Management’s Plan

The Company has incurred an accumulated deficit of $127.0 million through June 30, 2015. With the exception of the quarter ended June 30, 2010, the Company has incurred negative cash flow from operations since it started the business. The Company has spent, and expects to continue to spend, substantial amounts in connection with implementing its business strategy, including the planned product development efforts, clinical trials, and research and discovery efforts.

The actual amount of funds the Company will need to operate is subject to many factors, some of which are beyond our control. These factors include the following:

⋅ the progress of research activities;

⋅ the number and scope of research programs;

⋅ the progress of preclinical and clinical development activities;

⋅ the progress of the development efforts of parties with whom the Company has entered into research and development agreements;

⋅ costs associated with additional clinical trials of product candidates;

⋅ the ability to maintain current research and development licensing arrangements and to establish new research and development, and licensing arrangements;

⋅ the ability to achieve milestones under licensing arrangements;

⋅ the costs associated with manufacturing-related services to produce material for use in our clinical trials;

⋅ the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

⋅ the costs and timing of regulatory approvals.

The Company has based its estimate on assumptions that may prove to be wrong. The Company may need to obtain additional funds sooner or in greater amounts than it currently anticipates. Potential sources of financing include strategic relationships, public or private sales of the Company’s shares or debt and other sources.

The Company may seek to access the public or private equity markets when conditions are favorable due to long-term capital requirements. The Company does not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when needed on terms that will be acceptable to it, or at all. If the Company raises funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of the existing stockholders will be diluted. If the Company is not able to obtain financing when needed, it may be unable to carry out the business plan. As a result, the Company may have to significantly limit its operations and its business, financial condition and results of operations would be materially harmed.