the date hereof with respect to all of the matters described herein, and to execute such further assignments, releases, assumptions, amendments of the Agreement, notifications and other documents as may be reasonably requested for the purpose of giving effect to, or evidencing or giving notice of, the transactions contemplated by this Agreement.

16. ENTIRE AGREEMENT. This Agreement and the License Agreement constitute the entire agreement of the parties pertaining to the Shares and supersede all prior and contemporaneous agreements, representations, and understandings of the parties with respect thereto

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17. FEES, COSTS AND EXPENSES. All fees, costs and expenses (including attorneys’ fees and expenses) incurred by any party hereto in connection with the preparation, negotiation and execution of this Agreement and the License Agreement and the consummation of the transactions contemplated hereby and thereby (including the costs associated with any filings with, or compliance with any of the requirements of, any governmental authorities), shall be the sole and exclusive responsibility of such party.

18. “SHARES” DEFINED. The term Shares shall include (i) the Shares, (ii) any shares of Common Stock issued pursuant to Section 4.2 hereof and (iii) any shares of Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution (including a stock split or reverse stock split) with respect to, or in exchange for, or in replacement of, the shares of Common Stock referred to in clause (i) or (ii) of this definition.

19. PUBLIC STATEMENTS AND RELEASES. In connection with the first public announcement or disclosure of this Agreement or the transactions contemplated hereby, each of the parties to this Agreement agrees that it shall not make, issue, or release any announcement, whether to the public generally, or to any of its suppliers or customers, with respect to this Agreement or the transactions provided for herein, or make any statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without the prior consent of the other party, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, nothing in this Section 19 shall prevent any party hereto from making such public announcements or filings as it may consider necessary in order to satisfy its legal obligations, or from releasing a public statement mutually acceptable to the parties hereto upon Closing. On or before the third business day following the Closing Date, Geron will issue such a press release, and promptly thereafter file a current report on Form 8-K with the Commission, describing the transactions contemplated by this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement as of the date first above written.

GERON CORPORATION
/s/ Thomas B. Okarma
By:	Thomas B. Okarma, Ph.D., M.D.
Title:	Chief Executive Officer

MERIX BIOSCIENCE, INC.
/s/ Jeffrey D. Abbey
By:	Jeffrey D. Abbey
Title:	Vice President, Business Development

29

EXHIBIT C

List of Excluded Merix Patent Rights

C.1. Baylor Patent Rights

The following patent is licensed from Baylor.

US	1/08/02 (1/09/01 priority date)	10/466,023	Methods for Treating Autoimmune Diseases in a Subject and In Vitro Diagnostic Assays	Pending
PCT	1/08/02	PCT/US02/00343	“                                                             ”	Pending

C.2 Other Patent Rights

The following patent was assigned to Merix by Gerold Schuler.

Europe	3/12/02 (3/12/01 priority date)	PCT/EP02/02671	CD4+ CD25+ Regulatory T Cells from Human Blood	Pending
US	9/12/03	10/661,804		Pending

The following patent is licensed from Rockefeller University.

US	2/8/02 (8/13/99) (provisional)	10/049,316	EBV-associated antigen	Pending
PCT	8/10/00	PCT/US00/22106	Corresponding to above family	Pending

The following inventions were licensed from Duke University. No patent applications have been filed.

[**]	Not yet filed
[**]	Not yet filed

For clarification, any United States and foreign patents, patent applications, provisional patent applications, certificates of invention and applications therefor, divisions, continuations or continuations-in-part, or continuing prosecution applications, together with any extensions, registrations, confirmations, reissues, re-examinations, renewals or supplementary protection certificates and other forms of government-issued patent protection directed to the inventions claimed in the matters described above.

30

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

Name	Jurisdiction
DC Bio Corp.	Nova Scotia, Canada

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-1 of Argos Therapeutics, Inc. of our report dated July 29, 2011 relating to the financial statements, which appears in such Registration Statement. We also consent to the references to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Raleigh, North Carolina

July 29, 2011