Subsequent Event

On August 10, 2015, Synthetic Biologics, Inc. expanded its relationship with Intrexon Corporation (“Intrexon”) and entered into an Exclusive Channel Collaboration Agreement (the “Channel Agreement”) with Intrexon that governs a “channel collaboration” arrangement in which the Company will use Intrexon’s technology relating to the development and commercialization of novel biotherapeutics (a “Collaboration Product”) for the treatment of patients with phenylketonuria (PKU). The Company has agreed to pay Intrexon a technology access fee by the issuance of 937,500 shares of common stock, having a value equal to $3 million as of August 7, 2015, within ten days of approval of the issuance by the NYSE MKT. In addition, upon the achievement of the certain milestones, the Company agreed to pay Intrexon milestone payments of up to $27 million for each product developed. The Company will pay Intrexon royalties on annual net sales of Collaboration Products, calculated on a product-by-product basis equal to a percent of net sales (ranging from mid-single digits on the first $100 million of net sales to mid-teen digits on net sales in excess of $750 million).

On July 21, 2015, the Company completed a public offering of 15.3 million shares of common stock, including the fully exercised over-allotment option by the underwriters covering 2.0 million shares, at an offering price of $3.00 per share. The total gross proceeds of the offering, including the exercise in full of the over-allotment option, were approximately $46.0 million. Net proceeds to the Company, after deducting the underwriters' discount and other estimated expenses, were approximately $42.6 million.

On July 8, 2015, Putney Drug Corp, a subsidiary of the Company, and The Regents of the University of California (“The Regents”), entered into an amendment to their License Agreement, dated July 11, 2005 (as amended previously), and an amendment to their Clinical Trial Agreement (“CTA”), dated as of April 29, 2010.The amended License Agreement grants Licensee licenses under additional patent rights and other intellectual property of The Regents, including related know-how, not currently licensed to the Licensee, which is related to the use of Estriol (and related compounds) for the treatment, prevention or palliation of any autoimmune disease, condition or indication, including, without limitation, multiple sclerosis (the “Field of Use”). In addition, The Regents agreed in the CTA Amendment to provide to the Licensee and, as directed by the Licensee, to its third party consultants, all data and results (redacted for patient-identifying information) from the prior clinical trial study under the CTA (the “Documentation”). The Licensee agreed to fund the costs of the analysis by a third party contractor of the data it receives and to reimburse The Regents for its costs, including overhead, in preparing the databases and materials for access by Licensee. The Licensee has also agreed to use commercially reasonable efforts to seek and obtain a development and commercialization partner for Estriol in the Field of Use, within twelve months of the Effective Date.

The Licensee was also granted certain rights of first negotiation to expand the Field of Use to other indications and uses. If the Licensee does not find a development partner that is a pharmaceutical company with annual net sales of at least $100 million (a “Development Partner”) to develop Licensed Products (as defined in the License Agreement) in at least the U.S or Europe within 12 months of the Effective Date, the Licensee will continue to retain rights to the Licensed Products in the Field of Use, and will have 25 months after the Effective Date to initiate a Phase 3 clinical trial. If the Licensee licenses its rights in the Licensed Products (as defined in the License Agreement) to a Development Partner within 12 months of the Effective Date then the diligence obligations will be adjusted as follows: (a) within 24 months of the delivery to Licensee of all patient name redacted MRI image and electronic data created under the clinical study on Estriol conducted under the CTA the Development Partner shall complete all clinical trials requested by the U.S. Food and Drug Administration (the “FDA”) to be completed prior to initiating Phase 3 clinical trials; and (b) the Development Partner must initiate a Phase 3 clinical trial on a Licensed Product within 6 months of completing the trials covered in (a) above. The above time frames are subject to reasonable extensions for delays caused by regulatory issues out of the Development Partners’ control. In consideration of the rights received, Licensee agreed to additional one-time milestone payments (for Licensee’s achievement of certain milestone events) of (i) $2 million upon dosing the first patient in the first Phase 3 clinical trial; (ii) $3 million upon filing a New Drug Application (an “NDA”) with the FDA for a Licensed product; (iii) $1.5 million upon approval by the FDA of the NDA; (iv) $1.5 million upon achievement of $50 million in annual Net Sales (as defined in the License Agreement) for a License Product; and (v) $3 million upon achievement of $100 million in annual Net Sales for a Licensed Product. The Licensee also agreed to pay to The Regents 40% of sublicensing income payments received based on sublicensing, which includes all consideration received from a Sublicensee (as defined in the License Agreement) including milestone payments, sales-based payments, upfront license payments, but subject to certain exceptions; provided , however sublicensing fee payments will not be less than 5% of the Net Sales of the Licensed Products or Licensed Methods (as defined in the License Agreement) by the Sublicensee or other specified entities. The Licensee agreed to pay The Regents an earned royalty equal to 7% of the Net Sales (as defined in the License Agreement) for Licensee’s sales of Licensed Products and Licensed Methods. If the Licensee incurs Development Costs (as defined in the License Amendment) in the aggregate of $14 million following the Effective Date, then thereafter the Sublicense Percentage (as defined in the License Amendment) will be reduced by one percentage point for each $4 million of additional Development Costs incurred, provided, that the Sublicense Percentage may never fall below 25%. The parties also entered into a mutual release.