2. Management’s Plan

The Company has incurred an accumulated deficit of $161.3 million through June 30, 2016. With the exception of the quarter ended June 30, 2010, the Company has incurred negative cash flow from operations since its inception. 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.

At June 30, 2016, the Company had cash and cash equivalents of approximately $10.0 million. Based upon our current business plans, management does not believe that the Company’s current cash on hand will be sufficient to fund its operations for the next twelve months. The Company will be required to obtain additional funding in order to execute its plans, although it does not currently have commitments from any third parties to provide it with capital. The Company cannot assure that additional funding will be available on favorable terms, or at all. If the Company fails to obtain additional funding when needed, it may not be able to execute its business plans and its business may suffer, which would have a material adverse effect on its financial position, results of operations and cash flows.

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

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the progress of research activities;

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the number and scope of research programs;

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the progress of preclinical and clinical development activities;

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

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costs associated with additional clinical trials of product candidates;

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

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the ability to achieve milestones under licensing arrangements;

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

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

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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 its 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.