1.	Organization and Operations

The Company

Proteon Therapeutics, Inc. (the “Company”) is a late-stage biopharmaceutical company focused on the development of novel,

first

-in-class pharmaceuticals to address the medical needs of patients with kidney and vascular disease. The Company was formed in

June

2001

and incorporated on

March

24,

2006.

The Company devotes substantially all of its efforts to product research and development, initial market development and raising capital. The Company has not generated any product revenue related to its primary business purpose to date and is subject to a number of risks similar to those of other development stage companies, including dependence on key individuals, competition from other companies, the need for development of commercially viable products and the need to obtain adequate additional financing to fund the development of its product candidates. The Company is also subject to a number of risks similar to other companies in the biotechnology industry, including regulatory approval of products, uncertainty of market acceptance of products, competition from therapeutic alternatives and larger companies, compliance with government regulations, protection of proprietary technology, dependence on

third

parties and product liability.

As of

March

31,

2017,

the Company had cash, cash equivalents and available-for-sale investments of

$34.1

million. The Company believes that its existing cash, cash equivalents and available-for-sale investments will be sufficient to fund operations and capital expenditures into the

third

quarter of

2018.

The Company had an accumulated deficit of

$166.3

million as of

March

31,

2017.

November

12,

2015,

the Company filed a shelf registration statement on Form S-

(the “Registration Statement”), and entered into a Sales Agreement (the "Sales Agreement") with Cowen and Company, LLC (“Cowen”) to establish an at-the-market (“ATM”) equity offering program pursuant to which they are able, with the Company’s authorization, to offer and sell up to

$40

million of the Company’s Common Stock at prevailing market prices from time to time. The Registration Statement became effective on

January

12,

2016.

The Company will pay Cowen a commission equal to

of the gross proceeds of the sales price of all shares sold through it as sales agent under the Sales Agreement. The offering costs are offset against proceeds from the sale of common stock under this agreement. The Company filed a prospectus supplement on

March

16,

2017

because the Company is currently subject to General Instruction

I.B.6

of Form S-

which limits the amounts that the Company

may

sell under the Registration Statement. For the

three

months ended

March

31,

2017,

the Company sold

93,512

shares of common stock under the Sales Agreement for aggregate gross proceeds of

$0.2

million. Total offering costs of

$0.1

million were offset against the proceeds from the sale of common stock.