Bellerophon Therapeutics Annual Report 2014

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K (Mark One) xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36845 Bellerophon Therapeutics, Inc.(Exact Name of Registrant as Specified in Its Charter) Delaware47-3116175(State or Other Jurisdiction ofIncorporation or Organization)(I.R.S. EmployerIdentification No.) 53 Frontage RoadSuite 301Hampton, New Jersey08827(Address of Principal Executive Offices)(Zip Code) Registrant’s telephone number, including area code: (908) 574-4770 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, $0.01 par value per shareNASDAQ Global Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. o Yes x No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). o Yes o No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x 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. (Check one): Large accelerated fileroAccelerated fileroNon-accelerated filer x(Do not check if a smallerreporting company)Smaller reporting companyo Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No The registrant’s common stock began trading on the NASDAQ Global Market on February 13, 2015. As of February 13, 2015, the aggregate market value of the voting andnon-voting common equity held by non-affiliates of the registrant was approximately $63.1 million, based upon the closing price on the NASDAQ Global Market reported for suchdate. The registrant has elected to use February 13, 2015, the initial trading date of the registrant’s common stock on the NASDAQ Global Market, as the calculation date becauseon June 30, 2014 (the last business day of the registrant’s most recently completed second fiscal quarter), the registrant’s common stock was not publicly traded. Shares ofcommon stock held by each officer and director and by each person who is known to own 10% or more of the outstanding common stock have been excluded in that such personsmay be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of shares outstanding of the registrant’s common stock, as of March 25, 2015: 12,905,392 Table of Contents TABLE OF CONTENTS PART IItem 1.Business4Item 1A.Risk Factors54Item 1B.Unresolved Staff Comments102Item 2.Properties102Item 3.Legal Proceedings102Item 4.Mine Safety Disclosures102 PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities103Item 6.Selected Financial Data104Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations106Item 7A.Quantitative and Qualitative Disclosures About Market Risk124Item 8.Financial Statements and Supplementary Data124Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure146Item 9A.Controls and Procedures146Item 9B.Other Information146 PART IIIItem 10.Directors, Executive Officers and Corporate Governance147Item 11.Executive Compensation151Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters163Item 13.Certain Relationships and Related Transactions, and Director Independence168Item 14.Principal Accountant Fees and Services177 PART IVItem 15.Exhibits and Financial Statement Schedules179 iTable of Contents REFERENCES TO BELLEROPHON In this Annual Report on Form 10-K, unless otherwise stated or the context otherwise requires: · references to the “Company,” “Bellerophon,” “we,” “us” and “our” following the date of the Corporate Conversion refer to BellerophonTherapeutics, Inc. and its consolidated subsidiaries; · references to the “Company,” “Bellerophon,” “we,” “us” and “our” prior to the date of the Corporate Conversion refer to BellerophonTherapeutics LLC and its consolidated subsidiaries; and · references to the “Corporate Conversion” or “corporate conversion” refer to all of the transactions related to the conversion of BellerophonTherapeutics LLC into Bellerophon Therapeutics, Inc., including the conversion of all of the outstanding units of Bellerophon Therapeutics, Inc.into shares of common stock of Bellerophon Therapeutics, Inc. 1 Table of Contents FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. All statements, other thanstatements of historical facts, contained in this Annual Report on Form 10-K, including statements regarding our future results of operations and financialposition, business strategy and plans and objectives of management for future operations, are forward-looking statements, are forward-looking statements.The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,”“predicts,” “potential” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, althoughnot all forward-looking statements contain these identifying words. The forward-looking statements in this Annual Report on Form 10-K include, among other things, statements about: · the timing of the ongoing and expected clinical trials of our INOpulse and BCM product candidates, including statements regarding the timingof completion of the trials and the respective periods during which the results of the trials will become available; · the timing of and our ability to obtain marketing approval of our product candidates, and the ability of our INOpulse and BCM productcandidates to meet existing or future regulatory standards; · our ability to operate, and the implementation of our business strategy, as a stand-alone company; · our ability to comply with government laws and regulations; · our commercialization, marketing and manufacturing capabilities and strategy; · our estimates regarding the potential market opportunity for our product candidates; · the timing of or our ability to enter into partnerships to market and commercialize our product candidates; · the rate and degree of market acceptance of any product candidate for which we receive marketing approval; · our intellectual property position; · our expectations related to the use of proceeds from our initial public offering in February 2015; · our estimates regarding expenses, future revenues, capital requirements and needs for additional funding and our ability to obtain additionalfunding; · the success of competing treatments; · our competitive position; and · our expectations regarding the time during which we will be an “emerging growth company” under the Jumpstart Our Business Startups Act of2012. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place unduereliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in theforward-looking statements we make. We have included important factors in the cautionary statements included in this Annual Report on Form 10-K,particularly in the “Risk Factors” section, that could cause actual results or events to differ 2Table of Contents materially from the forward-looking statements that we make. 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 Annual Report on Form 10-K and the documents that we have filed as exhibits to this Annual Report on Form 10-K completelyand with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update anyforward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. This Annual Report on Form 10-K 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 informationhas been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. 3Table of Contents PART I Item 1. Business Overview We are a clinical-stage therapeutics company focused on developing innovative products at the intersection of drugs and devices that addresssignificant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases. We have two programs in advanced clinical development. Thefirst program, INOpulse, is based on our proprietary pulsatile nitric oxide delivery device. We are currently developing two product candidates under ourINOpulse program: one for the treatment of pulmonary arterial hypertension, or PAH, for which we intend to commence Phase 3 clinical trials in the secondhalf of 2015, and the other for the treatment of pulmonary hypertension associated with chronic obstructive pulmonary disease, or PH-COPD, which is inPhase 2 development. Our second program is bioabsorbable cardiac matrix, or BCM, which is currently in a placebo-controlled clinical trial designed tosupport CE mark registration in the European Union. We completed enrollment of this trial in December 2014, with 303 patients having completed thetreatment procedure, and we expect to report top line results in mid-2015. Assuming positive results, we intend to conduct a pivotal pre-market approval trialof BCM beginning in the first half of 2016, which will be designed to support registration in the United States. We are developing BCM for the prevention ofcardiac remodeling, which often leads to congestive heart failure following an ST-segment elevated myocardial infarction, or STEMI. Our Product Candidates The following table summarizes key information about our development programs and product candidates. We have worldwide commercializationrights to all of our product candidates. * We are currently conducting a single clinical trial for BCM that, assuming positive results, we plan to use as a CE markregistration trial in the European Union and following which we would conduct a second, larger clinical trial tosupport registration in the United States. From the inception of our business through December 31, 2014, $194.6 million was invested in our development programs. Prior to our recent initialpublic offering, our sole source of funding was investments in us by our former parent company, Ikaria, Inc., or Ikaria. As used in herein, unless contextotherwise requires, references to “Ikaria” refer to Ikaria, Inc. and its subsidiaries and any successor entity. 4Table of Contents INOpulse Our INOpulse program is an extension of the technology used in hospitals to deliver continuous-flow inhaled nitric oxide. Use of inhaled nitricoxide is approved by the U.S. Food and Drug Administration, or the FDA, and certain other regulatory authorities to treat persistent pulmonary hypertensionof the newborn. Ikaria has marketed continuous-flow inhaled nitric oxide as INOmax for hospital use in this indication since approval in 1999. InOctober 2013, Ikaria transferred to us exclusive worldwide rights to develop and commercialize pulsed nitric oxide in PAH, PH-COPD and pulmonaryhypertension associated with idiopathic pulmonary fibrosis, or PH-IPF, with no royalty obligations. Our INOpulse program is built on scientific and technicalexpertise developed for the therapeutic delivery of inhaled nitric oxide. In 2010, Ikaria filed an investigational new drug application, or IND, for INOpulse forthe treatment of patients with PAH, which is a form of pulmonary hypertension that is closely related to persistent pulmonary hypertension of the newborn. In2012, Ikaria filed a second IND for INOpulse for the treatment of patients with PH-COPD. These INDs were included in the assets that were transferred to us byIkaria. Nitric oxide is naturally produced and released by the lining of the blood vessel and results in vascular smooth muscle relaxation, an importantfactor in regulating blood pressure. As the muscles of the blood vessels relax, this allows the heart to increase blood flow to tissues and organs of the body,including the lung. When administered through inhalation, nitric oxide acts to selectively reduce pulmonary arterial pressure in the lung with minimal effectson blood pressure outside of the lungs, an important safety consideration. Inhaled nitric oxide is widely used in the hospital setting for the treatment of a variety of conditions and, as reported by Ikaria, over 450,000 patientshave been treated with inhaled nitric oxide worldwide since its first such use. However, chronic outpatient use of this therapy has previously been limited bya lack of a safe and compact delivery system for outpatient use. We have designed our INOpulse device, which is the means by which inhaled nitric oxide isdelivered to the patient, to be portable, which enables use by ambulatory patients on a daily basis inside or outside their homes. Our INOpulse device has aproprietary mechanism that delivers brief, targeted pulses of nitric oxide timed to occur at the beginning of a breath for delivery to the well-ventilated alveoliof the lungs, which minimizes the amount of drug required for treatment. We estimate this, and the higher concentration of nitric oxide we use, reduces thevolume of drug delivered to approximately 5% of the volume required for equivalent alveolar absorption using standard continuous flow delivery systems,and also reduces the amount of nitric oxide, as well as its by-product nitrogen dioxide, that is exhaled and released into the patient’s environment. INOpulseis designed to automatically adjust nitric oxide delivery based on a patient’s breathing pattern to deliver a constant and appropriate dose of the inhaled nitricoxide over time, independent of the patient’s activity level, thus ensuring more consistent dosing of the nitric oxide to the alveoli of the lungs. In our recently completed INOpulse clinical trials, we used the first generation INOpulse device, which we refer to as the INOpulse DS device. Infuture clinical trials, we intend to use our second generation device, which we refer to as the Mark2. The Mark2 has approximately the same dimensions as apaperback book and weighs approximately 2.5 pounds. The Mark2 has a simple and intuitive user interface and a battery life of approximately 24 hourswhen recharged, which takes approximately four hours and can be done while the patient sleeps. Based on the doses we have evaluated in our clinical trials,we expect that the cartridge will need to be replaced once a day. In addition, we have developed a triple-lumen nasal cannula, which forms part of the Mark2and enables more accurate dosing of nitric oxide and minimizes infiltration of oxygen, which can react with nitric oxide to form nitrogen dioxide. Our triple-lumen nasal cannula consists of a thin, plastic tube that is divided into three channels from end-to-end, including at the prongs that are placed in the patient’snostrils, with one channel delivering inhaled nitric oxide, a second for breath detection and a third available for oxygen delivery. INOpulse is designed to becompatible with many long-term oxygen therapy, or LTOT, systems. In the usability research we conducted, all eight patients with experience with theINOpulse DS device responded positively to the Mark2, and several of these patients indicated that the ability to take the Mark2 outside the home wouldlikely reduce concerns with maintaining compliance. 5Table of Contents Our technology is based on patents we have exclusively licensed from Ikaria for the treatment of PAH, PH-COPD and PH-IPF. These include patentswith respect to the pulsed delivery of nitric oxide to ensure a consistent dose over time, which expire as late as 2027 in the United States and as late as 2026in certain other countries, as well as with respect to the special triple-lumen cannula that allows for safer and more accurate dosing of pulsed nitric oxide,which expires in 2033. We have also licensed several other patent applications from Ikaria for certain of the innovations included in the Mark2 and certain ofthe resulting patents, if issued, would expire as late as 2033. INOpulse for PAH We are developing INOpulse for the treatment of PAH to address a significant and unmet medical need in an orphan disease, which is a disease thataffects fewer than 200,000 individuals in the United States. This program represents a potential first-in-class therapy for this indication. In October 2014, wecompleted a randomized, placebo-controlled, double-blind Phase 2 clinical trial of INOpulse for PAH. The data from this trial showed trends toward lowerpulmonary vascular resistance in both active arms compared to placebo and a slight trend toward increased six-minute walk distance in the higher dosegroup. While neither result reached the threshold for statistical significance, additional exploratory analyses of patients who were compliant with therapy,assessed as being on therapy for greater than 12 hours per day, as well as a similar analysis of patients on LTOT showed clinically meaningful andstatistically significant improvements in both the primary endpoint of pulmonary vascular resistance and the key secondary endpoint of six-minute walkdistance, relative to placebo, for patients on the higher dose. These two sub groups each comprised more than 50% of the total patients enrolled in the trial.Statistical significance for clinical trials means that, should the trial have a positive outcome, the results have a low probability of having occurred because ofchance rather than from the efficacy of the product. We believe the results of this trial provide sufficient indication of clinical benefit and safety to continue development of INOpulse for PAH inpivotal Phase 3 clinical trials. We had an End of Phase 2 meeting with the FDA on January 8, 2015. Based on feedback from the FDA at this meeting, we aremoving forward with Phase 3 development and plan to conduct two adequate and well-controlled confirmatory Phase 3 clinical trials, either sequentially orin parallel. In March 2015, we requested feedback on the proposed trial design from the Scientific Advice Working Party of the European Medicines Agency,or the EMA. We intend to finalize the clinical trial design following additional discussions with the FDA as well as with other regulatory authorities,including with the EMA. The FDA has granted orphan drug designation to our nitric oxide program for the treatment of PAH. If a product with an orphan drug designation isthe first to receive FDA approval, the FDA will not approve another product for the same indication that uses the same active ingredient for seven years,unless the other product is shown to be clinically superior. PAH is characterized by abnormal constriction of the arteries in the lung that increases the blood pressure in the lungs which, in turn, results inabnormal strain on the heart’s right ventricle, eventually leading to heart failure. While prevalence data varies widely, we estimate there are a total of at least35,000 patients currently diagnosed with and treated for PAH in the United States and European Union. Moreover, because PAH is rare and causes variedsymptoms, we believe there is significant under-diagnosis of the condition at its early stages. There are several approved therapies for PAH, and we estimate,based on public product sales data, that 2012 combined global sales for these therapies were over $4.0 billion. Most PAH patients are treated with multiplemedications and many are on supportive therapy. We believe that approximately 20,000 patients have severe to very severe PAH and are treated withmultiple therapies, including LTOT. Despite the availability of multiple therapies for this condition, PAH continues to be a life-threatening, progressivedisorder. A French registry initiated in 2002 and a U.S. registry initiated in 2006 estimate that the median survival of patients with PAH is three and five yearsfrom initial diagnosis, respectively. 6Table of Contents INOpulse for PH-COPD We are also developing INOpulse for the treatment of PH-COPD. The data from an initial three-month, open-label chronic-use Phase 2 trialconducted by a third party, which we in-licensed, showed that pulsed inhaled nitric oxide significantly reduced pulmonary arterial pressures in PH-COPDpatients on LTOT and did so without causing hypoxemia, or an abnormally low level of oxygen in the blood, which is a significant concern for thesepatients. In June 2012, Ikaria submitted the data from this trial to the FDA as part of the IND package for INOpulse for PH-COPD. Based on discussions withthe FDA, we believe this trial is an adequate Phase 2 trial. The FDA asked us to confirm the dose range and the safety related to hypoxemia in PH-COPDpatients using the INOpulse device, prior to proceeding to large scale trials. Following this guidance, we conducted a Phase 2 acute dose ranging randomizedplacebo-controlled trial in 159 patients with the INOpulse DS device, with doses ranging from 3 mcg to 75 mcg. This trial, which we completed in July 2014,identified a dose range that showed similar reduction in pulmonary arterial pressure versus baseline when compared to the initial acute effects of pulsedinhaled nitric oxide in the original chronic-use trial. In addition, in our confirmatory trial, none of the INOpulse doses tested had an adverse effect onhypoxemia relative to placebo. While the reduction in pulmonary arterial pressure did not reach statistical significance versus placebo in this acute setting,which was the primary endpoint of the trial, we believe that the results have confirmed a dose range for this therapy that delivers a significant reduction inpulmonary arterial pressure versus baseline and does not cause hypoxemia in patients with PH-COPD. We are currently evaluating our trial design for chronicuse in this population in a three-month Phase 2b trial and plan to finalize the protocol following discussions with regulatory authorities in the United Statesand European Union. COPD is a disease characterized by progressive and persistent airflow limitations. Patients with more severe COPD frequently have hypoxemia andmay be treated with LTOT. Despite treatment with oxygen, hypoxemia can progress and contribute to pulmonary hypertension. In 2010, Datamonitorestimated that over 1.4 million COPD patients in the United States were being treated with LTOT. Based on academic studies, we estimate that 50% of COPDpatients on LTOT have pulmonary hypertension. PH-COPD patients have a lower median life expectancy and a higher rate of hospitalization than COPDpatients with similar respiratory disease but without pulmonary hypertension. Currently, there are no approved therapies for treating PH-COPD, and the onlygenerally accepted treatments are LTOT, pulmonary rehabilitation and lung transplant. BCM Our second program, BCM, is a medical device intended to prevent congestive heart failure following a STEMI, which is a type of severe heartattack. Patients who suffer a STEMI are at an increased risk for congestive heart failure due to potential cardiac remodeling, which is a structural change inthe size and shape of the heart that affects its ability to function normally. BCM is delivered during a minimally invasive, commonly performed cardiac procedure called a percutaneous coronary intervention procedure.BCM is a formulated sterile solution of sodium alginate and calcium gluconate designed to be administered as a liquid through the coronary artery. Whenadministered following a STEMI, BCM flows into damaged heart muscle where, in the presence of abnormally high extracellular calcium released by thedamaged cells, it forms a protective hydrogel meshwork within the wall of the heart’s left ventricle. Based on pre-clinical animal studies, we believe thatBCM has the potential to act as a flexible scaffold to provide physical support to the ventricle wall in the early stages of recovery following a STEMI andprevent further structural damage while the heart muscle heals. In addition, in our pre-clinical animal studies, as calcium levels in the damaged area returnedto normal, BCM dissolved and was excreted through normal kidney function. In a 27-patient pilot clinical trial conducted in 2009, BCM was safely administered within seven days following a STEMI. Patients showed nodeterioration from baseline of important measures of left ventricular function at one, three and six month measurements. Follow-up safety data for thesepatients, which was obtained four years after the completion of the pilot clinical trial, showed one death from T-cell lymphoma—likely a 7Table of Contents preexisting condition—and one hospitalization from congestive heart failure. One patient was lost to follow-up in year four, but this patient had no devicerelated adverse events through the three-year evaluation. These results were below the incidence of adverse events of approximately 25% to 30% weexpected for patients following an acute myocardial infarction, or AMI, commonly known as a heart attack. This expectation was based on our review ofpublicly reported data from two long-term third-party studies of AMI patients. We initiated a clinical trial of BCM in December 2011 and enrolled the first patient in April 2012. We completed enrollment of this trial inDecember 2014, with 303 patients having completed the treatment procedure at almost 90 clinical sites in Europe, Australia, North America and Israel. Weexpect to report top line results in mid-2015, following a six-month follow-up period for all patients. This trial is a CE mark registration trial in the EuropeanUnion. If the results of this trial are positive, we expect it would form the basis for our application for CE marking in the European Union and we wouldexpect to conduct a second, larger clinical trial to support approval in the United States through the premarket approval, or PMA, pathway. In the United States, we are developing BCM under an investigational device exemption, or IDE. We sponsored an IDE application for our ongoingfeasibility clinical trial of BCM to prevent ventricular remodeling and heart failure in patients who are at high risk for ventricular remodeling after an AMIand a successful percutaneous coronary intervention. The FDA has designated BCM as a Class III device. Class III devices are those which the FDA deems topose the greatest risk, such as those that are life sustaining or life supporting. As a result, the FDA regulates Class III devices under the most rigorous deviceapproval pathway, the PMA process. Device approval under the PMA pathway must be supported by extensive data, including from pre-clinical studies andclinical trials, that demonstrate the safety and efficacy of the device for its intended use. In August 2013, the FDA confirmed that no additional pre-clinicalstudies were required to support a PMA application. Assuming positive results from this trial, we intend to conduct a pivotal pre-market approval trial ofBCM beginning in the first half of 2016, which will be designed to support registration in the United States. We have an exclusive worldwide license to BCM from BioLineRx Ltd. and its subsidiary, or BioLine, including with respect to issued compositionof matter patents on BCM that expire as late as 2029 in the United States, with a possible patent term extension to 2032 to 2034 depending on the timing ofmarketing approval and other factors, and 2024 in certain other countries. We licensed this product candidate in 2009, following completion of the 27-patient pilot clinical trial conducted by BioLineRx Ltd. Data from the American Heart Association and the European Association for Percutaneous Cardiovascular Interventions suggests that a total of over1,900,000 patients suffer a heart attack in the United States and European Union each year, with at least 750,000 of these patients having a STEMI.Following a STEMI, patients are at increased risk of developing cardiac remodeling and subsequent congestive heart failure, and data from long-term third-party studies suggest that the five-year post-AMI rate of congestive heart failure or death is approximately 35% to 40%. Our Strategy Our goal is to become a leader in developing and commercializing innovative products at the intersection of drugs and devices that addresssignificant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases. The key elements of our strategy to achieve this goal include: · Advance the clinical development of INOpulse. One of our lead product candidates is INOpulse for PAH. Based on the results from our recentlycompleted Phase 2 clinical trial in PAH, we intend to initiate a Phase 3 clinical trial for this indication in the second half of 2015. In addition,we believe the results of the PH-COPD clinical trials support continued Phase 2 development and we plan to evaluate our options for furtherdevelopment, including potentially through partnerships. · Advance the clinical development of BCM in the prevention of cardiac remodeling following a STEMI. One of our other lead productcandidates is BCM. Assuming positive results from our 8Table of Contents ongoing clinical trial, we expect to file for CE marking in the European Union in the second half of 2015 and to initiate a pivotal trial inearly 2016 to support a PMA submission seeking marketing approval in the United States. · Leverage our historical core competencies to expand our pipeline. We have years of institutional experience in the use of inhaled nitric oxidein treating pulmonary hypertension and in the development of drug-device combination product candidates. If we successfully advanceINOpulse for the two product candidates we are currently developing, we expect to develop INOpulse for treatment of PH-IPF and, subject toobtaining additional license rights from Ikaria, potentially other outpatient pulmonary hypertension indications. Our longer-term vision is toidentify and opportunistically in-license innovative therapies that are at the intersection of drugs and devices and to develop andcommercialize these product candidates. · Build commercial infrastructure in select markets. As we near completion of the development of our product candidates, we expect to build acommercial infrastructure to enable us to market and sell certain of our product candidates with a specialized sales force and to retain co-promotion or similar rights, when feasible, in indications requiring a larger commercial infrastructure. While we may partner with third parties tocommercialize our product candidates in certain countries, we may also choose to establish commercialization capabilities in select countriesoutside the United States. INOpulse INOpulse Scientific Background Nitric oxide is a naturally occurring molecule produced by many cells of the body. Researchers found that nitric oxide is produced and released bythe lining of the blood vessel and plays a role in controlling muscle tone in blood vessels. In particular, nitric oxide results in vascular smooth musclerelaxation in blood vessels and thus is an important factor in regulating blood pressure. As the muscles of the blood vessels relax, blood flow increases,helping the heart to deliver more blood to the body. When administered by inhalation to patients with pulmonary hypertension, we expect inhaled nitricoxide to act in a similar manner to naturally produced nitric oxide. The scientific journal Science named nitric oxide Molecule of the Year in 1992. Additionally, the three researchers who discovered the role of nitricoxide as a signaling molecule in the cardiovascular system earned the Nobel Prize for Physiology or Medicine in 1998. In 1991, Dr. Warren Zapol and his associates at the Massachusetts General Hospital discovered that inhaling nitric oxide in gas form could reducehigh blood pressure in the lungs, a condition known as pulmonary hypertension. Nitric oxide is a rapid and potent vasodilator, which means it dilates, orwidens, blood vessels. When inhaled, it quickly dilates blood vessels in the lungs, which reduces blood pressure in the lungs, strain on the right ventricle andshunting of de-oxygenated blood away from the lungs. Because more blood can flow through the lungs, blood levels of oxygen improve. In addition, inhalednitric oxide improves the efficiency of oxygen delivery, and because it is a gas, it goes only to the portions of the lung that are ventilated, or receiving airflow, and increases blood flow only in these areas. Thus, inhaled nitric oxide improves ventilation-perfusion matching, an important element of lung functioninvolving the air that reaches the lungs, or ventilation, and the blood that reaches the lungs, or perfusion. Inhaled nitric oxide is quickly inactivated aftercontact with blood, and is selective for the lungs, meaning that it has minimal effects on blood pressure outside of the lungs, which is an important safetyconsideration. In 1999, the FDA approved the use of inhaled nitric oxide for the short-term treatment of persistent pulmonary hypertension of the newborn. Basedon this approval, and similar approvals from foreign regulatory authorities, continuous-flow inhaled nitric oxide, which is administered to ventilated patientsby a dedicated in-hospital device, is marketed by Ikaria and its commercialization partners worldwide as INOmax (INOflo in 9Table of Contents Japan). Inhaled nitric oxide is widely used in the hospital setting for a variety of conditions and, as reported by Ikaria, over 450,000 patients have beentreated with inhaled nitric oxide worldwide since its commercial launch. However, chronic outpatient use of this therapy has previously been limited by thelack of a safe and compact delivery system for outpatient use. INOpulse Drug-Device Combination Our INOpulse device has a proprietary mechanism that delivers brief, targeted pulses of nitric oxide, timed to occur at the beginning of a breath andtargeted for delivery to the well-ventilated alveoli of the lungs. INOpulse is portable and therefore allows for treatment of ambulatory patients on a daily basisinside or outside their homes. INOpulse is designed to automatically adapt based on a patient’s breathing pattern to deliver a constant dose of the drug overtime, independent of the patient’s activity level, thus ensuring predictable dosing in the alveoli of the lungs. We estimate that, because of the pulsed deliveryand higher concentration of nitric oxide we use, the volume of drug delivered is reduced to approximately 5% of the volume required for equivalent alveolarabsorption using standard continuous-flow delivery systems. INOpulse is configured to be highly portable and compatible with available modes of LTOT via nasal cannula delivery. Our recently completedclinical trials of INOpulse for PAH and INOpulse for PH-COPD utilized the first generation INOpulse DS device, which is derived from an older hospital-based system. While this device is portable and appropriate for use at home, to make INOpulse acceptable to a broader range of patients and to improve itsusability, we are near completion of our second generation device, the Mark2, which we plan to use in future clinical trials. The Mark2 is approximately the size of a paperback book and weighs approximately 2.5 pounds. It has a simple user interface and a battery life ofapproximately 24 hours when recharged, which takes approximately four hours and can be done while the patient sleeps. Based on the doses we evaluated inour clinical trials, we expect the cartridge will need to be replaced once a day. The Mark2 incorporates our proprietary triple-lumen nasal cannula, safetysystems and proprietary software algorithms. The triple-lumen nasal cannula enables more accurate dosing of inhaled nitric oxide and minimizes infiltrationof oxygen, which can react with nitric oxide to form nitrogen dioxide. Our triple-lumen nasal cannula consists of a thin, plastic tube that is divided into threechannels from end-to-end including at the prongs that are placed in the patient’s nostrils, with one channel delivering inhaled nitric oxide, a second forbreath detection and a third available for oxygen delivery. Our device is designed to be compatible with many LTOT systems. The Mark2 has been well received by patients in the usability research we have conducted. In addition to the baseline testing on the originalINOpulse DS device, we have conducted two rounds of testing with COPD and PAH patients to evaluate the user interface, loading mechanism, size, carryingbag and other features. In the usability research we have conducted, all eight patients with experience with the INOpulse DS device responded positively tothe Mark2, and several of these patients indicated that the ability to take the Mark2 outside the home would likely reduce concerns with maintainingcompliance. Based on discussions with the FDA, we are required to show that the amount and timing of inhaled nitric oxide delivery is similar across INOpulsedevice generations. We have developed a regulatory bridging strategy to meet these requirements. To facilitate the transition from our existing INOpulse DSdevice to the Mark2 in our INOpulse clinical program, we plan to conduct comparability testing of inhaled nitric oxide dosing with the Mark2 as comparedto the INOpulse DS device. This testing will include a comparison of critical parameters, including pulse width and nitric oxide output. We will also assesswhether the Mark2 will meet the performance specifications of the INOpulse DS device in addition to Mark2-specific requirements. In addition, we aredeveloping a bridging test report that we expect to include in the regulatory package that we anticipate submitting to the FDA during the first half of 2015 togain approval for the device transition. We discussed our bridging strategy with the FDA during a meeting in May 2013, and we believe that, assuming theMark2 meets the specified comparability parameters, this testing will be sufficient to gain FDA approval to use the Mark2 in future clinical trials, as planned. 10Table of Contents We have licensed from Ikaria several patents and patent applications for certain innovations in our INOpulse devices. These include patents withrespect to the pulsed delivery of inhaled nitric oxide to ensure a consistent dose over time, which expire as late as 2027 in the United States and as late as2026 in certain other countries, as well as a patent with respect to the triple-lumen cannula that allows for safer and more accurate dosing of pulsed inhalednitric oxide, which expires in 2033. We have also licensed several other patent applications from Ikaria for certain of the innovations included in the Mark2and certain of the resulting patents that, if issued, would expire as late as 2033. In the European Union, where there is no formal drug-device designation, we expect INOpulse to be evaluated by the EMA as a drug with specificreference in the label to the device and cannula, which will require a separate CE mark from a Notified Body. Introduction to Pulmonary Hypertension Pulmonary hypertension is a disease characterized by constriction of the blood vessels in the lung, which causes blood pressure in the lung to riseand, in turn, increases the work required for the right ventricle of the heart to pump blood. The World Health Organization, or WHO, has endorsed a consensusclassification for pulmonary hypertension that was updated most recently in 2013. The WHO classification has five broad pulmonary hypertension groupsbased on similarities in pathological and hemodynamic characteristics and therapeutic approaches. We are initially focusing development of INOpulse inindications included in WHO Groups 1 and 3 due to our view of the likelihood of success and the size and commercial viability of these markets. Group 1pulmonary hypertension is comprised of patients with pulmonary arterial hypertension and is referred to as PAH. This Group combines conditions with arange of causes, all of which have a characteristic pattern of vascular remodeling. The constriction of the blood vessels and the resulting pressure on the heartis often the major reason for poor prognosis of PAH patients since they can be otherwise healthy. Most PAH-specific medications are vasodilators and workthrough one of the three key mechanistic pathways for vasoconstriction and vasodilation. We expect that, because inhaled nitric oxide is a vasodilator,patients in Group 1 will benefit from INOpulse. Group 3 pulmonary hypertension consists of pulmonary hypertension associated with lung disease orhypoxemia, which is an abnormally low level of oxygen in the blood. This Group includes patients with PH-COPD and PH-IPF, among others. INOpulse for Pulmonary Arterial Hypertension We are developing INOpulse for PAH to address a significant and unmet medical need in an orphan disease. This product candidate represents thedevelopment of a potential first-in-class therapy for this indication. Although current therapy for PAH provides some therapeutic benefit, there remains nocure, and approved therapies can have significant systemic side effects, such as hypotension and liver injury. INOpulse for PAH is designed to be a selective,short-acting pulmonary vasodilator and is being tested as an add-on therapy to existing PAH medications to evaluate its efficacy and side effect profile, inparticular its ability to provide clinical benefit without adding to the systemic effects such as hypotension. Disease Background and Market Opportunity PAH is a life-threatening, progressive disorder characterized by abnormally high blood pressure, or hypertension, in the pulmonary artery, the bloodvessel that carries blood from the heart to the lungs. PAH occurs when most of the very small arteries, or arterioles, throughout the lungs narrow in diameter,which increases the resistance to blood flow through the lungs. To overcome the increased resistance, pressure increases in the pulmonary artery and the rightventricle, which is the heart chamber that pumps blood into the pulmonary artery. In addition, PAH may cause changes to the blood vessel lining that hinderthe natural production of nitric oxide. Signs and symptoms of PAH occur when this increased pressure in the right ventricle cannot fully overcome theelevated resistance. 11Table of Contents There are a number of drugs approved for the treatment of PAH that work primarily by reducing pulmonary vascular resistance, which is the primaryproblem for these patients. However, despite the availability of multiple therapies for this condition, the mortality rate for PAH remains high, with estimatesof median survival ranging from three to five years. Patients with PAH also report severe impairment of health-related quality of life, including poor generaland emotional health and impaired physical functioning. The most common symptoms of PAH are shortness of breath during exertion and syncope, orfainting spells. People with PAH may experience additional symptoms, particularly as the condition worsens, including dizziness, swelling of the ankles orlegs, chest pain and a racing pulse. These impairments to health-related quality of life are comparable and sometimes more severe than those reported inpatients with severely debilitating conditions such as spinal cord injury. Since PAH is an orphan condition with poor diagnosis rates, published prevalence estimates for PAH vary widely. Based on epidemiological studiesand current treatment rates, we estimate that there are a total of at least 35,000 patients currently diagnosed and treated for PAH in the United States andEuropean Union. The average age of PAH patients at diagnosis is approximately 50 years, and approximately 80% of PAH patients are female. PAH is oftendiagnosed late in the disease progression with approximately 73% of these patients already having progressed to WHO functional Class III or IV at the timeof diagnosis. PAH is characterized by abnormal constriction of the arteries in the lung. PAH patients are generally treated with one or more of the four majorclasses of approved medications, which are prostacyclin and prostacyclin analogs, phosphodiesterase type-5 inhibitors, endothelin receptor antagonists and asoluble guanylate cyclase stimulator, all of which potentially result in vasodilatory systemic effects and, therefore, hypotension. Current guidelinesrecommend treatment with multiple medications in Class III and IV patients with progressive disease but suggest treatment be carefully managed byexperienced physicians. Approximately 45% of PAH patients are treated with more than one class of medication at a given time. In addition, sincehypoxemia can be a problem in these patients, it is often treated with LTOT in accordance with broadly supported treatment guidelines in the United Statesand European Union. We are testing INOpulse for PAH as an add-on therapy for use in patients whose disease is progressing and who use additional medications. If it isapproved, we expect INOpulse will provide the greatest benefit to patients who require pulmonary arterial pressure reductions beyond the reductionsachieved with the medication they are already using. Because of its localized effect and short-half life, we do not expect INOpulse will add to systemic bloodpressure reductions of other PAH drugs. We believe that INOpulse is also likely to be preferentially prescribed for patients already on LTOT. Data from a U.S.and a French registry indicate that approximately 40% of patients are treated with oxygen at diagnosis for hypoxemia. Approximately 60% of the patientsfrom our recently completed Phase 2 clinical trial were on LTOT. We believe that, as compared to patients who are not using a nasal cannula, patients who areaccustomed to using a nasal cannula for delivery of oxygen are more likely to be prescribed and are more likely to be compliant with the use of INOpulse. A 2013 report by CVS Caremark Specialty Analytics provided examples of PAH medications with annual prices ranging from approximately$100,000 to $150,000 per patient per year in the United States. We expect that, if approved, the price of INOpulse will be in the range of other establishedPAH medications. Scientific Rationale for Use of INOpulse for PAH Since the discovery of the significant role of nitric oxide in vasodilation, there has been an expectation in the scientific community that inhalednitric oxide could be an effective therapy for PAH. According to the Cleveland Clinic Center for Continuing Education section on Pulmonary Hypertension,exogenous administration of nitric oxide by inhalation is probably the most effective and specific therapy for PAH, but cost and technical complexity ofdelivering inhaled nitric oxide have limited its use to the hospital. Although not approved for the treatment of PAH, data from an in-hospital surveyconducted by Ikaria showed an estimated 1,000 to 2,000 INOmax uses in PAH patients in the United States each year, indicating that physicians already usenitric oxide in some PAH patients. The difficulty in delivering inhaled nitric oxide outside of the hospital 12Table of Contents results from the size of the device and cylinder and the need for a specialized delivery system with built-in safety systems. We are developing nitric oxide for treatment of PAH because nitric oxide is a proven vasodilator, and PAH is primarily a disease of high pulmonaryvascular resistance. PAH is associated with impaired release of nitric oxide and thus we believe chronic administration of inhaled nitric oxide may be viewedas an adjunctive or replacement therapy in patients with PAH. The use of inhaled nitric oxide in PAH has been proposed since the role of nitric oxide in thisdisease was identified. This drug has been tested in limited investigational studies conducted at academic institutions. One clinical trial conducted at an academic center in Spain in 11 patients, seven of whom had severe PAH and four of whom had severe chronicthromboembolic pulmonary hypertension, or CTEPH, evaluated the use of pulsed inhaled nitric oxide in an ambulatory setting. In this open-label, single-armtrial with no placebo control, patients were given ambulatory pulsed inhaled nitric oxide therapy via a nasal cannula for up to one year, after beingwithdrawn from PAH-specific therapy. The nitric oxide pulse was delivered to the patient at the beginning of each inspiration at a flow rate that wasindividualized for such patient. The goal of this trial was to evaluate the efficacy and safety of long-term treatment with inhaled nitric oxide outside thehospital setting. At the start of this trial, patients were evaluated for various measures including the distance they were able to walk in six minutes and WHOfunctional class. At baseline, most of these patients had significant impairment of six-minute walk distance, with the ability to walk an average of 125 meters,and poor WHO functional class status, with nine patients in Class IV and two patients in Class III. After one month of therapy, overall, patients improvedbased on WHO functional class, with six patients in Class III and five in Class II, and had improvements in six-minute walk distance of 128 meters onaverage. After six months of treatment, patients did not worsen clinically, however, between months six and 12, seven patients were given aphosphodiesterase type-5 inhibitor due to clinical worsening. One patient who initially did well with the added phosphodiesterase type-5 inhibitor therapydeveloped severe right heart failure at month eight and died, and another patient received a lung transplant at month nine. The remaining nine patients allhad clinical status at month 12 similar to their one month evaluation, and improvements in functional class and six-minute walk distance for the grouppersisted over time. We do not expect INOpulse to have systemic effects beyond the pulmonary vasculature because of the short half-life of nitric oxide combined withits targeted delivery to the alveoli. When nitric oxide is delivered as a pulse at the beginning of inhalation, it travels to the alveoli where it diffuses rapidlyacross the alveolar capillary membrane into the adjacent vascular smooth muscle of pulmonary vessels. This transport is similar to the natural transport ofendogenous nitric oxide from the endothelial cells, where it is produced, to the vascular smooth muscle cells where it relaxes the muscle and causesvasodilation of the pulmonary arteries. We believe this makes INOpulse unlikely to have intolerable side effects, such as systemic hypotension or drug-druginteractions. Given the need for PAH patients to be treated with multiple therapies and the potential for increased hypotension from each of the currentlyapproved PAH therapies, we are developing INOpulse as an add-on or adjunctive therapy for PAH, where we believe it has the highest commercial potential. Clinical Development Program INOpulse for PAH is designated as a drug-device combination by the FDA and is being evaluated through the Division of Cardiovascular and RenalProducts of the Center for Drug Evaluation and Research with consultation from the Center for Devices and Radiological Health. For our IND for PAH, wesubmitted data from animal studies in rats and sheep as well as the results of a Phase 1 trial of pulsed inhaled nitric oxide in healthy volunteers. In addition,we referenced additional data from Ikaria’s new drug application, or NDA, in respect of INOmax. Based on this, the FDA has agreed that no further preclinicalstudies are required for clinical development of INOpulse for PAH. 13Table of Contents In the European Union, where there is no formal drug-device designation, we expect that INOpulse for PAH will be evaluated by the EMA as a drugwith specific reference in the label to the device and cannula, which will require a separate CE mark from a Notified Body. Phase 2 Clinical Trial We recently completed Part A of our ongoing Phase 2 clinical trial of INOpulse for PAH in the United States and Canada. Our key inclusion criteriafor patients in this trial were that they: · be diagnosed with pulmonary hypertension WHO Group 1; · be on at least one other PAH medication for at least 12 weeks prior to treatment with INOpulse; and · demonstrate being able to walk between 100 and 450 meters within six minutes. In addition, this trial excluded patients with evidence of significant left ventricular dysfunction. The trial is being conducted in two parts, Part A and Part B. In October 2014, we completed Part A of this trial which was a randomized, placebo-controlled, double-blind clinical trial with patients randomized 1:1:1 to placebo or to one of two active doses, either 25 or 75 mcg/kg ideal bodyweight/hour, or mcg, for 16 weeks. Part B is an ongoing double-blind long-term extension of the initial trial with all patients on one of two doses of INOpulsefor PAH to monitor the long-term safety and tolerability of the therapy. Eighty-one percent of the patients in Part A elected to enter the Part B long-termextension trial. The primary endpoint in this trial was a change in pulmonary vascular resistance from baseline at 16 weeks, which was the end of Part A. Thetarget change in pulmonary vascular resistance was 190 dynes sec. cm-5, and the trial was powered for statistical significance at 130 dynes sec. cm-5. Themain secondary endpoint was change in six-minute walk distance over the same period. A clinically meaningful change in six-minute walk distance istypically considered to be an increase of at least 30 to 35 meters. We expect to continue the ongoing Part B of this trial until the earliest of INOpulse for PAHbeing approved, clinical development of INOpulse for PAH being discontinued or our decision to discontinue Part B. We typically use, and have used for this trial, a conventional method of assessing statistical significance known as a one-way analysis of variance, orANOVA. In this method the threshold of statistical significance is reached when a measure known as the p-value is 0.05 or lower. Because we are using twodoses, we are using a common adjustment to the significance threshold for the analysis in this trial, including the subgroup analysis, by requiring the p-valueto be 0.025 or lower before it is considered significant. When the p-value is higher than this threshold it is considered that any directional benefit seen in theclinical trial could be due to chance rather than being a true measure of the efficacy of the product tested. We randomized 80 patients for Part A of the Phase 2 clinical trial. The majority of the patients were female (79%), white (89%) and had idiopathicPAH (74%). The results from Part A of this trial, which are summarized in the table below, showed trends toward lower pulmonary vascular resistance in boththe active arms compared to placebo and a slight trend toward increased six-minute walk distance in the higher dose group. However, neither result wasstatistically significant. INOpulse for PAH—Phase 2 Part A Trial Results for All Patients Inhaled nitric oxide dose(mcg/kg idealbody weight/hour) ParameterPlacebo 25 75 Total number of patients randomized262727Pulmonary Vascular Resistance (dynes sec. cm-5)Number analyzed242324Baseline (mean)601.5665.8662.9Change from Baseline (mean)47.2-54.1-15.0p-value (ANOVA)—0.0910.1786-Minute Walk Distance (m)Number analyzed242423Baseline (mean)367.5326.8300.7Change from Baseline (mean)7.54.722.8p-value (ANOVA)—0.8510.314 14Table of Contents In an analysis of baseline characteristics, patients randomized to placebo were younger and less sick than those on either of the active arms on manydimensions including baseline pulmonary vascular resistance, baseline six-minute walk distance, duration of disease and WHO severity class. In addition,fewer of the patients on placebo were on LTOT compared to either of the active arms with more patients on LTOT at the 75 mcg dose than on the 25 mcgdose. INOpulse for PAH—Phase 2 Trial Baseline Demographics Inhaled nitric oxide dose(mcg/kg idealbody weight/hour) Placebo 25 75 Number of patients262727Age (years) (mean)52.056.357.9WHO Severity (number in Classes III and IV)192123Disease duration (years) (mean)5.56.26.0Pulmonary Vascular Resistance (dynes sec.cm-5) (mean)601.5665.8662.96-Minute Walk Distance (m) (mean)367.5326.8300.7Use of LTOT46.2%59.3%77.8% During evaluation of the data, we observed that adherence to therapy was widely variable. LTOT was a pre-specified parameter recorded at baseline,and patients using LTOT at baseline were more adherent to using the device. Good adherence was retrospectively defined as an average use of greater than12 hours per day. Specifically, patients using LTOT had a rate of 70% adherence as compared with 33% adherence in those patients not using LTOT. Basedon this observation, we conducted non-scheduled, exploratory analyses by LTOT use and by compliance (defined as patients who had average daily use of12 hours per day or more). Each of these subgroups comprised more than 50% of the total patients enrolled in the trial. The results of these analyses aresummarized in the following table. INOpulse for PAH—Phase 2 Part A Trial Compliance to Therapy Percent of patients Average hours of use per day Allpatients OnLTOT Not onLTOT < 4 Hours6.3%4.1%9.7%4-8 Hours20.0%8.2%38.7%8-12 Hours17.5%16.3%19.4%12-16 Hours22.5%30.6%9.7%16-20 Hours16.3%22.4%6.5%> 20 Hours17.5%18.4%16.1% 15Table of Contents Among LTOT users, there was a clinically meaningful and statistically significant improvement versus placebo in both pulmonary vascularresistance and six-minute walk distance in patients at the 75 mcg dose and there was a statistically significant improvement in pulmonary vascular resistanceand a positive trend in change in six-minute walk distance in patients on the 25 mcg dose. In the subgroup of compliant patients who used INOpulse for an average of greater than 12 hours per day, the results were very similar to those of theLTOT subgroup. This was expected since there is a significant overlap between the compliant patient and the LTOT group, with approximately 80% ofcompliant patients also treated with LTOT at baseline. In the compliant group, when compared to placebo, there was a positive trend for change in pulmonaryvascular resistance and a clinically meaningful and statistically significant improvement in six-minute walk distance in the 75 mcg dose arm and there was astatistically significant improvement in pulmonary vascular resistance and a non-significant change in six-minute walk distance in the 25 mcg dose arm. INOpulse for PAH—Phase 2 Part A Trial Results for Patient Subgroups Pulmonary Vascular Resistance Inhaled nitric oxide dose(mcg/kg idealbody weight/hour)Parameter/Population Placebo 25 75Total number of patients randomized262727On LTOTNumber analyzed101519Baseline (mean)580.1605.2614.9Change from Baseline (mean)125.5-47.1-17.5p-value (ANOVA)—0.0180.024> 12 hours per day (Compliant)Number analyzed101218Baseline (mean)527.6747.2670.6Change from Baseline (mean)146.5-66.9-5.1p-value (ANOVA)—0.0230.027 Six-Minute Walk Distance Inhaled nitric oxide dose(mcg/kg idealbody weight/hour)Parameter/Population Placebo 25 75Total number of patients randomized262727LTOTNumber analyzed101518Baseline (mean)333.5301.5292.2Change from Baseline (mean)-10.79.134.9p-value (ANOVA)—0.3200.021> 12 hours per day (Compliant)Number analyzed101216Baseline (mean)330.0316.3294.5Change from Baseline (mean)-10.18.537.0p-value (ANOVA)—0.3740.021 16Table of Contents INOpulse was relatively well-tolerated in Part A of this trial. Our Independent Data Safety Monitoring Board evaluated the safety analysis fromPart A of the trial in November 2014 and recommended proceeding with Part B of the trial. Drug-related serious adverse events, or SAEs, occurred in nopatients in the placebo group and one subject in each of the 25 mcg and 75 mcg groups. INOpulse—Phase 2 Part A Trial Results for All Patients: Summary Safety Data Inhaled nitric oxide dose(mcg/kg idealbody weight/hour)Number of PatientsPlacebo25 75Number of Patients262727Total Adverse Events (AEs)232226Drug related AEs9109Total Serious Adverse Events (SAEs)449Drug related SAEs011Deaths100Discontinuation due to AEs112 One patient in the placebo arm died during Part A of the trial due to worsening PAH. SAEs were reported for four patients in the placebo arm,including one each of: pneumonia/worsening PAH, catheter-related infection, ascites and left hip sciatica. Each of these were assessed by the investigator forthe trial as unrelated. Four patients in the 25 mcg low-dose active treatment arm experienced SAEs, including bacteremia, myelodysplastic syndrome,increased shortness of breath and dyspnea, one of which was assessed as possibly related to trial therapy. The 75 mcg high-dose active treatment arm had ninepatients with SAEs. The most common SAEs reported in the 75 mcg group were syncope and bronchitis/tracheobronchitis, one of which was assessed aspossibly related to trial therapy. Discontinuation of trial therapy due to adverse events, or AEs, occurred for two patients in the 75 mcg arm and one subject ineach of the 25 mcg and placebo arms. Pivotal Phase 3 Clinical Trials We believe the results from Part A of our Phase 2 clinical trial provide sufficient indication of clinical benefit and safety to continue development ofINOpulse for PAH in pivotal Phase 3 clinical trials. We had an End of Phase 2 meeting with the FDA on January 8, 2015. Based on this discussion, we plan toconduct this Phase 3 program as two adequate and well-controlled confirmatory trials, and we will conduct these two trials either sequentially or in parallel.In March 2015, we requested feedback on the proposed trial design from the Scientific Advice Working Party of the EMA. We currently intend to begin thePhase 3 program in the second half of 2015 and we estimate that, once initiated, each trial will take approximately three years to complete. We expect one of the trials to have two arms—placebo and 75 mcg active dose—and the other to have three arms—placebo, 50 mcg active dose and75 mcg active dose. Each arm is planned to have approximately 94 patients. Based on our discussions with the FDA, we expect that the primary endpoint ofthe trial will be change in six-minute walk distance evaluated at 18 weeks. In addition, we expect to have a secondary endpoint of time to clinical worsening,which we plan to analyze based on combined data from both trials to ensure adequate power for this assessment. We also plan to evaluate hemodynamicchanges using right heart catheterization in a subset of patients. We expect that enrollment for these trials will focus on patients with confirmed PAH who are treated with at least one approved PAH specific therapyand LTOT and who are willing to be compliant on therapy for at least 16 hours a day. We plan to conduct both trials with a two week run-in period, prior tothe start of clinical dosing, to enrich enrollment for patients who show a high degree of adherence (i.e., an average of at least 17Table of Contents 16 hours of use per day) during this run-in period. We plan to use the Mark2 in these Phase 3 clinical trials. Results from our usability testing suggest thatcompliance with the Mark2 may be better than was the case with the first generation INOpulse DS device. We expect that the Phase 3 clinical trials will bemulti-center multi-country trials with a focus on sites in North America and Europe. We intend to finalize the clinical trial design following additional discussions with the FDA as well as with other regulatory authorities, includingwith the EMA. INOpulse for PH-COPD We are developing INOpulse for PH-COPD to address a significant unmet medical need that we believe is often overlooked in everyday clinicalpractice because of the lack of available therapy. Pulmonary hypertension is more prevalent among those COPD patients who have advanced loss ofrespiratory function and low peripheral blood oxygen levels requiring treatment with LTOT. The co-morbidity of pulmonary hypertension in these patientsleads to cardiovascular complications from the added strain on the right ventricle of the heart. Current drug therapies for COPD are targeted to relieve thesymptoms and complications of the respiratory component of the disease. Unlike these therapies, INOpulse is directed at treating the cardiovascularcomplications of PH-COPD. We believe PH-COPD patients on LTOT who are at risk for cardiovascular complications could benefit from use of INOpulse inaddition to any respiratory benefits that result from their existing treatments. Disease Background and Market Opportunity COPD is a progressive disease caused by chronic inflammation and destruction of the airways and lung tissue. While COPD is primarily a respiratorydisease, over time, as the disease progresses, the chronic pulmonary restrictions and resulting deprivation of adequate oxygen, or hypoxia, can contribute tovasoconstriction in the pulmonary arterial bed. In addition, COPD patients can have deficiency in endogenous nitric oxide production in their lungs, whichcan worsen vasoconstriction. This pulmonary vasoconstriction puts pressure on the right side of the heart, making it less able to cope with stressors andpotentially leading to progressive cardiac dilation, heart failure and death. This cardiovascular component of COPD is, we believe, often overlooked despitepulmonologists’ general awareness of the problem, in part because there are no specific therapies for the condition in these patients. While it is widelybelieved that the cardiovascular complications of COPD occur only in the advanced stage of the disease as a consequence of chronic hypoxemia, recentfindings demonstrate an earlier involvement of the cardiovascular system in this disease. In 2010, Datamonitor estimated that approximately 12 million patients in the United States were being treated for COPD and that over 1.4 million ofthese patients were being treated with LTOT. Based on academic studies, we estimate that 50% of COPD patients on LTOT in the United States havepulmonary hypertension. Even though the degree of pulmonary hypertension in these patients is milder than in PAH patients, data published in literaturesuggests that even small elevations in mean pulmonary artery pressure in patients with advanced COPD can impact hospitalization, patient-assessedfunctional outcomes and mortality. Pulmonary hypertension is a well-known predictor of increased morbidity and mortality in COPD patients and isassociated with poor quality of life, worse clinical outcomes and shorter survival time. Based on a long-term study completed in 1992 and published in 1995,PH-COPD patients had a four-year survival rate of approximately 50%. By contrast, in this same long-term study, COPD patients with similar pulmonaryfunctions, but without pulmonary hypertension, had a four-year survival rate of 80%. We expect INOpulse for PH-COPD, if approved, would be a treated as a specialty drug. Specialty drugs are typically high-cost medications, oftenranging in price in the United States from approximately $15,000 to $50,000 per patient per year, used to treat rare or complex conditions, requiring closeclinical management and special handling and distributed through specialty pharmacies. 18Table of Contents Scientific Rationale for Use of INOpulse for PH-COPD The mechanism of action of inhaled nitric oxide in vasodilation at the alveolar smooth muscle in PH-COPD is similar to its action in PAH. Likeendogenous pulmonary nitric oxide, inhaled nitric oxide works by selectively relaxing lung vascular smooth muscles, causing dilation of pulmonary bloodvessels and consequently increased pulmonary blood flow. This reduces the elevated pulmonary artery pressure in patients with PH-COPD. PH-COPD patients generally have hypoxemia as a result of deteriorating lung function, which can be treated with supplemental oxygen therapy.However, these patients are not treated with currently approved PAH-specific drugs because these drugs can worsen hypoxemia. This worsening can occurwhen these drugs, which are systemically bioavailable, cause indiscriminate pulmonary vasodilation, even in poorly ventilated alveoli, resulting in loweraverage blood oxygenation levels. We believe that inhaled nitric oxide, as a locally active selective pulmonary vasodilator with minimal systemic effects,can drop pulmonary arterial pressures, and when delivered with INOpulse as a targeted pulse to the well-ventilated alveoli, avoid this indiscriminatevasodilation and the consequent lowering of blood oxygen levels. The targeted delivery of inhaled nitric oxide to specific alveoli is important because early trials with continuous-flow inhaled nitric oxide reducedpulmonary arterial pressure in PH-COPD patients but also resulted in lowering of blood oxygen levels. It was postulated that this unwanted effect might beavoided by administering nitric oxide as a brief pulse at the beginning of each breath because well-ventilated alveoli open faster, and a brief early pulsewould only reach these alveoli. As early as 1997, this concept was demonstrated by testing inhaled nitric oxide in PH-COPD patients during exercise, whichallowed the dose to mimic pulse dosing. Recently, data from a computational fluid-flow modeling study we conducted, using high resolution computedtomography scans and computer simulations, supported this hypothesis that early pulsed delivery of nitric oxide could be directed specifically to the well-ventilated alveoli. Clinical Development Program INOpulse for PH-COPD is designated as a drug-device combination by the FDA and is being evaluated through the Division of Cardiovascular andRenal Products of the Center for Drug Evaluation and Research with consultation from the Division of Pulmonary, Allergy, and Rheumatology Products andthe Center for Devices and Radiological Health. In our IND for PH-COPD, we referenced all of the information in our IND for PAH and included data from aPhase 2 clinical trial that Ikaria commenced in 2005 but terminated due to lack of enrollment after one subject was treated. The one subject experienced aserious adverse event of hypoxia, which was deemed unrelated to treatment. The data referenced in our IND, as well as the years of use of the marketedproduct, demonstrate that nitric oxide is well tolerated. The FDA has agreed that the IND package is complete and adequate for supporting Phase 2 clinicaldevelopment of INOpulse for PH-COPD. The FDA also agreed that no additional pre-clinical studies are needed to support product approval. In the European Union, where there is no formal drug-device designation, we expect that INOpulse for PH-COPD will be evaluated by the EMA as adrug with specific reference in the label to the device and cannula, which will require a separate CE mark from a Notified Body. In an initial three-month, open-label chronic-use Phase 2 trial, pulsed inhaled nitric oxide significantly reduced pulmonary arterial pressures in PH-COPD patients on LTOT and did so without causing hypoxemia, which is a significant concern for these patients. The inhaled nitric oxide was administeredusing a device that delivered pulsed nitric oxide as a fixed amount per breath along with the oxygen using a single lumen nasal cannula. This trial,completed in 2000, was conducted in two parts, an initial acute dose titration part and a three-month chronic ambulatory use part. In the initial acute test,each patient was treated with doses of 10, 15, 20, 25 and 30 ppm nitric oxide in a step-wise escalation from the lowest to higher doses. Each patient wasassessed for drops in mean pulmonary arterial pressures, or mPAP, as well as for changes in oxygenation levels. The mean acute change in mPAP in this trialwas a reduction of approximately 4 mmHg from a baseline of 27 19Table of Contents mmHg across all doses. In another measure of the hemodynamic effects of the drug, the pulmonary arterial systolic pressure reduced by 2.7 to 3.6 mmHgacross the nitric oxide doses tested. Based on the individual mPAP and oxygenation level changes in the acute test, each patient was assigned anindividualized dose to be used in the second part of the trial which was a three-month evaluation. The patients were then randomized to either the controlgroup for treatment with oxygen therapy or to the active group for treatment with both oxygen and the individually selected dose of nitric oxide over aperiod of three months. A total of 32 patients completed the three month portion per protocol, 15 of whom had been randomized to drug therapy and 17 ofwhom were randomized to the control group. At the end of the three month chronic use portion of the trial, patients in the nitric oxide arm had a statisticallysignificant decrease from baseline in mPAP of 6.8 mmHg compared to an increase in mPAP of 0.9 mmHg in the oxygen alone control arm of the trial(p < 0.001) demonstrating a sustained and potentially strengthened effect of inhaled nitric oxide on mPAP over three months. In addition, at the three monthevaluation, the patients treated with pulsed inhaled nitric oxide had no worsening of blood oxygen levels compared to the control group suggesting noworsening of oxygen exchange in the lungs. In June 2012, this data was submitted to the FDA as part of the IND package for INOpulse for PH-COPD. Based on discussions with the FDA, webelieve this trial is an adequate Phase 2 trial. The FDA has asked us to confirm the dose range and the safety related to hypoxemia in PH-COPD patients usingthe INOpulse device, prior to proceeding to large scale trials. Following this guidance, we conducted a Phase 2 acute dose ranging randomized placebo-controlled trial in 159 patients with the INOpulse DS device, with doses ranging from 3 mcg to 75 mcg. This Phase 2 trial, which we completed in July 2014,identified a dose range that showed similar efficacy versus baseline when compared to the initial acute effects of pulsed nitric oxide in the original chronic-use trial. The 10 mcg dose of INOpulse showed a decrease in pulmonary arterial systolic pressure from baseline of 5.4 mmHg (p < 0.05) and increasing thedose above 10 mcg did not result in a further decrease in pulmonary arterial systolic pressure from baseline indicating a plateau effect of the drug at 10 mcgand above. A post-hoc analysis of data combining all response data over the range of 10 mcg to 75 mcg showed a decrease in pulmonary arterial systolicpressure from baseline of 4.2 mmHg, which was significant and represented a mean decrease of approximately 9% from baseline. In addition, in ourconfirmatory trial, none of the INOpulse doses tested had an adverse effect on hypoxemia relative to placebo with a total of 48 patients with confirmedoxygenation level decrease greater than 5 mmHg from baseline (16/40 in placebo; 32/84 in inhaled nitric oxide). While the reduction in pulmonary arterialpressure did not reach statistical significance versus placebo in this acute setting, as the decrease in pulmonary arterial systolic pressure from baseline in theplacebo group was 1.9 mmHg, we believe that the results have confirmed a dose range for this therapy that delivers a significant reduction in pulmonaryarterial pressure versus baseline without causing hypoxemia in patients with PH-COPD. We are currently designing a three-month Phase 2b trial to evaluate safety and efficacy for chronic use of INOpulse for PH-COPD. We plan to finalizethe protocol following discussions with regulatory authorities in the United States and European Union. We currently intend to begin this Phase 2b trial inthe second half of 2015 and, once initiated, we expect the trial will take approximately 18 months to complete. INOpulse for Other Pulmonary Hypertension Conditions Pulmonary hypertension disease is often classified according to the WHO classification system which groups patients with pulmonary hypertensionaccording to the underlying etiologies, or causes, of the pulmonary hypertension. In this system, PAH is defined as Group 1 and PH-COPD is classified underGroup 3, pulmonary hypertension due to lung disease and/or hypoxemia. We believe the mechanism of action of inhaled nitric oxide as a pulmonaryvasodilator, and thus INOpulse, can be effective in treating pulmonary hypertension related to other conditions, including pulmonary hypertensionassociated with PH-IPF and other interstitial lung diseases, CTEPH and pulmonary hypertension associated with sarcoidosis. While there are two recently approved treatments for IPF, there are currently no approved therapies for PH-IPF. In 2013, riociguat (Adempas) was thefirst drug therapy approved for treating CTEPH, although other PAH medications are sometimes used to treat this condition. Patients with sarcoidosis areoften treated with 20Table of Contents steroids or other anti-inflammatory medications, however, there are no therapies approved to treat the PH associated with this disease. Our current license from Ikaria covers only the development of INOpulse for PAH, PH-COPD and PH-IPF. We would need to obtain additionallicense rights from Ikaria before beginning development of INOpulse for any other indication. BCM for Prevention of Cardiac Remodeling Following a STEMI We are developing BCM through the medical device regulatory pathway to prevent congestive heart failure following a STEMI, which is a type ofsevere heart attack. Patients who suffer a STEMI are at increased risk for congestive heart failure due to potential cardiac remodeling, which is a structuralchange in the size and shape of the heart that affects its ability to function normally. This change includes thinning of the left ventricle wall at the infarctionand the adjacent border zone, outward bulging of the infarcted region, hypertrophy of the non-infarcted portion of the left ventricle and dilation of the leftventricle chamber. Cardiac remodeling increases mechanical stresses on the left ventricular wall and reduces the efficiency of pumping blood often leading tocongestive heart failure. BCM is intended to prevent cardiac remodeling by reducing the abnormal increase in ventricular wall stress and structural changes in the heart aftera STEMI. Once blood flow has been re-established to the affected heart muscle of a patient following a STEMI, a physician deploys BCM through thecoronary artery related to the infarcted region of the left ventricle. BCM is designed to flow into the damaged heart muscle where it forms a flexible scaffoldto enhance the mechanical strength of the heart muscle during recovery and repair, thereby preventing cardiac remodeling. We have an exclusive worldwidelicense to BCM under a license agreement we entered into with BioLine in August 2009. Disease Background and Market Opportunity An AMI is generally a sudden event resulting from a blockage of one or more of the arteries supplying blood to the heart. This can cause the heartmuscle to die or temporarily stop working. In some patients, particularly those with large areas of the heart affected by the AMI, the dead or stunned muscle inthe infarcted area can start to degrade even if blood flow is subsequently restored. Given recent advances in treating AMIs, patients do not typically die of the acute event, especially in developed countries with good hospitalsystems. Instead, post-AMI patients are at an increased risk of congestive heart failure that results from the loss of structural support where the tissue has died,leading to a change in the shape of the heart, or remodeling, excess blood being left in the heart after it beats and increased strain on the left ventricular wall.This left ventricular dysfunction is characterized by increased ventricular volume and decreased ejection fraction, which is the fraction of blood in the heartthat is pumped out each time it contracts. The early impact of the heart attack on ejection fraction and left ventricular end-systolic volume is predictive of leftventricular function one year after the initial event. This deterioration in left ventricular function, which indicates adverse ventricular remodeling, caneventually cause the heart not to pump enough blood to the body, leading to congestive heart failure. In a large controlled study, worsening of ventricularmeasures was predictive of both mortality and heart failure. Data from long-term third-party studies suggests that the five-year post-AMI rate of congestive heart failure or death is approximately 35% to 40%.In addition, based on data presented from the study conducted in Olmstead County, Minnesota, we estimate that the three-year post-AMI rate of congestiveheart failure or mortality among patients who have had an AMI is approximately 30%. We are developing BCM to fill this unmet medical need by providingstructural support of the heart muscle in the early days and months following an AMI, which is a critical period when the extracellular matrix is first degradedand then reconstituted as part of the heart’s response to the injury and the time at which the heart is at high risk for remodeling. We expect that 21Table of Contents deploying BCM will help prevent cardiac remodeling and possibly the progression to advanced stages of congestive heart failure. According to hospital claims data and American Heart Association estimates, in 2014, the estimated incidence of AMI hospital admissions in theUnited States will be over 900,000. There are two classifications of AMI, STEMI and non-STEMI. While both types of AMIs can cause significant damage tothe heart, STEMIs tend to have more severe acute symptoms. We estimate that nearly one-third of AMI hospital admissions in the United States were forSTEMI. Additionally, according to a report published in the European Heart Journal in 2010, over one million people suffer from AMI in Europe, over half ofwhom have a STEMI. The costs of treating the consequences of AMI can be substantial. The American Heart Association reported that the total cost ofcongestive heart failure in 2012 was approximately $30.0 billion in the United States, and we estimate that approximately 40% of these patients were treatedfor congestive heart failure following an AMI. The average hospitalization costs in the United States for congestive heart failure have been estimated to be inthe range $17,000 to $21,000 per admission with total lifetime medical costs following congestive heart failure diagnosis estimated at more than $100,000per patient. Therefore, we believe BCM could be a treatment that would help to prevent cardiac remodeling and thereby reduce the incidence of congestiveheart failure, which could generate significant medical cost savings in addition to improving the quality of life of these patients. Scientific Rationale for Use of BCM in the Prevention of Cardiac Remodeling Following a STEMI BCM is a clear, low-viscosity solution containing sodium alginate and calcium gluconate. Alginates, which are complex sugars obtained fromseaweed, have been used extensively in the food industry as well as by the pharmaceutical and medical device industries. In medical devices, alginates havebeen used as wound dressings, as bone-void fillers and to create dental impressions. BCM’s specific, patent-protected composition has been optimized to bepartially cross-linked by calcium ions and to maintain a free-flowing liquid state for injection into the blood stream. However, when injected into the heartfollowing an AMI, we believe that BCM will flow into the damaged heart muscle where it will come into contact with the additional extracellular calciumthat is released by the newly dead heart muscle cells, resulting in the formation of additional cross-links within the alginate. These cross-links turn BCM intoa gel meshwork with mechanical properties similar to the normal extracellular cardiac matrix. Based on data from animal studies, we believe these propertiesallow BCM to provide temporary structural support to the wall of the heart while it heals after an AMI. Once deposited, BCM remains in the infarct zone for a few months. As the heart heals and the extracellular calcium levels return to normal, thecrosslinks in the gel slowly degrade, and the alginate returns to liquid form and is excreted via the kidneys. In our pre-clinical animal studies of BCM, tissuesample analysis has shown that most of the alginate dissipates within three months and is no longer detectable in the heart or elsewhere in the body within sixmonths after BCM injection. In an academic study published in the Journal of the American College of Cardiology, pigs were injected with either BCM orsaline following an AMI. In this study, the pigs that received saline had approximately 44% greater enlargement in left ventricular chamber volume after60 days compared to the pigs that received two milliliters of BCM. In another academic study conducted in dogs with AMI, deploying BCM at any timewithin one week of an AMI reduced cardiac remodeling compared to placebo. Clinical Development Program BCM is a Class III medical device that we are developing to prevent cardiac remodeling and subsequent congestive heart failure after AMI followingsuccessful re-opening of the blood vessels. We are currently conducting a clinical trial of BCM, which is designed as a CE mark registration trial in theEuropean Union. We refer to this trial as our PRESERVATION I trial, and it is designed as a double-blind, placebo-controlled trial, and the primary endpointis change in anatomical measurements six months after device deployment. The principal treatment for a STEMI is to re-establish blood flow in the blocked coronary artery at the earliest possible opportunity. This can beachieved by percutaneous coronary intervention, dissolving the 22Table of Contents blockage with medications or open heart surgery. BCM is designed to be deployed via a percutaneous coronary intervention into the previously blockedcoronary artery after blood flow has been re-established. We are developing BCM in the United States under an IDE and in consultation with a Notified Body in the European Union, which regulates thetesting and use of devices. For our IDE application, we performed animal and in vitro studies and device effectiveness studies in pigs. Our pre-clinical studiesdemonstrated that BCM was well tolerated and showed activity in reducing cardiac remodeling after AMI in pigs when deployed in either a dedicatedpercutaneous coronary intervention procedure or during an initial percutaneous coronary intervention procedure. The FDA has agreed that the non-clinicalpackage is complete and adequate for supporting clinical development, as specified in the IDE, and for registration of BCM. The first human trial for BCM was a pilot clinical trial conducted by BioLine in Europe and completed in 2009, in which BCM was safelyadministered to 27 patients within seven days following a moderate to large STEMI and percutaneous coronary intervention. This open-label trial, in whichall patients were treated with a two milliliter device, was conducted in multiple centers in Germany and Belgium and included patients who had experienceda first AMI of substantial size. The primary purpose of this trial was to evaluate the safety of BCM deployment. In addition, some efficacy parameters couldbe observed as all patients suffered a STEMI and had serial echocardiography studies performed at one, three and six months. A total of 27 patients (mean age54±9 years) after a STEMI were treated during the course of this trial. Twenty-four patients were male, and 19 had experienced an anterior AMI with peakcreatine kinase levels of 3183±1490 international units per liter. The time from symptom onset to primary percutaneous coronary intervention ranged from0.6 to 84.7 hours (with a mean of 9.9±16.9 hours and a median of 3.8 hours). There were no serious adverse events observed with BCM at deployment. In thistrial, eight patients experienced at least one treatment-emergent serious adverse event, and one event, a single episode of syncope that occurred 172 daysafter BCM deployment, was judged as possibly device related. In addition, 21 patients reported at least one adverse event in the initial six-month follow-upperiod. This data showed that BCM was well tolerated when deployed in patients following an AMI. In addition, standard echocardiogram measures of heartfunction were performed. In the six-month evaluation, patients in the trial, each of whom had large STEMIs, had measures of left ventricular function,including left ventricular end diastolic index, of left ventricular end systolic volume index and of left ventricular ejection fraction that indicated no changefrom baseline. Although interpretation of this data is limited by the lack of a control group, data from patients who were treated showed little change in theseleft ventricular measures, the worsening of which have been linked to mortality and heart failure. In addition to the short-term testing during the first six months following the STEMI, the 27 patients had annual follow-up safety evaluationsplanned for up to five years. At the four-year follow-up evaluation, which is the most recent data set reported, 25 of the 27 patients were confirmed to still bealive. Of the two patients not confirmed alive, one died from T-cell lymphoma, which was likely a pre-existing condition, and one was lost to follow-upbetween the three- and four-year follow-up evaluations. However, the patient lost to follow-up had no device-related adverse events at the three-year follow-up evaluation. Of the 25 patients who were confirmed to be alive at year four, one had a hospitalization for congestive heart failure, which occurred withinone year of device deployment. In addition, based on available data, during the four-year evaluation period, five patients experienced at least one cardiacischemic event (nine cardiac ischemic events in total), none of which were considered to be related to BCM. This data from the four-year safety follow-upevaluations is better than we expected based on our review of publicly reported data from two long-term third-party studies of AMI patients, the FraminghamHeart Study and the Olmstead County study. The data from these two studies suggest that the rate of congestive heart failure or death five years following anAMI is approximately 35% to 40%. In addition, based on data presented from the Olmstead County study, we estimate that the three-year post-AMI rate ofcongestive heart failure or mortality among patients who have had an AMI is approximately 30%. Our ongoing PRESERVATION I trial is a CE mark registration trial for EU regulatory purposes and is comparable to a feasibility clinical trial in theUnited States. We completed enrollment of this trial in December 2014, with 303 patients having completed the treatment procedure at almost 90 clinicalsites in Europe, Australia, North America and Israel. Our key inclusion criteria for this trial include that patients must have: 23Table of Contents · suffered from a large STEMI as measured by cardiac enzymes; · clinical signs of significant cardiac damage; · imaging evidence of impaired heart function; and · had a primary percutaneous coronary intervention with a stent placed. In this double-blind trial, patients are randomized in a two-to-one ratio to BCM or placebo. The trial device is injected in a second percutaneouscoronary intervention two to five days after the initial myocardial infarction. The primary endpoint is change in the anatomical measurement of leftventricular end-diastolic volume index by echocardiography measured six months after device deployment. Secondary endpoints include the measurementof functional capacity of change in six-minute walk distance and the measurement of patient reported outcome as recorded on the quality of life tool ofKansas City Cardiomyopathy Questionnaire. Other endpoints include a measurement of BCM in the peripheral circulation as an assessment of thepharmacokinetics of BCM, electrocardiogram measures and other anatomic endpoints, including change in left ventricular end-systolic volume index andejection fraction. In addition, as required by the trial protocol, we will follow all patients to monitor safety for a period of five years after device deployment.The Data Safety Monitoring Board for this trial has met six times to evaluate the safety data and on each occasion has approved the continuation of the trialas planned. We expect to report top line results from this trial in mid-2015. We also expect that if our PRESERVATION I trial is successful, we will rely on theresults to seek CE marking for BCM in the European Union potentially in the first half of 2016. Assuming positive results from our PRESERVATION I trial, we plan to conduct a second, larger clinical trial to support approval in the United Statesthrough the PMA pathway. We met with the FDA to discuss U.S. regulatory requirements for a pivotal clinical trial. Based on discussions with the FDACenter for Devices and Radiological Health in May 2010, we expect that our pivotal trial will include approximately 1,000 patients, having a compositeendpoint of anatomic measurements of left ventricular end-diastolic volume index or ejection fraction, a patient outcomes measurement test and a functionalmeasure such as six-minute walk distance or a cardiopulmonary stress test. We currently expect to begin this trial in the first half of 2016, and we estimatethat, once initiated, the trial will take approximately two to three years to complete. If the PRESERVATION I trial demonstrates that BCM is well tolerated and has a clinical benefit in severe STEMIs when deployed in a secondpercutaneous coronary intervention procedure, we intend to consider testing BCM in an expanded population, including patients with moderate STEMIs,and for deployment of BCM during the primary percutaneous coronary intervention procedure, eliminating the need for a second invasive procedure. We arecurrently designing a trial to evaluate the safety of deploying BCM in the primary percutaneous coronary intervention procedure after a large STEMI. Thesecondary objective of this trial will be to evaluate the efficacy of BCM six months after deployment using ventricular remodeling measures. We currentlyintend to begin this trial in the second half of 2015, assuming successful completion of PRESERVATION I, and we expect the trial will take approximatelyone year to complete. Relationship with Ikaria after the Spin-Out The development of our programs was initiated under the leadership of our scientific and development team while at Ikaria. Ikaria’s leadproduct, INOmax, is an inhaled nitric oxide product used for treatment of persistent pulmonary hypertension of the newborn. Our understanding of themedical applications of nitric oxide and associated delivery devices, as well as our innovative approach to the pulsed delivery of nitric oxide, originated atIkaria, and we in-licensed BCM while we were a part of Ikaria. In October 2013, Ikaria completed an internal reorganization of certain assets and subsidiaries, in which it transferred to us exclusive worldwiderights, with no royalty obligations, to develop and commercialize pulsed nitric oxide in PAH, PH-COPD and PH-IPF. Following the internal reorganization,in February 2014, Ikaria 24Table of Contents distributed all of our then outstanding units to its stockholders through the payment of a special dividend on a pro rata basis based on each stockholder’sownership of Ikaria capital stock. We refer to Ikaria’s distribution of our then outstanding units to its stockholders as the Spin-Out. Shortly after the Spin-Out, Ikaria was acquired by entities affiliated with Madison Dearborn Partners. On March 5, 2015, Mallinckrodt plc, orMallinckrodt, and Ikaria announced that they had entered into a definitive agreement under which a subsidiary of Mallinckrodt will acquire Ikaria.Mallinckrodt and Ikaria have announced that they expect this transaction to be completed in the second calendar quarter of 2015. Ikaria retains the right to develop and commercialize inhaled nitric oxide products, including pulsed products, in all indications other than PAH,PH-COPD and PH-IPF. In connection with the Spin-Out, we entered into several agreements with Ikaria providing for, among other things, the provision of transitionservices, the cross license of certain intellectual property, commitments not to compete, the manufacture and supply of the INOpulse drug and device andcertain employee matters. Transition Services Agreement In February 2014, we entered into a transition services agreement with Ikaria, which we refer to as the TSA. Pursuant to the terms and conditions ofthe TSA, Ikaria has agreed to use commercially reasonable efforts to provide certain services to us, including human resources support, real estate support,information technology support, accounting and tax support, treasury support, financial planning and analysis support, purchasing support,management/executive services, legal services, quality services, regulatory services, drug and device safety services, business development support,biometrics support and manufacturing support. Ikaria is obligated, subject to the terms of the TSA (including the early termination provisions thereof and ourobligation to use commercially reasonable efforts to provide the services for ourselves as soon as practicable), to provide such services until February 2016. Ikaria has also agreed, on the terms and subject to the conditions of the TSA, to use commercially reasonable efforts to allow our employees toremain in Ikaria’s Hampton, New Jersey facility for the continued operation of our business during the term of the TSA. We are obligated to pay Ikaria a service fee in the amount of $772,000 per month and to reimburse Ikaria for any out-of-pocket expenses incurred inconnection with its provisions of services under the TSA, any taxes imposed on Ikaria in connection with the performance or delivery of services under theTSA and any costs and expenses incurred by Ikaria in connection with the performance of any services that require resources outside of the existing resourcesof Ikaria or that otherwise interfere with the ordinary operations of Ikaria’s business. This monthly service fee is be payable by us regardless of the frequencyor quantity of services actually utilized by us under the TSA, and our obligation to pay such monthly service fee until February 2016 will survive any earlytermination of the TSA. At the time we entered into the TSA, we also entered into an escrow agreement, pursuant to which we deposited $18.5 million,representing the aggregate amount of the monthly service fees payable by us under the TSA, into escrow to guarantee our payment of such fees to Ikaria. Weare also obligated to pay any fees, costs, expenses or other amounts incurred by Ikaria to obtain the right to allow our employees to remain in the Hampton,New Jersey facility during the term of the TSA. Exclusive Cross-License, Technology Transfer and Regulatory Matters Agreement In February 2014, we entered into an exclusive cross-license, technology transfer and regulatory matters agreement with Ikaria. Pursuant to the termsof the license agreement, Ikaria granted to us a fully paid-up, non-royalty bearing, exclusive license under specified intellectual property rights controlled byIkaria to engage in the development, manufacture and commercialization of nitric oxide, devices to deliver nitric oxide and related services for or inconnection with out-patient, chronic treatment of patients with PAH, PH-COPD or PH-IPF, which we refer to collectively as the Bellerophon indications. 25Table of Contents We have granted to Ikaria a fully paid-up, non-royalty-bearing, exclusive license under specified intellectual property rights that we control toengage in the development, manufacture and commercialization of products and services for or used in connection with the diagnosis, prevention ortreatment, whether in- or out-patient, of certain conditions and diseases other than the Bellerophon indications and for the use of nitric oxide to treat orprevent conditions that are primarily managed in the hospital, which we refer to collectively as the Ikaria nitric oxide business. We have agreed that, during the term of the license agreement, we will not, without the prior written consent of Ikaria, grant a sublicense under anyof the intellectual property licensed to us under the license agreement to any of our affiliates or any third party, in either case that directly or indirectlycompetes with the Ikaria nitric oxide business. We have also agreed that we will include certain restrictions in our agreements with customers of our productsto ensure that such products will only be used for the Bellerophon indications. The license agreement will expire on a product-by-product basis for products for a specific Bellerophon indication at such time as we are no longerdeveloping or commercializing any product for such indication. The license agreement may be terminated by either party in the event an act or order of acourt or governmental authority prohibits either party from substantially performing under the license agreement. Either party may also terminate the licenseagreement in the event of an uncured material breach by the other party or in the event the other party is insolvent or in bankruptcy proceedings. Ikaria mayalso terminate the license agreement if we or any of our affiliates breach the agreements not to compete described below, or if we or any successor to ourrights under the license agreement markets a generic nitric oxide product that is competitive with INOmax. Under certain circumstances, if the licenseagreement is terminated, the licenses granted to Ikaria by us will survive such termination. Agreements Not to Compete In September 2013, October 2013 and February 2014, we and each of our subsidiaries entered into an agreement not to compete with Ikaria. We referto these agreements collectively as the agreements not to compete. Pursuant to the agreements not to compete, we and each of our subsidiaries agreed not toengage, anywhere in the world, in any manner, directly or indirectly, until the earlier of five years after the effective date of such agreement not to compete orthe date on which Ikaria and all of its subsidiaries are no longer engaged in such business, in: · the development, manufacture, commercialization, promotion, sale, import, export, servicing, repair, training, storage, distribution,transportation, licensing or other handling or disposition of any product or service (including, without limitation, any product or service thatutilizes, contains or includes nitric oxide for inhalation, a device intended to deliver nitric oxide or a service that delivers or supports thedelivery of nitric oxide), bundled or unbundled, for or used in connection with (a) the diagnosis, prevention or treatment, in both adult and/orpediatric populations, and whether in- or out-patient, of: (i) hypoxic respiratory failure associated with pulmonary hypertension, (ii) pulmonaryhypertensive episodes and right heart failure associated with cardiovascular surgery, (iii) bronchopulmonary dysplasia, (iv) the management ofventilation-perfusion mismatch in acute lung injury, (v) the management of ventilation-perfusion mismatch in acute respiratory distresssyndrome, (vi) the management of pulmonary hypertension episodes and right heart failure in congestive heart failure, (vii) pulmonary edemafrom high altitude sickness, (viii) the management of pulmonary hypertension episodes and right heart failure in pulmonary or cardiac surgery,(ix) the management of pulmonary hypertension episodes and right heart failure in organ transplant, (x) sickle cell vaso-occlusive crisis,(xi) hypoxia associated with pneumonia or (xii) ischemia-reperfusion injury or (b) the use of nitric oxide to treat or prevent conditions that areprimarily managed in the hospital; or · any and all development, manufacture, commercialization, promotion, sale, import, export, storage, distribution, transportation, licensing, orother handling or disposition of any terlipressin or any 26Table of Contents other product within the pressin family, (a) intended to treat (i) hepatorenal syndrome in any form, (ii) bleeding esophageal varices or (iii) septicshock or (b) for or in connection with the management of low blood pressure. The agreements not to compete expressly exclude the Bellerophon indications. In February 2014, we also entered into drug and device clinical supply agreements and an employee matters agreement with Ikaria See“Manufacturing” below for a description of the drug and device clinical supply agreements and “Certain Relationships and Related Person Transactions—Relationship with Ikaria” for a description of the employee matters agreement. BioLine License Agreement In August 2009, we entered into a license agreement with BioLineRx Ltd. and BioLine Innovations Jerusalem L.P., under which we obtained anexclusive worldwide license to BCM. Under the license agreement, we are obligated to use commercially reasonable efforts to develop and commercialize atleast one product containing BCM. We have established a joint development committee with BioLine to oversee the development of BCM. We paid BioLine a $7.0 million upfront payment in 2009 and a $10.0 million milestone payment in 2010. Under the terms of the license agreement,if we achieve certain clinical and regulatory events specified in the license agreement, we will be obligated to pay milestone payments to BioLine that couldtotal, in the aggregate, up to $115.5 million, and if we achieve certain commercialization targets specified in the license agreement, we will be obligated topay additional milestone payments to BioLine that could total, in the aggregate, up to $150.0 million. In addition, we will be obligated to pay BioLine aspecified percentage of any upfront consideration we receive for sublicensing BCM, as well as royalties on net sales, if any, at a percentage ranging from 11%to 15%, depending on net sales level, of any approved product containing BCM, subject to offsets for specified payments to third parties made in connectionwith BCM. Our obligation to pay BioLine royalties will expire on a product-by-product and country-by-country basis on the date on which BCM is nolonger covered by a valid claim in the licensed patent rights in the given country. BioLine has the option, exercisable under specified circumstances, to manufacture any product containing BCM for us pursuant to terms to benegotiated by the parties. If BioLine exercises this option, we would generally be obligated to purchase at least a specified percentage of our BCMrequirements from BioLine at a price calculated using a pre-agreed methodology, and the parties would be required to establish a joint manufacturingcommittee to coordinate manufacturing efforts. Except under specified circumstances, neither we, nor any other person that controls, is controlled by, or is under common control with us, maydirectly or indirectly acquire more than a specified percentage of the equity or debt securities of BioLine, or urge, induce, entice or solicit any other party toacquire such securities, without BioLine’s consent. We and BioLine have the right to terminate the license agreement for an uncured material breach by the other party. In addition, we have the right toterminate the license agreement if at any time we determine that further development of products containing BCM is not warranted. Manufacturing INOpulse Drug Product In February 2014, we entered into a drug clinical supply agreement with Ikaria, or the drug supply agreement, pursuant to which Ikaria has agreed touse commercially reasonable efforts to manufacture and supply, and we have agreed to acquire from Ikaria, our requirements for nitric oxide for inhalationand 27Table of Contents corresponding placebo for use in our clinical programs for PAH, PH-COPD and PH-IPF. Pursuant to the drug supply agreement, we will pay to Ikaria anamount equal to Ikaria’s internal and external manufacturing cost plus 20%. Under the terms of the drug supply agreement, we have also granted Ikaria a rightof first negotiation in the event that we desire to obtain supply of nitric oxide for inhalation and corresponding placebo (or any variant thereof or any versionwith different specifications) for commercial use. The drug supply agreement will expire on a product-by-product basis on the date we discontinue clinicaldevelopment of such product. In addition, either party may terminate the drug supply agreement in the event of an uncured material breach by the otherparty. Ikaria manufactures pharmaceutical-grade nitric oxide at its facility in Port Allen, Louisiana. This facility, which we believe is operated incompliance with current Good Manufacturing Practices, or cGMP, is the only FDA-inspected site for manufacturing pharmaceutical-grade nitric oxide in theworld. The primary manufacturing activity at the site is the commercial production of INOmax and production of INOpulse. This production includes thechemical synthesis of high-purity nitric oxide, which is the active pharmaceutical ingredient in INOmax and INOpulse, and the filling of the gas cylinders inwhich the products are packaged. To support business outside of the United States, the Port Allen manufacturing facility has also successfully passed inspections by local agencies,the EMA, Health Canada; the Pharmaceutical and Medical Devices Agency, or PMDA, of Japan, and the Korean FDA, or KFDA. The EMA, the HealthProtection Branch of Health Canada, PMDA and KFDA operate in a similar fashion to the FDA in that each requires submission of a dossier containingsubstantial evidence of safety and effectiveness prior to approval. These agencies’ monitoring of safety in a post-marketing setting also is similar to that ofthe FDA. The operations that Ikaria currently performs for us consist of two steps. The first step is to manufacture the concentrated drug product, which Ikariaconducts using the same processes that it uses to manufacture its own drug product. The second step is the filling operation in which the pre-mix product ismixed to the appropriate concentration and filled into the final cartridges that we use with INOpulse. As we have reduced the size and weight of INOpulse, wehave also developed a smaller, more-concentrated drug cartridge for INOpulse. The filling process has been developed by Ikaria as a high-throughput batchfill process that leverages several technologies that Ikaria has developed, and we have licensed, to fill smaller containers at a higher pressure and purity and ata significantly higher production rate than prior technology. This manufacturing system is designed to be modular and can be expanded as needed. The current installed capacity within the Port Allen plant issufficient to support our INOpulse clinical program as currently planned. In addition, the plant has the capacity to expand to meet additional demand. Wehave a license from Ikaria to use this fill process technology to work with additional companies, as needed, to produce the final cartridge. Commercial supplymanufacturing can be supported with additional units installed at the Port Allen site or other regional locations, by Ikaria or other manufacturers, asdetermined by distribution requirements. For our clinical trials, Ikaria can supply and ship product from the Port Allen site and the current cartridges areexpected to have a shelf life of at least one year. We are testing the finished product to potentially establish a shelf life of up to two years. INOpulse Drug Delivery Systems Ikaria has a drug delivery system manufacturing facility in Madison, Wisconsin, at which it designs, engineers, assembles, packages and distributesdrug delivery systems, including INOpulse. We entered into a services agreement with Ikaria, effective as of January 1, 2015, which expires in February 2016,under which, among other things, Ikaria agreed to use commercially reasonable efforts to provide us with certain INOpulse device related services, includingservices related to device remediation, upgrades and refurbishment. In February 2015, we entered into an agreement with Flextronics Medical Sales andMarketing Ltd., a subsidiary of Flextronics International Ltd., or Flextronics, to manufacture and service the Mark2 devices that we expect to use in futureclinical trials of INOpulse for PAH and INOpulse for PH-COPD. 28Table of Contents Each version of our INOpulse device currently under development will be pre-programmed at the time of manufacture to the dose setting specifiedfor the applicable indication. Since PAH patients have the potential for rebound pulmonary hypertension, which is a sudden and serious increase inpulmonary arterial pressure that results from therapy withdrawal, patients with this condition are required to have a backup system. Accordingly, we will berequired to provide PAH patients with either a separate backup device or a device with a built-in pneumatic, or non-electrical, backup system. Also, pursuantto the terms of our license agreement with Ikaria, we are required to lease and not to sell our INOpulse devices as well as to track and maintain control of theindications for which each are used. We intend to meet these requirements by maintaining close monitoring of the use of the devices, including throughplanned remote data downloads and a system diagnostic feature. BCM Product We currently outsource the manufacture of BCM for use in clinical trials. BCM is manufactured by a third-party under the terms of a manufacturingand supply agreement which expires in April 2017. We plan to enter into a manufacturing and supply agreement for BCM with a third-party prior toApril 2017. BCM is composed of ultra-pure sodium alginate and calcium-D-gluconate. We purchase sodium alginate from FMC BioPolymer AS (doing businessas NovaMatrix™) under the terms of a clinical supply agreement that expires in December 2018. We and FMC BioPolymer have agreed to negotiate acommercial supply agreement prior to the December 2018 expiration of the clinical supply agreement. Calcium-D-gluconate is a commodity item availablefrom multiple suppliers. If BCM is approved for commercial sale, we will likely continue to outsource its manufacture to contract manufacturers. BioLine has the option, exercisable under specified circumstances, to manufacture any product containing BCM for us pursuant to terms to benegotiated by the parties. If BioLine exercises this option, we would generally be obligated to purchase at least a specified percentage of our BCMrequirements from BioLine at a price calculated using a pre-agreed methodology, and the parties would be required to establish a joint manufacturingcommittee to coordinate manufacturing efforts. 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 our products.In addition, other companies are increasingly looking at cardiac and cardiopulmonary indications as a potential opportunity. It is possible that the number ofcompanies seeking to develop products and therapies for the treatment of unmet needs in our target markets will increase. Our competitors, either alone or with their strategic partners, may have substantially greater financial, technical and human resources than we do andsignificantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products and thecommercialization of those products. Accordingly, our competitors may be more successful than we may be in obtaining approval for therapies and achievingwidespread market acceptance. We anticipate that we will face intense and increasing competition as new drugs and advanced technologies becomeavailable. Currently, there are 12 drugs approved for the treatment of PAH, within the following categories: prostacyclin and prostacyclin analogs (includingFlolan (epoprostenol), which is marketed by GlaxoSmithKline, Tyvaso (treprostinil), Orenitram (treprostinil) and Remodulin (treprostinil), which aremarketed by United Therapeutics Corporation, and Ventavis (iloprost) and Veletri (epoprostenol), which are marketed by Actelion Pharmaceuticals US, Inc.,or Actelion), phosphodiesterase type-5 inhibitors (including Adcirca (tadalafil), which is marketed by United Therapeutics Corporation, and Revatio(sildenafil), which is marketed by Pfizer Inc.), endothelin receptor antagonists (including Letairis (ambrisentan), which is marketed by Gilead Sciences, Inc.,and Opsumit (macitentan) and Tracleer (bosentan), which are marketed by Actelion) and a soluble guanylate 29Table of Contents cyclase stimulator (Adempas (riociguat), which is marketed by Bayer HealthCare Pharmaceuticals Inc.). Actelion recently submitted an NDA to the FDA forselexipag, a selective prostacyclin receptor agonist. There are also other treatments in Phase 1 and Phase 2 clinical development, including other nitric oxide generation and delivery systems, includingGeNOsyl™, which is being developed by GeNO LLC, and a nebulized formulation of nitrite, which is being developed by Mast Therapeutics. Currently, there are no approved therapies for treating PH-COPD, and the only generally accepted treatments are LTOT, pulmonary rehabilitationand lung transplant, and we are not aware of any therapies for PH-COPD in advanced clinical development. There are no generally accepted products approved for structural support to prevent cardiac remodeling following an AMI. Other product candidatesthat are currently in clinical development include stem cell therapies to restore heart muscle cells following an AMI, with large Phase 3 trials expected to becompleted in 2018 or 2019. We do not expect BCM to compete with, or replace, current treatments for congestive heart failure following AMI, but insteadbelieve it will become part of the treatment regimen used in conjunction with other therapies. In addition, because BCM can be delivered by a minimallyinvasive percutaneous coronary intervention procedure, we do not believe it will directly compete with devices that are used to treat congestive heart failure,which are designed for administration during open heart surgery or by intra-cardiac injection involving a thoracotomy procedure. These include: meshrestraining devices, for example HeartNet™; injectable biopolymers, for example Algisyl-LVR™; and implantable electro-stimulation devices, for example,CardioFit™. In addition, volume reduction surgery or cardiac assist devices, or pumps, are sometimes used to treat patients with congestive heart failure. Patents and Proprietary Rights We strive to protect the proprietary technologies that we believe are important to our business, including seeking and maintaining patent protectionintended to protect, for example, our product candidates, related technologies and/or other aspects of the inventions that are important to our business. Ourowned and licensed patents and patent applications cover patentable subject matter from composition of matter, methods of use, manufacturing processes forBCM and method of administration, devices and device components, critical safety features and design components with respect to INOpulse. However,patent protection is not available for the composition of matter of the active pharmaceutical ingredients in INOpulse since nitric oxide is a naturallyoccurring molecule. Actual protection afforded by a patent, which can vary from country to country, depends on the type of patent, the scope of its coverage and theavailability of legal remedies in the country. We also rely on trade secrets and careful monitoring of our proprietary information to protect aspects of ourbusiness that are not amenable to, or that we do not consider appropriate for, patent protection. We plan to continue to expand our intellectual property estate by filing patent applications directed to inventions which provide additional patentprotection for our product offering, for instance, device enhancements, safety features and manufacturing processes. Our success will depend significantly onour ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to ourbusiness; defend and enforce our patents; maintain our licenses to use intellectual property owned by third parties; preserve the confidentiality of our tradesecrets; and operate without infringing the valid and enforceable patents and other proprietary rights of third parties. We also consider know-how, continuingtechnological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary positions. A third party may hold intellectual property, including patent rights that are important or necessary to the development of our programs. It may benecessary for us to use the patented or proprietary technology of third parties to commercialize our product candidates, in which case we would be required toobtain a license 30Table of Contents from these third parties on commercially reasonable terms, or our business could be harmed, possibly materially. For example, if we want to expand theindications for which we could develop and commercialize pulsed nitric oxide beyond PAH, PH-COPD and PH-IPF, we will need to obtain a license fromIkaria. The patent positions of therapeutics companies like us are generally uncertain and involve complex legal, scientific and factual questions. Inaddition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by thecourts after issuance. Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings which may result in furthernarrowing or even cancellation of patent claims. Consequently, we do not know whether any of our product candidates will be protectable or remainprotected by enforceable patents. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particularjurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors. Any patents that we own or license may bechallenged, narrowed, circumvented or invalidated by third parties. Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer,and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority ofinventions covered by pending patent applications. Moreover, we may have to participate in interference proceedings declared by the U.S. Patent andTrademark Office, or USPTO, to determine priority of inventions for any patent applications filed with the USPTO on or before March 15, 2013. Likewise,derivation proceedings may also be declared for any patent filings filed after March 15, 2013. The patents and patent applications that relate to our programs are described below. INOpulse As of March 25, 2015, we hold exclusive licenses from Ikaria to at least 80 patents and pending patent applications in both the United States andforeign countries including Australia, Brazil, Canada, China, Europe, Hong Kong, India, Indonesia, Israel, Japan, Korea, Mexico, the Philippines, Russia andSingapore. Certain of these issued patents and patent applications, if issued, will expire as late as 2033. These patent rights have been exclusively licensedfor the treatment of patients with PAH, PH-COPD and PH-IPF and cover methods of delivery and the drug delivery device, as well as important safety featuresand the ornamental design of the drug delivery device. A primary basis for patent exclusivity is based on pending and issued in-licensed patents directed to proprietary methods of administering pulsedinhaled nitric oxide, as well as a device for delivering the same. This patent family expires as late as 2027 in the United States and as late as 2026 inAustralia, Brazil, Canada, China, Europe, Hong Kong, Japan and Mexico. Another important basis for patent exclusivity is based on an in-licensed portfolio of one issued U.S. patent, three pending U.S. patent applications,and two Patent Cooperation Treaty pending patent applications, in each case directed to novel nasal cannula features that we believe are necessary for theaccurate, safe and efficacious administration of pulsed nitric oxide. Each of these patents and patent applications, if issued, will expire in 2033 in the UnitedStates and abroad. Another in-licensed patent family relates to features of the drug delivery canister necessary for providing drug product for use with our proprietarypulsing drug delivery device. This patent family includes one issued U.S. patent, one issued Japanese patent, one issued Mexican patent, one issuedSingaporean patent and three issued Australian patents, as well as 16 pending patent applications in the United States, Brazil, Canada, China, Europe, HongKong, India, Indonesia, Israel, Japan, Korea, Mexico, the Philippines, Russia and Singapore. These pending applications, if issued, will expire in 2029, aswell will the issued Australian, Japanese, Mexican and Singaporean patents. The issued U.S. patent will expire in 2030. 31Table of Contents Several other patent families directed to device and safety features are pending. Furthermore, a design patent covering the ornamental design of theintended commercial device has been granted, and a design patent application is pending for the ornamental design of the clinical device. In addition, the FDA has granted orphan drug designation to our nitric oxide program for the treatment of PAH, which could result in marketingexclusivity of seven years in the United States should this be the first NDA approved for inhaled nitric oxide in this indication. The active ingredient, nitricoxide, was previously approved by the FDA as a drug in a separate clinical application. Accordingly, any related patent rights will not be eligible for a patentterm extension under relevant provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act. BCM Patent protection of BCM in the United States and in Australia, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea and Mexico isprovided by issued composition of matter and method of treatment patents and patent pending applications, which we in-license from BioLine, that cover theintended commercial product. These issued patents are not limited to treatment of cardiac tissue, affording broad protection for the use of BCM in treatingany damaged body tissue. We were notified by the European Patent Office in July 2014 and October 2014 that Notices of Opposition to two Europeanpatents that we licensed from BioLine, one of which covers the BCM intended commercial product described above, have been filed with the EuropeanPatent Office. A Notice of Opposition initiates a process during which the European Patent Office can decide to reconsider an issued patent and modify orrevoke some or all of the patent claims. We have the right to respond to the Notices of Opposition before the European Patent Office makes a decisionwhether or not any or all of the patent claims are to be modified or revoked. We filed a response to the first patent opposition in December 2014, and wefiled a response to the second patent opposition in March 2015, as we believe the two issued patents were properly examined and appropriately granted bythe European Patent Office. Furthermore, we believe the arguments made in the Notices of Opposition misstate the facts and lack scientific merit. BCM will be regulated as a device and therefore data exclusivity will not be available. However, under the Hatch-Waxman Act, one issued U.S.patent covering the product will be eligible for patent term extension of up to five years to recover patent term lost during clinical trials. Accordingly, if theU.S. composition of matter patent that expires in 2029 is selected for this extension and a patent term extension is granted, certain rights under the patent maynot expire until 2032 to 2034, depending on the timing of marketing approval and other factors. Corresponding issued patents in other countries will expirein 2024 and may also be eligible for patent term extensions. We do not expect to be granted a patent term extension for composition of matter patents inEurope, but patent term extensions may be available in other countries such as Japan and Israel. Method of manufacturing patents that we have in-licensed have issued in the United States, Australia, China, Europe, India, Israel, Korea andMexico and are pending in Canada. The U.S. issued patent expires in 2025 and the non-U.S. issued patents expire in 2024. The method of manufacturingpatent applications we developed and own, if issued, will expire in the United States, Canada and Europe in 2032, not including any applicable patent termadjustment. Further, there is no abbreviated clinical trial pathway, such as an abbreviated new drug application, or ANDA, or a 505(b)(2) new drugapplication, for a device product approved via a PMA pathway. Patent Term The base term of a U.S. patent is 20 years from the filing date of the earliest-filed non-provisional patent application from which the patent claimspriority. The term of a U.S. patent can be lengthened by patent term adjustment, which compensates the owner of the patent for administrative delays at theUSPTO. In some cases, the term of a U.S. patent is shortened by terminal disclaimer that reduces its term to that of an earlier-expiring patent. 32Table of Contents The term of a U.S. patent may be eligible for patent term extension under the Hatch-Waxman Act to account for at least some of the time the drug ordevice is under development and regulatory review after the patent is granted. With regard to a drug or device for which FDA approval is the first permittedmarketing of the active ingredient, the Hatch-Waxman Act allows for extension of the term of one U.S. patent. Thus, patent term extension is not available forINOpulse since the active moiety is nitric oxide, which is already subject to an approved NDA. The extended patent term cannot exceed the shorter of fiveyears beyond the non-extended expiration of the patent or 14 years from the date of the FDA approval of the drug or device. Some foreign jurisdictions haveanalogous patent term extension provisions that allow for extension of the term of a patent that covers a device approved by the applicable foreign regulatoryagency. In the future, if and when BCM receives FDA approval, we expect to apply for a patent term extension on the patent covering BCM that we believewill provide the best exclusivity position if extended. Trade Secrets In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. We typically rely on trade secrets toprotect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. For example, elements of themanufacture of our products are based on trade secrets and know-how that are not publicly disclosed. We protect trade secrets and know-how by establishingconfidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and commercial partners.These agreements provide that all confidential information developed or made known during the course of an individual or entity’s relationship with us mustbe kept confidential during and after the relationship. These agreements also provide that all inventions resulting from work performed for us or relating toour business and conceived or completed during the period of employment or assignment, as applicable, shall be our exclusive property. In addition, we takeother appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary technology by thirdparties. Trademarks We also seek trademark protection where available and when appropriate. The symbol ™ indicates a common law trademark. Other service marks,trademarks and trade names appearing in this Annual Report on Form 10-K are the property of their respective owners. Government Regulation Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, including the EuropeanUnion, extensively regulate, among other things, the research, development, testing, manufacture, quality control, clearance, approval, packaging, storage,recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of pharmaceuticalproducts and medical devices. The processes for obtaining marketing approvals in the United States and in foreign countries and jurisdictions, along withsubsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financialresources. Review and Approval of Drugs in the United States In the United States, the FDA regulates drugs under the Food, Drug, and Cosmetic Act, or FDCA, and implementing regulations. The process ofobtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires theexpenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product developmentprocess, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal bythe FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters,product 33Table of Contents recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution,disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice or other governmental entities. Our product candidates must be approved by the FDA through the NDA process before they may be legally marketed in the United States. Anapplicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: · completion of pre-clinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, orGLP, regulations; · submission to the FDA of an IND, which must take effect before human clinical trials may begin; · approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; · performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safetyand efficacy of the proposed drug product for each indication; · preparation and submission to the FDA of an NDA; · review of the product by an FDA advisory committee, where appropriate or if applicable; · satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof,are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve theproduct’s identity, strength, quality and purity; · payment of user fees and securing FDA approval of the NDA; and · compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or REMS, and post-approval studiesrequired by the FDA. Pre-Clinical Studies Pre-clinical studies include laboratory evaluation of the purity and stability of the manufactured drug substance or active pharmaceutical ingredientand the formulated drug or drug product, as well as in vitro and animal studies to assess the safety and activity of the drug for initial testing in humans and toestablish a rationale for therapeutic use. The conduct of pre-clinical studies is subject to federal regulations and requirements, including GLP regulations. Theresults of the pre-clinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies,among other things, are submitted to the FDA as part of an IND. Companies usually must complete some long-term pre-clinical testing, such as animal tests of reproductive adverse events and carcinogenicity, andmust also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the drug incommercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of thedrug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drugproduct. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidatedoes not undergo unacceptable deterioration over its shelf life. 34Table of Contents Human Clinical Studies in Support of an NDA Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators inaccordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writingbefore their participation in any clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of thestudy, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequentprotocol amendments must be submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the FDA, unlessbefore that time the FDA raises concerns or questions related to a proposed clinical trial and places the trial on clinical hold. In such a case, the IND sponsorand the FDA must resolve any outstanding concerns before the clinical trial can begin. Accordingly, submission of an IND may or may not result in the FDAallowing clinical trials to commence. In addition, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before itcommences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually. The IRB must review and approve,among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance with FDAregulations. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for publicdissemination on their ClinicalTrials.gov website. A sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trialunder an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of an NDA orIND so long as the clinical trial is conducted in compliance with GCP, and the FDA is able to validate the data from the study through an onsite inspection ifthe agency deems it necessary. Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined: · Phase 1: The drug is initially introduced into a small number of healthy human subjects or patients with the target disease (e.g., cancer) orcondition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication ofits effectiveness and to determine optimal dosage. · Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluatethe efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. · Phase 3: Phase 3 clinical trials are commonly referred to as “pivotal” studies, which typically denotes a study which presents the data that theFDA or other relevant regulatory agency will use to determine whether or not to approve a drug. In Phase 3 clinical trials, the drug isadministered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials togenerate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile ofthe 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 adverseevents 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 thesponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to anunacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical 35Table of Contents trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug hasbeen associated with unexpected serious harm to patients. The FDA will typically inspect one or more clinical sites to assure compliance with GCP and theintegrity of the clinical data submitted. Section 505(b)(2) NDAs NDAs for most new drug products are based on two full clinical studies which must contain substantial evidence of the safety and efficacy of theproposed new product. These applications are submitted under Section 505(b)(1) of the FDCA. The FDA is, however, authorized to approve an alternativetype of NDA under Section 505(b)(2) of the FDCA. This type of application allows the applicant to rely, in part, on the FDA’s previous findings of safety andefficacy for a similar product, or published literature. Specifically, Section 505(b)(2) applies to NDAs for a drug for which the investigations made to showwhether or not the drug is safe for use and effective in use and relied upon by the applicant for approval of the application “were not conducted by or for theapplicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted.” Thus, Section 505(b)(2) authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the applicant.NDAs filed under Section 505(b)(2) may provide an alternate and potentially more expeditious pathway to FDA approval for new or improved formulationsor new uses of previously approved products. If the 505(b)(2) applicant can establish that reliance on the FDA’s previous approval is scientificallyappropriate, the applicant may eliminate the need to conduct certain pre-clinical or clinical studies of the new product. The FDA may also require companiesto perform additional studies or measurements to support the change from the approved product. The FDA may then approve the new drug candidate for all orsome of the label indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant. Submission of an NDA to the FDA NDAs for most new drug products are based on two full clinical studies that must contain substantial evidence of the safety and efficacy of theproposed new product. Assuming successful completion of required clinical testing and other requirements, the results of the pre-clinical and clinical studies,together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to theFDA as part of an NDA requesting approval to market the drug product for one or more indications. Under federal law, the submission of most NDAs isadditionally subject to an application user fee, currently exceeding $2.1 million, and the sponsor of an approved NDA is also subject to annual product andestablishment user fees, currently exceeding $104,000 per product and $554,000 per establishment. These fees are typically increased annually. The FDA conducts a preliminary review of an NDA within 60 days of its receipt and informs the sponsor by the 74th day after the FDA’s receipt ofthe submission whether the application is sufficiently complete to permit substantive review. The FDA may request additional information rather than acceptan NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to reviewbefore the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA has agreed tospecified performance goals in the review process of NDAs. Most such applications are meant to be reviewed within ten months from the date of filing, andmost applications for “priority review” products are meant to be reviewed within six months of filing. The review process may be extended by the FDA forvarious reasons, including for three additional months to consider new information or clarification provided by the applicant to address an outstandingdeficiency identified by the FDA following the original submission. Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is or will be manufactured. These pre-approvalinspections cover all facilities associated with an NDA submission, 36Table of Contents including drug component manufacturing (such as Active Pharmaceutical Ingredients), finished drug product manufacturing, and control testing laboratories.The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements andadequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typicallyinspect one or more clinical sites to assure compliance with GCP. The FDA may refer an application for a novel drug to an advisory committee or explain why such referral was not made. Typically, an advisorycommittee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as towhether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but itconsiders such recommendations carefully when making decisions. Accelerated Approval Pathway The FDA may grant accelerated approval to a drug for a serious or life-threatening condition that provides meaningful therapeutic advantage topatients over existing treatments based upon a determination that the drug has an effect on a surrogate endpoint that is reasonably likely to predict clinicalbenefit. The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that can bemeasured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on irreversible morbidity ormortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, orother measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easilyor more rapidly than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely topredict the clinical benefit of a drug, such as an effect on IMM. The FDA has limited experience with accelerated approvals based on intermediate clinicalendpoints, but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is notitself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict theultimate clinical benefit of a drug. The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required tomeasure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. The accelerated approvalpathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify anddescribe the drug’s clinical benefit. As a result, a product candidate approved on this basis is subject to rigorous post-marketing compliance requirements,including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approvalstudies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the drug from the market on an expedited basis. Allpromotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA. The FDA’s Decision on an NDA On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the inspection of the manufacturingfacilities, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specificprescribing information for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantialadditional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’ssatisfaction in a resubmission of the NDA, the FDA 37Table of Contents will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If the FDA approves a product, it may limit the approved indications for use for the product, require that contraindications, warnings or precautionsbe included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety afterapproval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions which can materially affectthe potential market and profitability of the product. In addition, as a condition of approval, the FDA may require an applicant to develop a REMS. REMSuse risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential risks. To determinewhether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of theproduct, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a new molecular entity. REMS caninclude medication guides, physician communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU may include, butare not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the useof patient registries. The FDA may require a REMS before approval or post-approval if it becomes aware of a serious risk associated with use of the product.The requirement for a REMS can materially affect the potential market and profitability of a product. The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs. After approval,many types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to furthertesting requirements and FDA review and approval. Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, amongother things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting ofadverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, aresubject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at whichsuch products are manufactured, as well as new application fees for supplemental applications with clinical data. In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register theirestablishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliancewith cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDAregulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsorand any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in thearea 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 ifproblems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events ofunanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to theapproved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distributionor other restrictions under a REMS program. Other potential consequences include, among other things: 38Table of Contents · 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 NDAs or supplements to approved NDAs, 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 onlyfor the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws andregulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significantliability. In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, which regulatesthe distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by thestates. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountabilityin distribution. Abbreviated New Drug Applications for Generic Drugs In 1984, with passage of the Hatch-Waxman Amendments to the FDCA, Congress authorized the FDA to approve generic drugs that are the same asdrugs previously approved by the FDA under the NDA provisions of the statute. To obtain approval of a generic drug, an applicant must submit an ANDA tothe agency. In support of such applications, a generic manufacturer may rely on the pre-clinical and clinical testing previously conducted for a drug productpreviously approved under an NDA, known as the reference listed drug, or RLD. Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to the activeingredients, the route of administration, the dosage form, and the strength of the drug. At the same time, the FDA must also determine that the generic drug is“bioequivalent” to the innovator drug. Under the statute, a generic drug is bioequivalent to a RLD if the rate and extent of absorption of the drug do not showa significant difference from the rate and extent of absorption of the listed drug. Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication “ApprovedDrug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book.” Physicians and pharmacists consider a therapeuticequivalent generic drug to be fully substitutable for the RLD. In addition, by operation of certain state laws and numerous health insurance programs, theFDA’s designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the prescribingphysician or patient. Under the Hatch-Waxman Amendments, the FDA may not approve an ANDA until any applicable period of non-patent exclusivity for the RLD hasexpired. The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing a new chemical entity. In cases where suchexclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by aParagraph IV certification, in which case the applicant may submit its application four years following the original product approval. The FDCA alsoprovides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical investigations, other than bioavailability or 39Table of Contents bioequivalence studies, that were conducted by or for the applicant and are essential to the approval of the application. This three-year exclusivity periodoften protects changes to a previously approved drug product, such as a new dosage form, route of administration, combination or indication. Hatch-Waxman Patent Certification and the 30-Month Stay Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’sproduct or an approved method of using the product. Each of the patents listed by the NDA sponsor is published in the Orange Book. When an ANDAapplicant files its application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in theOrange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval. To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed forthe approved product in the Orange Book to the same extent that an ANDA applicant would. Specifically, the applicant must certify with respect to each patent that: · the required patent information has not been filed; · the listed patent has expired; · the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or · the listed patent is invalid, unenforceable or will not be infringed by the new product. A certification that the new product will not infringe the already approved product’s listed patents or that such patents are invalid or unenforceableis called a Paragraph IV certification. If the applicant does not challenge the listed patents or indicate that it is not seeking approval of a patented method ofuse, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired. If the ANDA applicant or 505(b)(2) applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of theParagraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may theninitiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 daysafter the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months after the receipt ofthe Paragraph IV notice, expiration of the patent, or a decision in the infringement case that is favorable to the ANDA applicant. Orphan Designation and Exclusivity Under the Orphan Drug Act, FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition (generallymeaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost ofdeveloping and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product). Acompany must request orphan product designation before submitting a NDA. If the request is granted, FDA will disclose the identity of the therapeutic agentand its potential use. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation, the product will beentitled to orphan product exclusivity. Orphan product exclusivity means that FDA may not approve any other applications for the same product for the sameindication for seven years, except in certain limited circumstances. Competitors may receive approval of different products for the indication for which theorphan product has exclusivity and may obtain approval for the same product but for a 40Table of Contents different indication. If a drug or drug product designated as an orphan product ultimately receives marketing approval for an indication broader than whatwas designated in its orphan product application, it may not be entitled to exclusivity. Pediatric Studies and Exclusivity Under the Pediatric Research Equity Act of 2003, a NDA or supplement thereto must contain data that are adequate to assess the safety andeffectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for eachpediatric subpopulation for which the product is safe and effective. With enactment of the Food and Drug Administration Safety and Innovation Act, orFDASIA, in 2012, sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatricstudy or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required byregulation. The applicant, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with each other, and agreeupon a final plan. The FDA or the applicant may request an amendment to the plan at any time. 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 approvalof the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferralrequests and requests for extension of deferrals are contained in FDASIA. Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of anadditional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent exclusivity. This six-monthexclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not needto show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, theadditional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whateverstatutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension, but iteffectively extends the regulatory period during which the FDA cannot approve another application. Patent Term Restoration and Extension A patent claiming a new drug product or medical device may be eligible for a limited patent term extension under the Hatch-Waxman Act, whichpermits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review. The restoration period grantedon a patent covering a new drug product or a Class III medical device is typically one-half the time between the date a clinical investigation on human beingsis begun and the submission date of an application for premarket approval of the product or medical device, plus the time between the submission date of anapplication for approval of the product or medical device and the ultimate approval date. Patent term restoration cannot be used to extend the remaining termof a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug product or medical device is eligible forthe extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple drugs ormedical devices for which approval is sought can only be extended in connection with one of the approvals. The USPTO reviews and approves theapplication for any patent term extension or restoration in consultation with the FDA. Review and Approval of Medical Devices in the United States Medical devices in the United States are strictly regulated by the FDA. Under the FDCA a medical device is defined as an instrument, apparatus,implement, machine, contrivance, implant, in vitro reagent, or 41Table of Contents other similar or related article, including a component, part or accessory which is, among other things: intended for use in the diagnosis of disease or otherconditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals; or intended to affect the structure or any function of thebody of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or otheranimals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes. This definition provides a cleardistinction between a medical device and other FDA regulated products such as drugs. If the primary intended use of the product is achieved throughchemical action or by being metabolized by the body, the product is usually a drug. If not, it is generally a medical device. Unless an exemption applies, a new medical device may not be marketed in the United States unless and until it has been cleared through filing of a510(k) premarket notification, or 510(k), or approved by the FDA pursuant to a PMA. The information that must be submitted to the FDA in order to obtainclearance or approval to market a new medical device varies depending on how the medical device is classified by the FDA. Medical devices are classifiedinto one of three classes on the basis of the controls deemed by the FDA to be necessary to reasonably ensure their safety and effectiveness. Class I devices are those low risk devices for which reasonable assurance of safety and effectiveness can be provided by adherence to the FDA’sgeneral controls for medical devices, which include applicable portions of the FDA’s Quality System Regulation, or QSR, facility registration and productlisting, reporting of adverse medical events and malfunctions and appropriate, truthful and non-misleading labeling, advertising and promotional materials.Many Class I devices are exempt from premarket regulation; however, some Class I devices require premarket clearance by the FDA through the510(k) premarket notification process. Class II devices are moderate risk devices and are subject to the FDA’s general controls, and any other special controls, such as performancestandards, post-market surveillance, and FDA guidelines, deemed necessary by the FDA to provide reasonable assurance of the devices’ safety andeffectiveness. Premarket review and clearance by the FDA for Class II devices are accomplished through the 510(k) premarket notification procedure,although some Class II devices are exempt from the 510(k) requirements. Premarket notifications are subject to user fees, unless a specific exemption applies. Class III devices are deemed by the FDA to pose the greatest risk, such as those for which reasonable assurance of the device’s safety andeffectiveness cannot be assured solely by the general controls and special controls described above and that are life-sustaining or life-supporting. A PMAapplication must provide valid scientific evidence, typically extensive pre-clinical and clinical trial data and information about the device and itscomponents regarding, among other things, device design, manufacturing and labeling. PMA applications (and supplemental PMA applications) are subjectto significantly higher user fees than are 510(k) premarket notifications. Clinical Studies in Support of Development of a Medical Device The types of clinical studies required for the development and approval of a medical device differ from those required for drug products. Clinicaltrials involving a drug product typically involve a sequential process of Phase 1, 2 and 3 clinical trials to test for the safety and efficacy of the product. Theclinical development of a medical device, on the other hand, is often conducted in three different sequential phases, which may overlap or be combined.Those phases are a pilot study, which may also be referred to as an early feasibility study; a feasibility study; and a pivotal study. · Pilot Study: A pilot study is a limited clinical investigation of a device early in development, typically before the device design has beenfinalized, for a specific indication. It may be used to evaluate the device design concept with respect to initial clinical safety and devicefunctionality in a small number of subjects (generally fewer than ten initial subjects) when this information cannot practically be providedthrough additional nonclinical assessments or appropriate nonclinical tests are unavailable. Information obtained from a pilot study may guidedevice modifications. 42Table of Contents · Feasibility Study: A feasibility study is a clinical investigation that is commonly used to capture preliminary safety and effectivenessinformation on a near-final or final device design to adequately plan an appropriate pivotal study. Because the study of a near-final or finaldevice design takes place later in development than a pilot study, the FDA has indicated that it expects to see more nonclinical (or priorclinical) data in a feasibility study IDE application. A feasibility study does not necessarily need to be preceded by a pilot study. · Pivotal Study: A pivotal study is a clinical investigation designed to collect definitive evidence of the safety and effectiveness of a device for aspecified intended use, typically in a statistically justified number of subjects. Evidence from one or more pivotal clinical studies generallyserves as the primary basis for the determination of reasonable assurance of safety and effectiveness of the medical device of a PMA and FDA’soverall benefit-risk determination. A pivotal study may or may not be preceded by a pilot study or feasibility study. These three stages in the development of a medical device may be dependent on each other and conducting a thorough evaluation in one stage canmake the next stage more straightforward. To determine which type of clinical study is appropriate to pursue, a manufacturer will consider several factors,such as the novelty of the device, the device’s intended clinical use, the stability of the device design and the amount of test data available to support theIDE application. A pilot study is appropriate when device changes are expected and when, due to the novelty of the device or its intended use, a clinicalstudy is expected to provide information that cannot be practically obtained through additional nonclinical assessments. A pilot study may also beappropriate even if a device or a prototype of the device has previously been used clinically for the intended clinical use. A feasibility study or a pivotalstudy may be more appropriate if the device design is near-final or final, respectively, depending on the amount of data available to justify the study. 510(k) Premarket Notification To obtain 510(k) clearance, a manufacturer must submit a premarket notification demonstrating that the proposed device is “substantiallyequivalent” to a predicate device, which is a previously cleared 510(k) device or a pre-amendment device that was in commercial distribution before May 28,1976, for which the FDA has not yet called for the submission of a PMA application. The FDA’s 510(k) clearance pathway usually takes from three to12 months from the date the application is submitted and filed with the FDA, but it can take significantly longer and clearance is never assured. The FDA hasissued guidance documents meant to expedite review of a 510(k) and facilitate interactions between applicants and the agency. To demonstrate substantialequivalence, a manufacturer must show that the device has the same intended use as a predicate device and the same technological characteristics, or thesame intended use and different technological characteristics and does not raise new questions of safety and effectiveness than the predicate device. Most510(k)s do not require clinical data for clearance, but the FDA may request such data. The FDA seeks to review and act on a 510(k) within 90 days of submission, but it may take longer if the agency finds that it requires moreinformation to review the 510(k). If the FDA determines that the device is substantially equivalent to a predicate device, the subject device may be marketed.However, if the FDA concludes that a new device is not substantially equivalent to a predicate device, the new device will be classified in Class III and themanufacturer will be required to submit a PMA to market the product. Devices of a new type that the FDA has not previously classified based on risk areautomatically classified into Class III by operation of section 513(f)(1) of the FDCA, regardless of the level of risk they pose. To avoid requiring PMA reviewof low- to moderate-risk devices classified in Class III by operation of law, Congress enacted section 513(f)(2) of the FDCA. This provision allows the FDA toclassify a low- to moderate-risk device not previously classified into Class I or II, a process known as the de novo process. A company may apply directly tothe FDA for classification of its device as de novo or may submit a de novo petition within 30 days of receiving a not substantially equivalent determination. 43Table of Contents Modifications to a 510(k)-cleared medical device may require the submission of another 510(k). Modifications to a 510(k)-cleared device frequentlyrequire the submission of a traditional 510(k), but modifications meeting certain conditions may be candidates for FDA review under a special 510(k). If adevice modification requires the submission of a 510(k), but the modification does not affect the intended use of the device or alter the fundamentaltechnology of the device, then summary information that results from the design control process associated with the cleared device can serve as the basis forclearing the application. A special 510(k) allows a manufacturer to declare conformance to design controls without providing new data. When themodification involves a change in material, the nature of the “new” material will determine whether a traditional or special 510(k) is necessary. Any modification to a 510(k)-cleared product that would constitute a major change in its intended use or any change that could significantly affectthe safety or effectiveness of the device may, in some circumstances, requires the submission of a PMA, if the change raises complex or novel scientific issuesor the product has a new intended use. A manufacturer may be required to submit extensive pre-clinical and clinical data depending on the nature of thechanges. The FDA requires every manufacturer to make the determination regarding the need for a new 510(k) submission in the first instance, but the FDAmay review any manufacturer’s decision. If the FDA disagrees with the manufacturer’s determination and requires new 510(k) clearances or PMA approvalsfor modifications to previously cleared products for which the manufacturer concluded that new clearances or approvals are unnecessary, the manufacturermay be required to cease marketing or distribution of the products or to recall the modified product until it obtains clearance or approval, and themanufacturer may be subject to significant regulatory fines or penalties. In addition, the FDA is currently evaluating the 510(k) process and may makesubstantial changes to industry requirements. Premarket Approval Application The PMA process for approval to market a medical device is more complex, costly, and time consuming than the 510(k) clearance procedure. A PMAmust be supported by extensive data, including technical information regarding device design and development, pre-clinical studies, clinical studies,manufacturing and controls information and labeling information, that demonstrates the safety and effectiveness of the device for its intended use. After aPMA is submitted, the FDA has 45 days to determine whether it is sufficiently complete to permit a substantive review. If the PMA is complete, the FDA willfile the PMA. If the FDA accepts the application for filing, the agency will begin an in-depth substantive review of the application. By statute, the FDA has180 days to review the application although, generally, review of the application often takes between one and three years, and may take significantly longer.If the FDA has questions, it will likely issue a first major deficiency letter within 150 days of filing. It may also refer the PMA to an FDA advisory panel foradditional review, and will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with the QSR, either of which could extendthe 180-day response target. In addition, the FDA may request additional information or request the performance of additional clinical trials in which case thePMA approval may be delayed while the trials are conducted and the data acquired are submitted in an amendment to the PMA. Even with additional trials,the FDA may not approve the PMA application. If the FDA’s evaluations of both the PMA and the manufacturing facilities are favorable, the FDA will either issue an approval letter authorizingcommercial marketing or an approvable letter that usually contains a number of conditions that must be met in order to secure final approval. If the FDA’sevaluations are not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. The PMA process, including the gathering of clinicaland nonclinical data and the submission to and review by the FDA, can take several years, and the process can be expensive and uncertain. Moreover, even ifthe FDA approves a PMA, the FDA may approve the device with an indication that is narrower or more limited than originally sought. The FDA can imposepost-approval conditions that it believes necessary to ensure the safety and effectiveness of the device, including, among other things, restrictions onlabeling, promotion, sale and distribution. After approval of a PMA, a new PMA or PMA supplement may be required for a modification to the device, itslabeling, or its 44Table of Contents manufacturing process. PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplementis limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensivetechnical or clinical data or the convening of an advisory panel. The time for review of a PMA supplement may vary depending on the type of change, but itcan be lengthy. In addition, in some cases the FDA might require additional clinical data. Investigational Device Exemption A clinical trial is typically required for a PMA and, in a small percentage of cases, the FDA may require a clinical study in support of a510(k) submission. A manufacturer that wishes to conduct a clinical study involving the device is subject to the FDA’s IDE regulation. The IDE regulationdistinguishes between significant and nonsignificant risk device studies and the procedures for obtaining approval to begin the study differ accordingly.Also, some types of studies are exempt from the IDE regulations. Significant risk devices are, among other things, devices that are substantially important in diagnosing, curing, mitigating, or treating disease or inpreventing impairment to human health and present a potential for serious risk to the health, safety or welfare of a subject. Studies of devices that pose asignificant risk require both FDA and an IRB approval prior to initiation of a clinical study. Nonsignificant risk devices are devices that do not pose asignificant risk to the human subjects. A nonsignificant risk device study requires only IRB approval prior to initiation of a clinical study. An IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device inhumans and that the testing protocol is scientifically sound. An IDE application is considered approved 30 days after it has been received by the FDA, unlessthe FDA otherwise informs the sponsor prior to 30 calendar days from the date of receipt that the IDE is approved, approved with conditions, or disapproved.The FDA typically grants IDE approval for a specified number of subjects to be enrolled at specified study centers. The clinical trial must be conducted inaccordance with applicable regulations, including but not limited to the FDA’s IDE regulations and GCP. The investigators must obtain subject informedconsent, rigorously follow the investigational plan and study protocol, control the disposition of investigational devices, and comply with all reporting andrecord keeping requirements. A clinical trial may be suspended or terminated by the FDA, the IRB or the sponsor at any time for various reasons, including abelief that the risks to the study participants outweigh the benefits of participation in the trial. Approval of an IDE does not bind the FDA to accept the resultsof the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria. Humanitarian Use Device When a medical device is intended to treat or diagnose a disease or condition that affects or is manifested in fewer than 4,000 individuals in theUnited States per year, a manufacturer may seek approval through a humanitarian device exemption, or HDE, application to market its product as ahumanitarian use device, or HUD. This pathway provides an incentive for the development of devices for the treatment or diagnosis of diseases affectingsmall populations and where a manufacturer’s research and development costs could exceed market return. Thus, the purpose of the HDE is to encouragedevice manufacturers to develop devices for rare conditions or diseases. Prior to submitting the HDE application the device manufacturer must request HUD designation from the FDA’s Office of Orphan ProductsDevelopment. The FDA seeks to respond to the request within 45 days of submission. If granted, a manufacturer may file an HDE application for HUDapproval. An HDE application is similar to a PMA application but is exempt from the effectiveness requirements of a PMA. In submitting an HDE applicationa manufacturer is not required to include scientifically valid clinical investigation results demonstrating that the device is effective for its intended purpose.However, the 45Table of Contents application must contain sufficient information for the FDA to determine that the device does not pose an unreasonable or significant risk of illness or injury,and that the probable benefit to health outweighs the risk of injury or illness from its use, taking into account the probable risks and benefits of currentlyavailable devices or alternative forms of treatment. The manufacturer must also demonstrate that no comparable devices are available to treat or diagnose thedisease or condition, and that the manufacturer could not otherwise bring the device to market. The FDA seeks to act on an HDE application within 75 daysafter accepting the HDE for filing. If the FDA approves the HDE, the manufacturer may market the HUD. However, an HUD may only be used in facilities that have established an IRBto supervise clinical testing of devices and after an IRB has approved the use of the device to treat or diagnose the specific disease. HUDs are also subject tospecific labeling requirements identifying the device as a HUD device and noting that although the device is authorized by the FDA, the effectiveness of thedevice for the specific indication has not been demonstrated. Moreover, a manufacturer cannot charge an amount for an HDE approved device that exceedsthe costs of research and development, fabrication, and distribution. Expedited Access PMA The FDA has proposed a program to provide earlier access to high-risk medical devices that are intended to treat or diagnose patients with seriousconditions whose medical needs are unmet by current technology. The Expedited Access Premarket Approval Application for Unmet Medical Needs for LifeThreatening or Irreversibly Debilitating Diseases or Conditions program, or EAP, allows for earlier and more interactive engagement with FDA staff. It alsoinvolves senior FDA management and a collaboratively developed plan for collecting scientific and clinical data to support approval—taken together, thesefeatures are meant to provide patients with earlier access to safe and effective medical devices by reducing the time associated with product development. To be eligible for participation in the program, the medical device must be intended to treat or diagnose a life-threatening or irreversibly-debilitating disease or condition and represent one of the following: · no approved alternative treatment exists; · a breakthrough technology that provides a clinically meaningful advantage over existing technology; · offers a significant, clinically meaningful advantage over existing approved alternatives; or · availability of the device is in the patient’s best interest. The EAP must be accompanied by an acceptable data development plan that has been approved by the FDA. When utilizing the EAP program, the FDA willcontinue to apply the current approval standard of demonstrating a reasonable assurance of safety and efficacy. Post-Marketing Restrictions and Enforcement After a device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to: · submitting and updating establishment registration and device listings with the FDA; · compliance with the QSR, which requires manufacturers to follow stringent design, testing, control, documentation, record maintenance,including maintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process; 46Table of Contents · unannounced routine or for-cause device inspections by the FDA, which may include our suppliers’ facilities; and · labeling regulations, which prohibit the promotion of products for uncleared or unapproved or “off-label” uses and impose other restrictions onlabeling; post-approval restrictions or conditions, including requirements to conduct post-market surveillance studies to establish continuedsafety data or tracking products through the chain of distribution to the patient level. Under the FDA medical device reporting, or MDR, regulations, medical device manufacturers are required to report to the FDA information that adevice has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death orserious injury if the malfunction of the device or a similar device of such manufacturer were to recur. The decision to file an MDR involves a judgment by themanufacturer. If the FDA disagrees with the manufacturer’s determination, the FDA can take enforcement action. Additionally, the FDA has the authority to require the recall of commercialized products in the event of material deficiencies or defects in design ormanufacture. The authority to require a recall must be based on an FDA finding that there is reasonable probability that the device would cause seriousadverse health consequences or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. TheFDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. The failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the followingsanctions: · untitled letters, warning letters, fines, injunctions or civil penalties; · recalls, detentions or seizures of products; · operating restrictions; · delays in the introduction of products into the market; · total or partial suspension of production; · delay or refusal of the FDA or other regulators to grant 510(k) clearance or PMA approvals of new products; · withdrawals of 510(k) clearance or PMA approvals; or · in the most serious cases, criminal prosecution. To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduledand unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of subcontractors. Review and Approval of Combination Products in the United States Certain products may be comprised of components that would normally be regulated under different types of regulatory authorities, and frequentlyby different Centers at the FDA. These products are known as combination products. Specifically, under regulations issued by the FDA, a combinationproduct may be: · a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as asingle entity; 47Table of Contents · two or more separate products packaged together in a single package or as a unit and comprised of drug and device products; · a drug or device packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approvedindividually specified drug or device where both are required to achieve the intended use, indication, or effect and where upon approval of theproposed product the labeling of the approved product would need to be changed, e.g., to reflect a change in intended use, dosage form,strength, route of administration, or significant change in dose; or · any investigational drug or device packaged separately that according to its proposed labeling is for use only with another individuallyspecified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect. Under the FDCA, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. Thatdetermination is based on the “primary mode of action” of the combination product. Thus, if the primary mode of action of a device-drug combinationproduct is attributable to the drug product, the FDA Center responsible for premarket review of the drug product would have primary jurisdiction for thecombination product. The FDA has also established an Office of Combination Products to address issues surrounding combination products and providemore certainty to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry. It is alsoresponsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the FDA center that has primaryjurisdiction for review of combination products where the jurisdiction is unclear or in dispute. Review and Approval of Drug Products in the European Union In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements ofother countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization,commercial sales and distribution of drug products. Whether or not it obtains FDA approval for a product, the company would need to obtain the necessaryapprovals by the comparable foreign regulatory authorities before it can commence clinical trials or marketing of the product in those countries orjurisdictions. The approval process ultimately varies between countries and jurisdictions and can involve additional product testing and additionaladministrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required toobtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtainingregulatory approval in one country or jurisdiction may negatively impact the regulatory process in others. Pursuant to the European Clinical Trials Directive, a system for the approval of clinical trials in the European Union has been implemented throughnational legislation of the member states. Under this system, an applicant must obtain approval from the competent national authority of a European Unionmember state in which the clinical trial is to be conducted. Furthermore, the applicant may only start a clinical trial after a competent ethics committee hasissued a favorable opinion. Clinical trial application must be accompanied by an investigational medicinal product dossier with supporting informationprescribed by the European Clinical Trials Directive and corresponding national laws of the member states and further detailed in applicable guidancedocuments. To obtain marketing approval of a drug under European Union regulatory systems, an applicant must submit a marketing authorization application,or MAA, either under a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid for all EuropeanUnion member states. The centralized procedure is compulsory for specific products, including for medicines produced by certain biotechnologicalprocesses, products designated 48Table of Contents as orphan medicinal products, advanced therapy products and products with a new active substance indicated for the treatment of certain diseases. Forproducts with a new active substance indicated for the treatment of other diseases and products that are highly innovative or for which a centralized process isin the interest of patients, the centralized procedure may be optional. Under the centralized procedure, the Committee for Medicinal Products for Human Use, or the CHMP, established at the EMA, is responsible forconducting the initial assessment of a drug. The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessmentof modifications or extensions to an existing marketing authorization. Under the centralized procedure in the European Union, the maximum timeframe forthe evaluation of an MAA is 210 days, excluding clock stops, when additional information or written or oral explanation is to be provided by the applicantin response to questions of the CHMP. Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is of majorinterest from the point of view of public health and in particular from the viewpoint of therapeutic innovation. In this circumstance, the EMA ensures that theopinion of the CHMP is given within 150 days. The decentralized procedure is available to applicants who wish to market a product in various European Union member states where such producthas not received marketing approval in any European Union member states before. The decentralized procedure provides for approval by one or more other,or concerned, member states of an assessment of an application performed by one member state designated by the applicant, known as the reference memberstate. Under this procedure, an applicant submits an application based on identical dossiers and related materials, including a draft summary of productcharacteristics, and draft labeling and package leaflet, to the reference member state and concerned member states. The reference member state prepares a draftassessment report and drafts of the related materials within 210 days after receipt of a valid application. Within 90 days of receiving the reference memberstate’s assessment report and related materials, each concerned member state must decide whether to approve the assessment report and related materials. If a member state cannot approve the assessment report and related materials on the grounds of potential serious risk to public health, the disputedpoints are subject to a dispute resolution mechanism and may eventually be referred to the European Commission, whose decision is binding on all memberstates. Review and Approval of Medical Devices in the European Union The European Union has adopted numerous directives and standards regulating, among other things, the design, manufacture, clinical trials,labeling, approval and adverse event reporting for medical devices. In the European Union, medical devices must comply with the Essential Requirements inAnnex I to the EU Medical Devices Directive (Council Directive 93/42/EEC), or the Essential Requirements. Compliance with these requirements is aprerequisite to be able to affix the CE mark of conformity to medical devices, without which they cannot be marketed or sold in the European EconomicArea, or EEA, comprised of the European Union member states plus Norway, Iceland, and Liechtenstein. Actual implementation of these directives, however,may vary on a country-by-country basis. To demonstrate compliance with the Essential Requirements a manufacturer must undergo a conformity assessment procedure, which variesaccording to the type of medical device and its classification. Except for low risk medical devices, where the manufacturer can issue a CE Declaration ofConformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires theintervention of a third-party organization designated by competent authorities of a European Union country to conduct conformity assessments, or a NotifiedBody. Notified Bodies are independent testing houses, laboratories, or product certifiers typically based within the European Union and authorized by theEuropean member states to perform the required conformity assessment tasks, such as quality system audits and device compliance testing. The NotifiedBody would typically audit and examine the product’s Technical File and the quality system for the manufacture, design and final inspection of the productbefore issuing a CE Certificate of Conformity demonstrating compliance with the relevant Essential Requirements. 49Table of Contents Medical device manufacturers must carry out a clinical evaluation of their medical devices to demonstrate conformity with the relevant EssentialRequirements. This clinical evaluation is part of the product’s Technical File. A clinical evaluation includes an assessment of whether a medical device’sperformance is in accordance with its intended use, and that the known and foreseeable risks linked to the use of the device under normal conditions areminimized and acceptable when weighed against the benefits of its intended purpose. The clinical evaluation conducted by the manufacturer must alsoaddress any clinical claims, the adequacy of the device labeling and information (particularly claims, contraindications, precautions and warnings) and thesuitability of related Instructions for Use. This assessment must be based on clinical data, which can be obtained from clinical studies conducted on thedevices being assessed, scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or both clinical studies andscientific literature. With respect to implantable devices or devices classified as Class III in the European Union, the manufacturer must conduct clinical studies toobtain the required clinical data, unless relying on existing clinical data from similar devices can be justified. As part of the conformity assessment process,depending on the type of devices, the Notified Body will review the manufacturer’s clinical evaluation process, assess the clinical evaluation data of arepresentative sample of the device’s subcategory or generic group, or assess all the clinical evaluation data, verify the manufacturer’s assessment of that dataand assess the validity of the clinical evaluation report and the conclusions drawn by the manufacturer. Even after a manufacturer receives a CE Certificate of Conformity enabling the CE mark on it products and the right to sell the products in the EEAcountries, a Notified Body or a competent authority may require post-marketing studies of the products. Failure to comply with such requirements in a timelymanner could result in the withdrawal of the CE Certificate of Conformity and the recall or withdrawal of the subject product from the European market. A manufacturer must inform the Notified Body that carried out the conformity assessment of the medical devices of any planned substantial changesto the devices which could affect compliance with the Essential Requirements or the devices’ intended purpose. The Notified Body will then assess thechanges and verify whether they affect the product’s conformity with the Essential Requirements or the conditions for the use of the devices. If the assessmentis favorable, the Notified Body will issue a new CE Certificate of Conformity or an addendum to the existing CE Certificate of Conformity attestingcompliance with the Essential Requirements. If it is not, the manufacturer may not be able to continue to market and sell the product in the EEA. In the European Union, medical devices may be promoted only for the intended purpose for which the devices have been CE marked. Failure tocomply with this requirement could lead to the imposition of penalties by the competent authorities of the European Union Member States. The penaltiescould include warnings, orders to discontinue the promotion of the medical device, seizure of the promotional materials and fines. Promotional materialsmust also comply with various laws and codes of conduct developed by medical device industry bodies in the European Union governing promotionalclaims, comparative advertising, advertising of medical devices reimbursed by the national health insurance systems and advertising to the general public. Additionally, all manufacturers placing medical devices in the market in the European Union are legally bound to report any serious or potentiallyserious incidents involving devices they produce or sell to the competent authority in whose jurisdiction the incident occurred. In the European Union,manufacturers must comply with the EU Medical Device Vigilance System. Under this system, incidents must be reported to the relevant authorities of theEuropean Union countries, and manufacturers are required to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deteriorationin the state of health associated with the use of a medical device that is already placed on the market. An incident is defined as any malfunction ordeterioration in the characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly orindirectly, might lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in their state of health. An FSCAmay include the recall, 50Table of Contents modification, exchange, destruction or retrofitting of the device. FSCAs must be communicated by the manufacturer or its European AuthorizedRepresentative to its customers and to the end users of the device through Field Safety Notices. In September 2012, the European Commission adopted aproposal for a regulation which, if adopted, will change the way that most medical devices are regulated in the European Union, and may subject products toadditional requirements. Pharmaceutical Coverage, Pricing and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities. Salesof products will depend, in part, on the extent to which the costs of the products will be covered by third-party payors, including government health programsin the United States such as Medicare and Medicaid, commercial health insurers and managed care organizations. The process for determining whether apayor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the productonce coverage is approved. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of theapproved products for a particular indication. Additionally, the containment of healthcare costs has become a priority of federal and state governments, andthe prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest inimplementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products.Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures,could further limit our net revenue and results. In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensivepharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtainFDA or other comparable regulatory approvals. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate willbe approved. Third-party reimbursement may not be sufficient to maintain price levels high enough to realize an appropriate return on investment in productdevelopment. In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that drug products may bemarketed 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 torestrict the range of drug products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products forhuman 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 onthe profitability of the company placing the drug product on the market. Other member states allow companies to fix their own prices for drug products, butmonitor 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 exertcompetitive pressure that may reduce pricing within a country. Any country that has price controls or reimbursement limitations for drug products may notallow favorable reimbursement and pricing arrangements. Healthcare Law and Regulation Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of drug products that are grantedmarketing approval. Arrangements with third-party payors and customers are subject to broadly applicable fraud and abuse and other healthcare laws andregulations. Such restrictions under applicable federal and state healthcare laws and regulations, include the following: 51Table of Contents · the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving orproviding 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, in whole or in part, under a federal healthcare program suchas Medicare and Medicaid; · the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities forknowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a falsestatement to avoid, decrease or conceal an obligation to pay money to the federal government; · the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a schemeto defraud any healthcare benefit program or making false statements relating to healthcare matters; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, alsoimposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individuallyidentifiable health information; · the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making anymaterially false statement in connection with the delivery of or payment for healthcare benefits, items or services; · the federal transparency requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act of 2010, or collectively the PPACA will require applicable manufacturers of covered drugs, devices, drugs and medicalsupplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physiciansand teaching hospitals and physician ownership and investment interests; and · analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketingarrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevantcompliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments tophysicians and other health care providers or marketing expenditures. State and foreign laws also govern the privacy and security of health information insome circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. Employees As of December 31, 2014, we had 48 full-time employees, of which 41 employees were engaged in research and development and seven employeesprovided general and administrative support. Of our employees, 27 have earned advanced degrees. Our employees are not represented by a labor union orcovered by a collective bargaining agreement. Our Corporate Information We were incorporated under the laws of the State of Delaware on October 17, 2013 under the name Ikaria Development LLC. We changed our nameto Bellerophon Therapeutics LLC on January 27, 2014. On 52Table of Contents February 12, 2015, we converted from a Delaware limited liability company into a Delaware corporation and changed our name to BellerophonTherapeutics, Inc. We currently have three wholly-owned subsidiaries: Bellerophon BCM LLC, a Delaware limited liability company; Bellerophon PulseTechnologies LLC, a Delaware limited liability company; and Bellerophon Services, Inc., a Delaware corporation. Our website address iswww.bellerophon.com. The information contained on, or that can be accessed through, our website does not constitute part of this Annual Report onForm 10-K. We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference. Our executive offices are located at 53 Frontage Road, Suite 301, Hampton, New Jersey 08827, and our telephone number is (908) 574-4770. Available Information We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-Kand amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the ExchangeAct. We make these reports available through our website as soon as reasonably practicable after we electronically file such reports with, or furnish suchreports to, the SEC. We also make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10%stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by thosepersons. The information contained on, or that can be access through, our website is not a part of or incorporated by reference in this Annual Report onForm 10-K. 53Table of Contents Item 1A. Risk Factors The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks anduncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem lesssignificant may also impair our business operations. Please see page 2 of this Annual Report on Form 10-K for a discussion of some of the forward-lookingstatements that are qualified by these risk factors. If any of the following risks occur, our business, financial condition, results of operations and futuregrowth prospects could be materially and adversely affected. Risks Related to Our Financial Position and Need for Additional Capital We have incurred significant losses since inception. We expect to incur losses over the next several years and may never achieve or maintain profitability. Since inception, we have incurred significant operating losses. Our net loss was approximately $46.2 million for the year ended December 31, 2012,$62.0 million for the year ended December 31, 2013 and $59.7 million for the year ended December 31, 2014. We do not know whether or when we willbecome profitable. We have not generated any revenues to date from product sales. We have not completed development of any product candidate and havedevoted substantially all of our financial resources and efforts to research and development, including pre-clinical studies and clinical trials. We expect tocontinue to incur significant expenses and operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter andyear to year. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our deficit and working capital. We anticipate thatour expenses will increase substantially if and as we: · continue our research and clinical development of our INOpulse program for the treatment of PAH and PH-COPD and of our BCM program forthe prevention of left ventricular remodeling following a STEMI; · identify, develop and/or in-license additional product candidates; · seek regulatory approvals for any product candidates that successfully complete clinical trials; · in the future, establish a manufacturing, sales, marketing and distribution infrastructure; · maintain, expand and protect our intellectual property portfolio; · add equipment and physical infrastructure to support our research and development; · hire additional clinical, regulatory, quality control and scientific personnel; and · add operational, financial and management information systems and personnel, including personnel to support our product development andany future commercialization efforts and personnel and infrastructure necessary to help us comply with our obligations as a public company. To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. Wedo not expect to generate significant revenue unless and until we are able to obtain marketing approval for, and successfully commercialize, one or more ofour product candidates. This will require us to be successful in a range of challenging activities, including completing pre-clinical studies and clinical trialsof our product candidates, discovering additional product candidates, 54Table of Contents obtaining regulatory approval for our product candidates, manufacturing, marketing and selling any products for which we may obtain regulatory approval,satisfying any post-marketing requirements and obtaining reimbursement for our products from private insurance or government payors. We are in the earlystages of most of these activities and have not yet commenced other of these activities. We may never succeed in these activities and, even if we do, maynever generate revenues that are significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict thetiming or amount of increased expenses or when, or if, we will be able to achieve profitability. If we are required by the FDA or the EMA to perform trials inaddition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product candidates, ourexpenses could increase. 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 andremain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research anddevelopment efforts, diversify our product offerings or even continue our operations. A decline in the value of our company could cause our stockholders tolose all or part of their investment in us. In addition, our recurring losses from operations, accumulated deficit and our need to raise additional financing in order to continue to fund ouroperations, raise substantial doubt about our ability to continue as a going concern. Given our planned expenditures for the next several years, including,without limitation, expenditures in connection with our clinical trials, our independent registered public accounting firm may conclude that there issubstantial doubt regarding our ability to continue as a going concern. Our very limited operating history as a stand-alone company may make it difficult for our stockholders to evaluate the success of our business to date andto assess our future viability. We were formed as a wholly-owned subsidiary of Ikaria in October 2013 and became a stand-alone company in February 2014 following the Spin-Out and, as such, have a very limited operating history as a stand-alone company. Prior to the Spin-Out, Ikaria assisted us by providing financing and certaincorporate functions. Following the Spin-Out, Ikaria has no obligation to provide assistance to us other than on an interim basis as provided for in theagreements we entered into in connection with the Spin-Out. See “Certain Relationships and Related Person Transactions—Relationship with Ikaria.” Our operations to date have been limited to organizing and staffing our company, developing and securing our technology, and undertaking pre-clinical studies and clinical trials of our product candidates. We have not yet demonstrated the ability to successfully operate as a stand-alone company or tocomplete development of any product candidates, obtain marketing approvals, manufacture a commercial scale product, or arrange for a third party to do soon our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions our stockholdersmake about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developingand commercializing products. Assuming we obtain marketing approval for any of our product candidates, we will need to transition from a company with a research anddevelopment focus to a company capable of supporting commercial activities or we will need to enter into strategic partnerships. We may encounterunforeseen expenses, difficulties, complications and delays and may not be successful in such a transition. 55Table of Contents We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our productdevelopment programs or commercialization efforts. We expect our expenses to increase in connection with our ongoing activities, particularly as we initiate additional clinical trials of our INOpulseand BCM product candidates and continue research and development and seek regulatory approval for these and potentially other product candidates. Inaddition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to productmanufacturing, marketing, sales and distribution. In particular, the costs that may be required for the manufacture of any product candidate that receivesmarketing approval may be substantial. In addition, relative to previous years when we operated as a private company, we expect to incur additional costs in2015 and future years associated with operating as a public company. As of December 31, 2014, we had cash and cash equivalents and restricted cash of$27.6 million. From the inception of our business through December 31, 2014, Ikaria made cumulative investments of $177.5 million in us and contributedan additional $80.0 million in cash to us in connection with the Spin-Out. Now that we are a stand-alone company, any additional funding will need to comefrom another source. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable toraise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any futurecommercialization efforts. We plan to use our current cash and cash equivalents and restricted cash, including the net proceeds of our initial public offering, primarily to fundour ongoing research and development efforts. We will be required to expend significant funds in order to advance development of our INOpulse and BCMproduct candidates and any other potential product candidates. Our existing cash and cash equivalents and restricted cash, including the net proceeds of ourinitial public offering, will not be sufficient to fund all of the efforts that we plan to undertake, such as the further development of INOpulse for PH-COPD orBCM, or to fund completion of clinical development or commercialization of any of our product candidates. Accordingly, we will be required to obtainfurther funding through public or private equity offerings, debt financings, collaborations or licensing arrangements or other sources. Adequate additionalfunding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed would have a negative impact on ourfinancial condition and our ability to pursue our business strategy. We believe that our existing cash and cash equivalents and restricted cash as of December 31, 2014, together with the net proceeds of our initialpublic offering, will enable us to fund our planned operating expenses and capital expenditure requirements at least into mid-2016. We have based thisestimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our future capital requirementswill depend on many factors, including: · the progress and results of our current and planned clinical trials of our INOpulse and BCM product candidates; · the costs, timing and outcome of regulatory review of our product candidates; · the costs of operating as a stand-alone company; · the cost and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of ourproduct candidates for which we receive marketing approval; · the revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval; · our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements; 56Table of Contents · the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights anddefending any intellectual property-related claims; · the scope, progress, results and costs of discovery, pre-clinical development and clinical trials for any other product candidates; · the extent to which we acquire or in-license other product candidates and technologies; · our headcount growth and associated costs; and · the costs of operating as a public company. Identifying potential product candidates and conducting pre-clinical studies and clinical trials is a time-consuming, expensive and uncertainprocess that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve productsales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales ofproducts 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 financingto achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seekadditional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or futureoperating plans. Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to technologies or productcandidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of public orprivate equity offerings, debt financings and/or license and development agreements with collaboration partners. We do not have any committed externalsource of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of ourstockholders may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of ourstockholders. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability totake specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate ourproduct development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to developand market ourselves. If we raise funds through collaborations, strategic partnerships or marketing, distribution 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 grant licenses on terms thatmay not be favorable to us. Risks Related to Our Business and Industry We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as a stand-alone company, and we may experienceincreased or unexpected costs after the Spin-Out or as a result of the Spin-Out. We have historically operated as part of Ikaria’s broader corporate organization, and Ikaria has assisted us by providing certain corporate functions.However, following the Spin-Out, Ikaria is contractually obligated to provide to us only those services specified in a transition services agreement, or theTSA, a services agreement, or the 2015 Services Agreement, and the other agreements we entered into with Ikaria to govern our relationship following theSpin-Out. See “Certain Relationships and Related Person Transactions—Relationship with Ikaria” for a summary of these agreements. The TSA and the 2015Services Agreement provide for certain 57Table of Contents services to be provided until February 2016. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that Ikariapreviously provided to us that are not specified in the TSA, the 2015 Services Agreement or the other agreements. Also, upon the termination of the servicesprovided under the TSA or other agreements, such services will be provided internally or by unaffiliated third parties, and we expect that in some instances,we will incur higher costs to obtain such services than we incurred under the terms of such agreements. Ultimately, we may be unable to replace in a timelymanner or on comparable terms the services specified in such agreements. In addition, during the transitional services period, we will rely, in part, on the sameexecutive team at Ikaria that also will continue to manage the business of Ikaria during such time, and there may be conflicting demands on their time, whichcould result in an inadequate level of attention to the demands of our business. If Ikaria and its employees do not continue to perform effectively thetransition services and the other services that are called for under the TSA, the 2015 Services Agreement and other agreements, we may not be able to operateour business effectively and our business and financial condition could be adversely affected. On March 5, 2015, Mallinckrodt and Ikaria announced that the two companies had entered into a definitive agreement under which a subsidiary ofMallinckrodt will acquire Ikaria and that they expect the acquisition will be completed in the second calendar quarter of 2015. While the TSA imposesbinding obligations on Ikaria to perform in accordance with the TSA’s terms, it is possible that following completion of the sale, as the new owner’s influenceon Ikaria’s operations increases, Ikaria may not continue to provide the same level of performance under the TSA as Ikaria has provided to date. Moreover, tothe extent that we desire to extend, renew or expand the scope of the TSA, it is also possible that Ikaria will not be willing to do so on reasonable terms, or atall. In any of these circumstances, our business, product development and financial statements could be materially adversely affected. Prior to the Spin-Out, we utilized the executive management team and administrative resources of Ikaria. Many daily functions were performed byIkaria, including those related to the preparation of our financial statements and the engagement of auditors to audit our financial statements, which havebecome our responsibility following the Spin-Out. We may need to acquire assets and resources in addition to those provided to us by Ikaria, and we mayface difficulty in integrating newly acquired assets into our business. Additionally, as a stand-alone company, we no longer have access to Ikaria’s financialresources. Instead, our ability to fund our capital needs will depend on our ongoing ability to generate cash from operations, enter into partneringarrangements, obtain debt financing and access capital markets, which are subject to general economic, financial, competitive, regulatory and other factorsthat are beyond our control. Our business, financial condition and results of operations could be harmed, possibly materially, if we have difficulty operatingas a stand-alone company, fail to acquire necessary capital or assets that prove to be important to our operations, or are unable to enter into partnering orother business development arrangements. We are also currently incurring and expect to continue to incur additional incremental expenses associated with being a stand-alone company.These incremental pretax expenses were approximately $5.0 million for the year ended December 31, 2014. Our historical financial information is not necessarily representative of the results we would have achieved as a stand-alone company and may not be areliable indicator of our future results. The historical financial information we have included in this report may not reflect what our results of operations, financial position and cash flowswould have been had we been a stand-alone company during the periods presented. This is primarily because: · our historical financial information reflects allocations for services historically provided to us by Ikaria, which allocations may not reflect thecosts we will incur for similar services in the future as a stand-alone company; and 58Table of Contents · our historical financial information does not reflect changes that we expect to incur in the future as a result of our separation from Ikaria andfrom reduced economies of scale, including changes in the cost structure, personnel needs, financing and operations of our business. In addition, as a newly public company, we are also responsible for the additional costs associated with being a public company, including costsrelated to corporate governance and having listed and registered securities. Therefore, our historical financial information may not be indicative of our futureperformance as a stand-alone public company. For additional information about our past financial performance and the basis of presentation of our financial statements, please see “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto included elsewhere in thisAnnual Report on Form 10-K. The ownership by certain of our executive officers and directors of equity of Ikaria, as well as the continued roles of certain of our directors with Ikaria,may create, or may create the appearance of, conflicts of interest. Because of their current or former positions with Ikaria, our chief business officer, Manesh Naidu, our chief clinical development officer, ReinildeHeyrman, our chief scientific officer, Martin Meglasson, our treasurer, David Abrams, and one of our directors, Daniel Tassé, own equity in Ikaria. In addition,two of our directors, Matthew Holt and Adam B. Weinstein, may be deemed to beneficially own equity in Ikaria. Such equity ownership may create, or maycreate the appearance of, conflicts of interest. The individual holdings of equity of Ikaria may be significant for some of these persons compared to suchperson’s total assets. Ownership by certain of our executive officers and directors of equity of Ikaria creates, or may create the appearance of, conflicts ofinterest when these officers or directors are faced with decisions that could have different implications for Ikaria than the decisions have for us. In addition,Matthew Holt and Daniel Tassé are currently serving on our board of directors as well as Ikaria’s board of directors, and Mr. Tassé is currently serving as thechief executive officer of Ikaria. The continued service at both companies creates, or may create the appearance of, conflicts of interest when these directorsare faced with decisions that could have different implications for Ikaria than the decisions have for us, such as the allocation of time and resources to theprovision of transitional services to us by Ikaria pursuant to the TSA, the 2015 Services Agreement and the other agreements. We face substantial competition from other pharmaceutical, biotechnology and medical device companies and our operating results may suffer if we failto compete effectively. The pharmaceutical, biotechnology and medical device industries are highly competitive. There are many pharmaceutical, biotechnology andmedical device companies, public and private universities and research organizations actively engaged in the research and development of products that maybe similar to our product candidates. In addition, other companies are increasingly looking at the cardiopulmonary and cardiac disease market as a potentialopportunity. Currently, there are 12 drugs approved for the treatment of PAH, within the following categories: prostacyclin and prostacyclin analogs(including Flolan (epoprostenol), which is marketed by GlaxoSmithKline, Tyvaso (treprostinil), Orenitram (treprostinil) and Remodulin (treprostinil),which are marketed by United Therapeutics Corporation, and Ventavis (iloprost) and Veletri (epoprostenol), which are marketed by ActelionPharmaceuticals US, Inc., or Actelion), phosphodiesterase type-5 inhibitors (including Adcirca (tadalafil), which is marketed by United TherapeuticsCorporation, and Revatio (sildenafil), which is marketed by Pfizer Inc.), endothelin receptor antagonists (including Letairis (ambrisentan), which ismarketed by Gilead Sciences, Inc., and Opsumit (macitentan) and Tracleer (bosentan), which are marketed by Actelion) and a soluble guanylate cyclasestimulator (Adempas (riociguat), which is marketed by Bayer HealthCare Pharmaceuticals Inc.). Actelion recently submitted an NDA to the FDA forselexipag, a selective prostacyclin receptor agonist. There are also other treatments in Phase 1 and Phase 2 clinical development, including other nitric oxidegeneration and delivery systems, including GeNOsyl, which is being developed by GeNO LLC, and a nebulized formulation of nitrite, which is beingdeveloped by Mast Therapeutics. 59®®®®®®®®®®®®Table of Contents Currently, there are no approved therapies for treating PH-COPD, and the only generally accepted treatments are LTOT, pulmonary rehabilitationand lung transplant, and we are not aware of any therapies for PH-COPD in advanced clinical development. There are no generally accepted products approved for structural support to prevent cardiac remodeling following an AMI. Other product candidatesthat are currently in clinical development include stem cell therapies to restore heart muscle cells following an AMI, with large Phase 3 trials expected to becompleted in 2018 or 2019. We do not expect BCM to compete with, or replace, current treatments for congestive heart failure following AMI, but insteadbelieve it will become part of the treatment regimen used in conjunction with other therapies. In addition, because BCM can be delivered by a minimallyinvasive percutaneous coronary intervention procedure, we do not believe it will directly compete with devices that are used to treat congestive heart failure,which are designed for administration during open heart surgery or by intra-cardiac injection involving a thoracotomy procedure. These include: meshrestraining devices, for example HeartNet; injectable biopolymers, for example Algisyl-LVR; and implantable electro stimulation devices, for example,CardioFit. In addition, volume reduction surgery or cardiac assist devices, or pumps, are sometimes used to treat patients with congestive heart failure. Many of our competitors, either alone or through their strategic partners, have substantially greater name recognition and financial, technical,manufacturing, marketing and human resources than we do and significantly greater experience and infrastructure in the research and clinical development ofmedical products, obtaining FDA and other regulatory approvals of those products, and commercializing those products around the world. Additionalmergers and acquisitions in the pharmaceutical, biotechnology and medical device industries may result in even more resources being concentrated in ourcompetitors. Large pharmaceutical and medical device companies in particular have extensive expertise in pre-clinical and clinical testing and in obtainingregulatory approvals for medical products. In addition, academic institutions, government agencies, and other public and private organizations conductingresearch may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusivecollaborative or licensing relationships with our competitors. Accordingly, our competitors may be more successful than we may be in obtaining approval forinhaled nitric oxide products and achieving widespread market acceptance. We anticipate that we will face intense and increasing competition as newproducts and technologies become available. We will not be able to compete effectively unless we successfully: · design, develop and commercialize products that are superior to other products in the market; · attract qualified scientific, medical, sales and marketing, engineering and commercial personnel; · obtain patent and/or other proprietary protection for our processes and product candidates; and · obtain required regulatory approvals. It is also possible that Ikaria will seek to develop and commercialize inhaled nitric oxide products or product candidates in PAH, PH-COPD and/orPH-IPF. While a subsidiary of Ikaria has granted to us an exclusive license to develop and commercialize pulsed nitric oxide in PAH, PH-COPD and PH-IPFand the scope of that license includes certain technology developed or acquired by that subsidiary after the date of the license agreement, the license doesnot include technology developed or acquired by other subsidiaries or affiliates of Ikaria. Because Ikaria and its subsidiaries and affiliates are not subject toany non-competition obligations in our favor, it is possible that these other subsidiaries or affiliates of Ikaria may seek to develop or commercialize inhalednitric oxide or other products or product candidates, using technology not exclusively licensed to us, that are competitive with our products or productcandidates. 60Table of Contents Risks Related to the Discovery, Development and Commercialization of Our Product Candidates We are dependent on the success of our INOpulse and BCM product candidates and our ability to develop, obtain marketing approval for and successfullycommercialize these product candidates. If we are unable to develop, obtain marketing approval for or successfully commercialize our product candidates,either alone or through a collaboration, or experience significant delays in doing so, our business could be materially harmed. We currently have no products approved for sale and have invested a significant portion of our efforts and financial resources in the development ofour INOpulse for PAH, INOpulse for PH-COPD and BCM product candidates. Our prospects are substantially dependent on our ability to develop, obtainmarketing approval for and successfully commercialize these product candidates. The success of our product candidates will depend on, among other things,our ability to successfully complete clinical trials of each product candidate. The clinical trial process is uncertain, and failure of one or more clinical trialscan occur at any stage of testing. For example, although we believe our recently completed Phase 2 clinical trials of INOpulse for PAH and INOpulse for PH-COPD support advancement into a Phase 3 and a Phase 2b clinical trial, respectively, the primary endpoints for both INOpulse for PAH and INOpulse for PH-COPD were not statistically significant for any of the doses tested. In addition to the successful completion of clinical trials, the success of our product candidates will also depend on several other factors, includingthe following: · receipt of marketing approvals from the FDA or other applicable regulatory authorities; · establishment of supply arrangements with third-party raw materials suppliers and manufacturers; · establishment of arrangements with third-party manufacturers to obtain finished drug products that are appropriately packaged for sale; · the performance of our future collaborators for one or more of our product candidates, if any; · the extent of any required post-marketing approval commitments to applicable regulatory authorities; · obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the United States and internationally; · protection of our rights in our intellectual property portfolio; · launch of commercial sales if and when our product candidates are approved; · a continued acceptable safety profile of our product candidates following any marketing approval; · commercial acceptance, if and when approved, by patients, the medical community and third-party payors; · establishing and maintaining pricing sufficient to realize a meaningful return on our investment; and · competition with other products. If we are unable to develop, receive marketing approval for, or successfully commercialize our product candidates, or experience delays as a result ofany of these factors or otherwise, our business could be materially harmed. 61Table of Contents Clinical trials involve a lengthy and expensive process with an uncertain outcome. We may incur additional costs or experience delays in completing, orultimately be unable to complete, the development and commercialization of our product candidates. We recently completed Phase 2 clinical trials of INOpulse for PAH and INOpulse for PH-COPD and are currently conducting a clinical trial of BCM.The risk of failure of all of our product candidates is high. It is impossible to predict when or if any of our product candidates will prove effective or safe inhumans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we mustconduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to designand implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Theclinical development of our product candidates is susceptible to the risk of failure inherent at any stage of development, including failure to demonstrateefficacy in a clinical trial or across a broad population of patients, the occurrence of severe or medically or commercially unacceptable adverse events, failureto comply with protocols or applicable regulatory requirements and determination by the FDA or any comparable non-U.S. regulatory authority that a drugproduct is not approvable. For example, although we believe our recently completed Phase 2 clinical trials of INOpulse for PAH and INOpulse for PH-COPDsupport advancement into a Phase 3 and a Phase 2b clinical trial, respectively, the primary endpoints for both INOpulse for PAH and INOpulse for PH-COPDwere not statistically significant for any of the doses tested. It is possible that even if one or more of our product candidates has a beneficial effect, that effect will not be detected during clinical evaluation as aresult of one or more of a variety of factors, including the size, duration, design, measurements, conduct or analysis of our clinical trials. Conversely, as aresult of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, ifany. Similarly, in our clinical trials we may fail to detect toxicity of or intolerability caused by our product candidates, or mistakenly believe that our productcandidates are toxic or not well tolerated when that is not in fact the case. Also, the exclusion criteria we define may not sufficiently rule out patients who areat a higher risk of being harmed by the treatment. For example, our exclusion criteria for pre-existing left heart dysfunction in our recently completed Phase 2INOpulse clinical trials may not rule out patients who may experience an adverse event related to left ventricular function due to exposure to nitric oxide. Inaddition, patients who are not excluded for reactive pulmonary vasculature when exposed to nitric oxide may still experience pulmonary hypertension. The outcome of pre-clinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of aclinical trial do not necessarily predict final results, particularly when earlier trials are small, open-label or non-placebo-controlled trials and in trials thathave different endpoints than earlier trials. For example, we are relying on the results from a 32-patient Phase 2 PH-COPD trial, conducted in Austria, as partof our clinical development program of INOpulse for PH-COPD, and we may not be able to replicate the results of this trial in a larger trial or in a trial thatuses a clinical endpoint rather than the anatomical endpoints used in the 32-patient trial. Similarly, for BCM, we are using the results of the 27-patient pilottrial conducted by BioLineRx Ltd. that used anatomical changes to measure efficacy and did not have a control group as support for our larger ongoingclinical trial, which may not achieve the same results as the BioLineRx Ltd. trial. Many companies in the biotechnology, pharmaceutical and medical deviceindustries have suffered significant setbacks in late-stage clinical trials after achieving positive results in earlier development, and we cannot be certain thatwe will not face such setbacks. The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may notbecome apparent until the clinical trial is well advanced or completed. We have limited experience in designing clinical trials and may be unable to designand execute a clinical trial to support marketing approval. In addition, pre-clinical and clinical data are often susceptible to varying interpretations andanalyses. Many companies that believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials have nonetheless failed toobtain marketing approval for the product candidates. Even if we believe that the results of clinical trials for our product candidates warrant 62Table of Contents marketing approval, the FDA or comparable non-U.S. regulatory authorities may disagree and may not grant marketing approval of our product candidates. In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate dueto numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in andadherence to the clinical trial protocols and the rate of dropout among clinical trial participants. Any Phase 3 or other clinical trials that we may conduct maynot demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidates. INOpulse is a sophisticated electro-mechanical device comprised of components that may fail or deteriorate over time or with improper use. If weexperience problems with, failure of, or delays in obtaining any INOpulse components, our business could be materially adversely harmed. Because INOpulse is a sophisticated electro-mechanical device, the parts which comprise the device are subject to sudden failure or to wear and tear,which may result in decreased function or failure of those parts over time. Although we perform scheduled, preventive maintenance on our drug deliverysystem to limit device failures, and additional maintenance as needed whenever a user reports a device malfunction, components of our devices may fail. Inaddition, although we have designed INOpulse to be simple and easy to use and will provide user manuals and other training materials, users of INOpulsemay use the devices improperly, which could cause the devices to fail or otherwise not work properly. There are several components in INOpulse that are custom designed or assembled for us. We are dependent on a single company to supply us withsome of these components. While we believe there are alternative suppliers from which we could purchase most of these components, there is a risk that asingle-source supplier could fail to deliver adequate supply, or could suffer a business interruption that could affect our supply of these components. We obtain some of the components for INOpulse through individual purchase orders executed on an as needed basis rather than pursuant to long-term supply agreements. Our business, financial condition or results of operations could be adversely affected if any of our principal third-party suppliers ormanufacturers experience production problems, lack of capacity or transportation disruptions or otherwise cease producing such components. We are transitioning our INOpulse delivery system to a next generation device that was not utilized in our recently completed INOpulse Phase 2 clinicaltrials. Failure by the FDA or other regulatory authority to support the transition and bridging strategy for our transition to the new device could increaseour development costs and/or delay commencement of our future clinical trials of INOpulse. Our recently completed INOpulse Phase 2 clinical trials utilized the first generation INOpulse DS device. We are near completion of a secondgeneration INOpulse device, the Mark2, and we plan to transition our INOpulse delivery system from INOpulse DS to the Mark2 for any future INOpulseclinical trials. To facilitate the transition from our existing INOpulse DS device to the Mark2 in our clinical program, we plan to conduct comparabilitytesting of nitric oxide dosing with the Mark2 as compared to the INOpulse DS device. This testing will include a comparison of critical parameters, includingpulse width and nitric oxide output. We will also assess whether the Mark2 will meet the performance specifications of the INOpulse DS device in addition toMark2-specific requirements. In addition, we are developing a bridging test report that we expect to include in the regulatory package that we anticipatesubmitting to the FDA during the first half of 2015 to gain approval for the device transition. We discussed our strategy with the FDA during a meeting inMay 2013, and we believe that, assuming the Mark2 meets the specified comparability parameters, this testing will be sufficient to gain FDA approval to usethe Mark2 in future clinical trials, as planned. The FDA may not agree that our data support transition to this new device, in which case we may be required toprovide additional data, perform a revised bridging assessment or repeat the Phase 2 clinical trial, any of which could increase our development 63Table of Contents costs and/or delay or prevent commencement of these future clinical trials. In addition, even if the FDA accepts our transition plan, use of the Mark2 in futureclinical trials could produce results that are different than those we would expect based on the results from the Phase 2 clinical trial using the INOpulse DSdevice. We intend to conduct, and may in the future conduct, clinical trials for certain of our product candidates at sites outside the United States, and the FDAmay not accept data from trials conducted in such locations. We have conducted, and may in the future choose to conduct, one or more of our clinical trials outside the United States. For example, our Phase 2clinical trial of INOpulse for PAH included sites in Canada and our clinical trial of BCM includes sites in Europe, Canada, Australia and Israel. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditionsimposed by the FDA. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with GCPin the case of drug trials, or the Declaration of Helsinki or the laws and regulations of the country in which the research is conducted, whichever affordsgreater protection to the human subjects, in the case of device trials. The trial population must also adequately represent the U.S. population, and the datamust be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. Generally, the patient population forany clinical trials conducted outside of the United States must be representative of the population for whom we intend to seek approval in the United States.In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will be dependent upon its determination that thetrials also complied with all applicable U.S. laws and regulations. There can be no assurance that the FDA will accept data from trials conducted outside ofthe United States. If the FDA does not accept the data from our Phase 2 clinical trial of INOpulse for PAH in Canada or our clinical trial of BCM in Europe,Canada, Australia or Israel, or any future trial that we conduct outside the United States, it would likely result in the need for additional trials, which would becostly and time-consuming and delay or permanently halt our development of INOpulse for PAH and BCM or any future product candidates. In addition, the conduct of clinical trials outside the United States could have a significant impact on us. Risks inherent in conducting internationalclinical trials include: · foreign regulatory requirements that could restrict or limit our ability to conduct our clinical trials; · administrative burdens of conducting clinical trials under multiple foreign regulatory schema; · foreign exchange fluctuations; and · diminished protection of intellectual property in some countries. If clinical trials of our product candidates fail to demonstrate safety and efficacy of our product candidates to the satisfaction of the FDA and comparablenon-U.S. regulators, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development andcommercialization of these product candidates. We are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approvalfrom the FDA. Comparable non-U.S. regulatory authorities, such as the EMA, impose similar restrictions. We may never receive such approvals. We mustcomplete extensive pre-clinical studies and clinical trials to demonstrate the safety and efficacy of our product candidates in humans before we will be able toobtain these approvals. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. We havenot previously submitted an NDA to the FDA or similar drug approval filings to comparable non-U.S. regulatory authorities for any of our product candidates. 64Table of Contents Any inability to successfully complete pre-clinical and clinical development could result in additional costs to us and impair our ability to generaterevenues from product sales. In addition, if (1) we are required to conduct additional clinical trials or other testing of our product candidates beyond the trialsand testing that we contemplate, (2) we are unable to successfully complete clinical trials of our product candidates or other testing, (3) the results of thesetrials or tests are unfavorable, uncertain or are only modestly favorable, such as in our Phase 2 clinical trials of INOpulse for PAH and INOpulse for PH-COPD,or (4) there are unacceptable safety concerns associated with our product candidates, we, in addition to incurring additional costs, 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 we intended or desired; · obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxed warnings; · be subject to additional post-marketing testing or other requirements; or · be required to remove the product from the market after obtaining marketing approval. For example, the FDA has granted us an IDE for our ongoing clinical trial of BCM, which we refer to as our PRESERVATION I trial, which currentlylimits at 60 the number of patients we can enroll in the United States. This limitation is due to the novelty of BCM and the lack of prior data onadministration to human patients of four milliliters of BCM that we are using in the trial because we did not conduct a pilot study of BCM with the fourmilliliter volume. Due to the lack of a pilot study or other data supporting the safety or efficacy of four milliliters of BCM in human patients, the FDA mayrequire that, prior to approval, we conduct additional trials of BCM or that we provide additional data to support the safety and/or efficacy of four millilitersof BCM in human patients. In addition, the FDA has asked us to conduct a study to test the environmental impact of using INOpulse at home. When inhaled nitric oxide isadministered through INOpulse, a small portion of the nitric oxide will be exhaled or otherwise emitted and could react with oxygen in room air to formnitrogen dioxide, which is an environmental pollutant. The study will measure the nitrogen dioxide in the room air with use of INOpulse under actual orsimulated patient use conditions. If the FDA or other regulatory authority requires us to conduct additional testing or determines that an unacceptableamount of nitrogen dioxide is formed through the use of INOpulse, we may be required to alter the design of INOpulse, which may not be possible, and theclinical development timeline for INOpulse may be delayed or prove to be more costly than we currently anticipate. If we experience any of a number of possible unforeseen events in connection with clinical trials of our product candidates, potential marketing approvalor commercialization of our product candidates could be delayed or prevented. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent marketing approval of ourproduct candidates, including: · clinical trials of our product candidates may produce unfavorable or inconclusive results; · we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; 65Table of Contents · the number of patients required for clinical trials of our product candidates may be larger than we anticipate, patient enrollment in these clinicaltrials 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, including those manufacturing our product candidates or components or ingredients thereof or conducting clinicaltrials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all; · regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at aprospective trial site; · we may experience delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospectivetrial sites; · patients who enroll in a clinical trial may misrepresent their eligibility to do so or may otherwise not comply with the clinical trial protocol,resulting in the need to withdraw such patients from the clinical trial, increase the needed enrollment size for the clinical trial or extend theclinical trial’s duration; · we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants arebeing exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of a product candidate; · 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 their respective standards of conduct, a finding that the participants are beingexposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate or findings ofundesirable effects caused by a chemically or mechanistically similar drug or drug candidate; · the FDA or comparable non-U.S. regulatory authorities may disagree with our clinical trial design or our interpretation of data from pre-clinicalstudies and clinical trials; · the FDA or comparable non-U.S. regulatory authorities may find regulatory non-compliance with the manufacturing processes or facilities ofthird-party manufacturers with which we enter into agreements for clinical and commercial supplies; · the supply or quality of raw materials or manufactured product candidates or other materials necessary to conduct clinical trials of our productcandidates may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; and · the approval policies or regulations of the FDA or comparable non-U.S. regulatory authorities may significantly change in a manner renderingour clinical data insufficient to obtain marketing approval. Product development costs for us will increase if we experience delays in testing or pursuing marketing approvals and we may be required to obtainadditional funds to complete clinical trials and prepare for possible commercialization of our product candidates. We do not know whether any pre-clinicalstudies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. For example, although we recentlycompleted a Phase 2 clinical trial for INOpulse for PH-COPD, we are currently evaluating our options for further Phase 2 development in this indication.Significant pre-clinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize ourproduct candidates or allow our competitors to bring products to market before we do and impair our ability to 66Table of Contents successfully commercialize our product candidates and may harm our business and results of operations. In addition, many of the factors that cause, or leadto, clinical trial delays may ultimately lead to the denial of marketing approval of any of our product candidates. If we experience delays or difficulties in the enrollment of patients in clinical trials, we may not achieve our clinical development on our anticipatedtimeline, or at all, and our receipt of necessary regulatory approvals could be delayed or prevented. We may not be able to initiate or continue clinical trials for our INOpulse or BCM product candidates if we are unable to locate and enroll asufficient number of eligible patients to participate in clinical trials. Patient enrollment is a significant factor in the timing of clinical trials, and is affected bymany factors, including: · the size and nature of the patient population; · the severity of the disease under investigation; · the proximity of patients to clinical sites; · the eligibility criteria for the trial; · the design of the clinical trial; · limitations placed on enrollment by regulatory authorities; · efforts to facilitate timely enrollment; · competing clinical trials; and · clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to otheravailable therapies, including any new product candidates that may be approved for the indications we are investigating. For example, we may experience difficulty enrolling our clinical trials, including, but not limited to, any future clinical trials of INOpulse for PAH,which is an orphan disease due to the small number of patients who suffer from PAH, or any future clinical trials of INOpulse for PH-COPD because such trialsmay require that patients meet the restrictive enrollment criteria, such as having been diagnosed with both COPD and pulmonary hypertension, beundergoing treatment with LTOT and not having significant left ventricular dysfunction. In addition, with respect to our PRESERVATION I trial, the FDA has limited us to enrolling a maximum of 60 patients in the United States. Thislimitation is due to the novelty of BCM and the lack of prior data on the administration to human patients of four milliliters of BCM that we are using in thetrial because we did not conduct a pilot study of BCM with this dose. We will need to obtain the FDA’s approval of any expansion of this U.S. enrollmentcap, and such approval would likely be based on our submission of data to the FDA supporting the safety of four milliliters of BCM in human patients, if any.The Israeli Ministry of Health is also requiring that we submit to it additional safety data once 70 patients are enrolled in Israel. Our inability to enroll a sufficient number of patients for our clinical trials could result in significant delays or may require us to abandon one ormore clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, delay or halt thedevelopment of and approval processes for our product candidates and jeopardize our ability to achieve our clinical development timeline and goals,including the dates by which we will commence, complete and receive results from clinical trials. Enrollment delays may also delay or jeopardize our abilityto commence sales and generate revenues from our product candidates. Any of the foregoing could cause the value of our company to decline and limit ourability to obtain additional financing, if needed. 67Table of Contents We may not obtain orphan drug exclusivity, or we may not receive the full benefit of orphan drug exclusivity even if we obtain such exclusivity. Regulatory authorities in some jurisdictions, including the United States and European Union, may designate drugs and biologics for relativelysmall patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic intendedto treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States who have beendiagnosed as having the disease or condition at the time of the submission of the request for orphan drug designation. The FDA has granted orphan drugdesignation to our nitric oxide program for the treatment of PAH. Accordingly, the first company to receive FDA approval for nitric oxide for the treatment ofPAH will obtain seven years of marketing exclusivity, during which time the FDA may not approve another product containing nitric oxide as its activeingredient for the treatment of PAH, unless such product is shown to be clinically superior. Even though we have obtained orphan drug designation for our nitric oxide program to treat PAH, and even if we obtain orphan drug designation forour product candidates in other indications or for our future product candidates, due to the uncertainties associated with developing pharmaceutical products,we may not be the first to obtain marketing approval for any particular orphan indication, or we may not obtain approval for an indication for which we haveobtained orphan drug designation. Further, even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not protect the producteffectively from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA cansubsequently approve the same drug for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution topatient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in theregulatory review or approval process. Orphan drug exclusivity may be lost if the FDA determines that the request for designation was materially defective orif the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition. Serious adverse events or undesirable side effects or other unexpected properties of our product candidates may be identified during development thatcould delay or prevent the product candidate’s marketing approval. Serious adverse events or undesirable side effects caused by, or other unexpected properties of, our product candidates could cause us, aninstitutional review board or regulatory authorities to interrupt, delay or halt clinical trials of one or more of our product candidates and could result in amore restrictive label or the delay or denial of marketing approval by the FDA or comparable non-U.S. regulatory authorities. If any of our product candidatesis associated with serious adverse events or undesirable side effects or has properties that are unexpected, we may need to abandon development or limitdevelopment of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, lesssevere or more acceptable from a risk-benefit perspective. Many drugs or devices that initially showed promise in clinical or earlier stage testing have laterbeen found to cause undesirable or unexpected side effects that prevented further development of the drug or device. For example, in our recently completed Phase 2 clinical trial for INOpulse for PAH, serious adverse events were reported for four patients in the25 mcg/kg ideal body weight/hour, or mcg, low-dose active treatment arm, including bacteremia, myelodysplastic syndrome, increased shortness of breathand dyspnea, one of which was assessed as possibly related to trial therapy. In the 75 mcg high-dose active treatment arm, nine patients had serious adverseevents. The most common serious adverse events reported were syncope and bronchitis/tracheobronchitis, one of which was assessed as possibly related totrial therapy. Discontinuation of trial therapy due to adverse events occurred for two patients in the 75 mcg arm and one subject in the 25 mcg arm.Additional or more serious adverse events, undesirable side effects or other unexpected properties of INOpulse for PAH or our other product candidates couldarise or become known either during further clinical development. If such an event occurs during development, clinical trials for our product candidatescould be 68Table of Contents suspended or terminated and the FDA or comparable foreign regulatory authorities could order us or our collaborators to cease further development, requireus to conduct additional clinical trials or other tests or studies or deny approval of the applicable product candidate. Further, pending discussions withregulatory authorities, we may be required to conduct a drug-drug interaction study of INOpulse for PH-COPD. We expect the FDA to require us primarily tostudy interactions with long-acting beta agonists, which is the only class of COPD drug that has been identified as having potential adverse cardiac sideeffects, to confirm that pulsed inhaled nitric oxide does not increase systemic bio-availability of inhaled beta agonists. If the results of such a study indicateincreased bioavailability that we are not able to address to the satisfaction of the FDA, marketing approval of INOpulse for PH-COPD, if any, may be limitedto patients who do not use long-acting beta agonists. Additionally, INOpulse is an extension of the technology that is used in hospitals to deliver inhaled nitric oxide to neonates with a form ofpulmonary hypertension called persistent pulmonary hypertension of the newborn. Persistent pulmonary hypertension is an FDA-approved use of inhalednitric oxide, which is currently marketed by Ikaria as INOmax. Because INOpulse draws on the established efficacy and safety of INOmax, if any seriousadverse events or undesirable side effects or other unexpected properties of INOmax or other inhaled nitric oxide delivery systems developed by Ikaria areidentified, INOpulse may be adversely affected and we may be required to interrupt, delay or halt our INOpulse clinical trials. We may not be successful in our efforts to identify or discover additional potential product candidates. A significant portion of the research that we are conducting involves the development of innovative approaches to the pulsed delivery of nitricoxide. Our drug-device discovery efforts may not be successful in creating drugs or devices that have commercial value or therapeutic utility. Our researchprograms may initially show promise in creating potential product candidates, yet fail to yield viable product candidates for clinical development for anumber of reasons, including that potential product candidates may, on further study, be shown to have harmful side effects or other characteristics thatindicate that they are unlikely to be product candidates that will receive marketing approval and achieve market acceptance. Currently, we are dependent onIkaria for our business development functions pursuant to the TSA and lack the capability to bring such functions in-house. Accordingly, if Ikaria does notperform such business development functions effectively, our business and prospects may be materially and adversely affected. Our research programs to identify new product candidates will require substantial technical, financial and human resources. We may be unsuccessfulin our efforts to identify new potential product candidates. In addition, we may focus our efforts and resources on one or more potential product candidatesthat ultimately prove to be unsuccessful. Pursuant to the terms of our license agreement with Ikaria, we only have the right to develop and commercialize pulsed nitric oxide in PAH, PH-COPD and PH-IPF; Ikaria retains the right to develop and commercialize inhaled nitric oxide products, including pulsed products, in all other indications.Additionally, we are limited in the scope of potential product candidates that we can identify or discover due to non-competition agreements that we enteredinto with Ikaria. Pursuant to these agreements, we and each of our subsidiaries agreed not to engage, anywhere in the world, in any manner, directly orindirectly, until the earlier of five years after the effective date of such non-competition agreement or the date on which Ikaria and all of its subsidiaries are nolonger engaged in such business, in: · the development, manufacture, commercialization, promotion, sale, import, export, servicing, repair, training, storage, distribution,transportation, licensing, or other handling or disposition of any product or service (including, without limitation, any product or service thatutilizes, contains or includes nitric oxide for inhalation, a device intended to deliver nitric oxide or a service that delivers or supports thedelivery of nitric oxide), bundled or unbundled, for or used in connection with (a) the diagnosis, prevention or treatment, in both adult and/orpediatric populations, and whether in- or out-patient, of: (i) hypoxic respiratory failure associated with pulmonary hypertension, 69Table of Contents (ii) pulmonary hypertensive episodes and right heart failure associated with cardiovascular surgery, (iii) bronchopulmonary dysplasia, (iv) themanagement of ventilation-perfusion mismatch in acute lung injury, (v) the management of ventilation-perfusion mismatch in acute respiratorydistress syndrome, (vi) the management of pulmonary hypertension episodes and right heart failure in congestive heart failure, (vii) pulmonaryedema from high altitude sickness, (viii) the management of pulmonary hypertension episodes and right heart failure in pulmonary or cardiacsurgery, (ix) the management of pulmonary hypertension episodes and right heart failure in organ transplant, (x) sickle cell vaso-occlusivecrisis, (xi) hypoxia associated with pneumonia or (xii) ischemia-reperfusion injury or (b) the use of nitric oxide to treat or prevent conditionsthat are primarily managed in the hospital; or · any and all development, manufacture, commercialization, promotion, sale, import, export, storage, distribution, transportation, licensing, orother handling or disposition of any terlipressin or any other product within the pressin family, (a) intended to treat (i) hepatorenal syndrome inany form, (ii) bleeding esophageal varices or (iii) septic shock or (b) for or in connection with the management of low blood pressure. In the event that we or one of our subsidiaries materially breach the provisions of the non-competition agreements and do not cure such breachwithin 30 days after receiving written notice thereof from Ikaria, Ikaria will have the right to terminate the license agreement. If we are unable to identify suitable additional compounds for pre-clinical and clinical development, or at all, our ability to develop productcandidates and obtain product revenues in future periods could be compromised, which could result in significant harm to our financial position andadversely impact our stock price. If any of our product candidates receives marketing approval and we, or others, later discover that the product is less effective than previously believed orcauses undesirable side effects that were not previously identified, our ability to market the product could be compromised. Clinical trials of our product candidates are conducted in carefully defined subsets of patients who have agreed to enter into clinical trials.Consequently, it is possible that our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positiveeffect, if any, or alternatively fail to identify undesirable side effects. If, following approval of a product candidate, we, or others, discover that the drug is lesseffective than previously believed or causes undesirable side effects that were not previously identified, any of the following undesirable events could occur: · regulatory authorities may withdraw their approval of the product or seize the product; · we may be required to recall the product or change the way the product is administered; · additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular product; · we may be subject to fines, injunctions or the imposition of civil or criminal penalties; · regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication; · we may be required to create a handout, sometimes referred to as a Medication Guide, outlining the risks of the previously unidentified sideeffects for distribution to patients; · we could be sued and held liable for harm caused to patients; 70Table of Contents · the product may become less competitive; and · our reputation may suffer. Any of these events could have a material and adverse effect on our operations and business and could adversely impact our stock price. Even if one of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, and the market opportunity for the product candidate may be smallerthan we estimate. We have never commercialized a product. Even if one of our product candidates is approved by the appropriate regulatory authorities for marketingand sale, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. Forexample, physicians are often reluctant to switch their patients from existing therapies even when new and potentially more effective or convenienttreatments enter the market. Further, patients often acclimate to the therapy that they are currently taking and do not want to switch unless their physiciansrecommend switching products or they are required to switch therapies due to lack of reimbursement for existing therapies. Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources andmay not be successful. If any of our product candidates is approved but does not achieve an adequate level of market acceptance, we may not generatesignificant revenues and we may not become profitable. The degree of market acceptance of, and potential market opportunity for, our product candidates, ifapproved for commercial sale, will depend on a number of factors, including: · the efficacy and safety of the product; · the potential advantages of the product compared to alternative treatments; · the prevalence and severity of any side effects; · the clinical indications for which the product is approved; · whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy; · limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling; · our ability to offer the product for sale at competitive prices; · our ability to establish and maintain pricing sufficient to realize a meaningful return on our investment; · our ability to prevent use of our INOpulse for PH-COPD device by PAH patients due to expected pricing differences; · the product’s convenience and ease of administration compared to alternative treatments; · the willingness of the target patient population to try, and of physicians to prescribe, the product; · the strength of sales, marketing and distribution support; 71Table of Contents · the approval of other new products for the same indications; · changes in the standard of care for the targeted indications for the product; · the timing of market introduction of our approved products as well as competitive products and other therapies; · availability and amount of reimbursement from government payors, managed care plans and other third-party payors; · adverse publicity about the product or favorable publicity about competitive products; and · potential product liability claims. The potential market opportunities for our product candidates are difficult to estimate precisely. Our estimates of the potential market opportunities,including our estimates with respect to pricing and reimbursement, are predicated on many assumptions, including industry knowledge and publications,third-party research reports and other surveys. While we believe that our internal assumptions are reasonable, these assumptions involve the exercise ofsignificant judgment on the part of our management, are inherently uncertain and the reasonableness of these assumptions has not been assessed by anindependent source. If any of the assumptions proves to be inaccurate, the actual markets for our product candidates could be smaller than our estimates ofthe potential market opportunities. If we are unable to establish sales, marketing and distribution capabilities or enter into acceptable sales, marketing and distribution arrangements withthird parties, we may not be successful in commercializing any product candidates that we develop, if and when those product candidates are approved. We do not have a sales, marketing or distribution infrastructure and have limited experience in the sale, marketing and distribution ofpharmaceutical products. To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsourcethese functions to third parties. We expect to build a commercial infrastructure to allow us to market and sell certain of our product candidates whenapproved, if any, using a specialty sales force in the United States, and we may choose to establish commercialization capabilities in select countries outsidethe United States. The development of sales, marketing and distribution capabilities will require substantial resources, will be time-consuming and coulddelay any product launch. We expect that we will commence the development of these capabilities prior to receiving approval of any of our productcandidates. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing and distribution capabilities is delayedor does not occur for any reason, we could have prematurely or unnecessarily incurred these commercialization costs. Such a delay may be costly, and ourinvestment could be lost if we cannot retain or reposition our sales and marketing personnel. In addition, we may not be able to hire or retain a sales force inthe United States that is sufficient in size or has adequate expertise in the medical markets that we plan to target. If we are unable to establish or retain a salesforce and marketing and distribution capabilities, our operating results may be adversely affected. If a potential partner has development orcommercialization expertise that we believe is particularly relevant to one of our product candidates, then we may seek to collaborate with that potentialpartner even if we believe we could otherwise develop and commercialize the product independently. We may partner with third parties to commercialize our product candidates in certain countries outside the United States. As a result of entering intoarrangements with third parties to perform sales, marketing and distribution services, our product revenues or the profitability of these product revenues maybe lower, perhaps substantially lower, than if we were to directly market and sell products in those markets. Furthermore, we may be unsuccessful in enteringinto the necessary arrangements with third parties or may be unable to do so on terms that are favorable to us. In addition, we may have little or no controlover such third parties, and any of 72Table of Contents them may fail to devote the necessary resources and attention to sell and market our product candidates effectively. If we do not establish sales and marketing capabilities, either on our own or in collaboration with third parties, we will not be successful incommercializing any of our product candidates that receive marketing approval. Even if we are able to commercialize any product candidate that we develop, the product may become subject to unfavorable pricing regulations, third-party payor reimbursement practices or healthcare reform initiatives that could harm our business. The commercial success of our product candidates will depend substantially, both in the United States and abroad, on the extent to which the costsof our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, orreimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not available,or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approvedreimbursement amount may not be high enough to allow us to establish and maintain pricing sufficient to realize a meaningful return on our investment. There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs and devices. Marketing approvals,pricing and reimbursement for new drug and device products vary widely from country to country. Some countries require approval of the sale price of a drugor device before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In somenon-U.S. markets, pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketingapproval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy timeperiods, which may negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations mayhinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval. 73Table of Contents Our ability to commercialize our product candidates will depend in part on the extent to which coverage and reimbursement for these products andrelated treatments will be available from government health administration authorities, private health insurers and other organizations. Governmentauthorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will cover andestablish reimbursement levels. The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. Governmentauthorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, whichcould affect our ability to sell our product candidates profitably. These payors may not view our products, if any, as cost-effective, and coverage andreimbursement may not be available to our customers, or may not be sufficient to allow our products, if any, to be marketed on a competitive basis. Cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues. If theprices for our products, if any, decrease or if governmental and other third-party payors do not provide adequate coverage or reimbursement, our prospects forrevenue and profitability will suffer. Approval of a product does not guarantee sufficient reimbursement to commercialize. For example, assuming positiveresults, approval of CE marking for BCM in the European Union may be achieved with our ongoing clinical trial but, based on current reimbursementpractices in the European Union, this data may not be sufficient to gain sufficient reimbursement for us to invest in commercialization activities. There may also be delays in obtaining coverage and reimbursement for newly approved products, and coverage may be more limited than theindications for which the product is approved by the FDA or comparable non-U.S. regulatory authorities. Moreover, eligibility for reimbursement does notimply that any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.Reimbursement rates may vary, by way of example, according to the use of the product and the clinical setting in which it is used. Reimbursement rates mayalso be based on reimbursement levels already set for lower cost products or may be incorporated into existing payments for other services. In addition, increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new technologies andare challenging the prices charged. We cannot be sure that coverage will be available for any product candidate that we commercialize and, if available, thatthe reimbursement rates will be adequate. Further, the net reimbursement for drug products may be subject to additional reductions if there are changes tolaws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. An inability to promptly obtaincoverage and adequate payment rates from both government-funded and private payors for any our product candidates for which we obtain marketingapproval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financialcondition. We anticipate that reimbursement of BCM will be based on the patient’s diagnosis related group, or DRG, for patients who are covered by Medicareor Medicaid, or through similar reimbursement programs for patients to who are covered by private third-party payors. Within the DRG system, patients areclassified by similar diagnoses, which are mapped from the International Statistical Classification of Diseases and Related Health Problems, or ICD, a medicalclassification list provided by the World Health Organization. The version of ICD that is currently in use with respect to DRG classifications is ICD-9. However, an updated version, ICD-10, has been adopted. We expect that DRG classifications will be required to be mapped against ICD-10 by October 2015and, as a result, we believe that the DRG classifications will be mapped from ICD-10 rather than ICD-9 at the time we commercialize BCM, if ever, whichwould result in favorable reimbursement. However, if ICD-9 continues to be used for DRG classification mapping by hospitals or Medicare or Medicaid orother payors, or our expectations with respect to the applicable DRG classification prove incorrect, reimbursement for BCM may prove less favorable orinadequate. In addition, even if ICD-10 is adopted for reimbursement assessments, the mapping to the DRGs, or the amount reimbursed for the DRGs, maychange, all of which could adversely affect the ability of our customers to gain sufficient reimbursement, and therefore, the adoption of, or price we couldcharge for, BCM. 74Table of Contents If the FDA or comparable non-U.S. regulatory authorities approve generic versions of any of our products that receive marketing approval, or suchauthorities do not grant our products appropriate periods of data exclusivity before approving generic versions of our products, the sales of our productscould be adversely affected. Once an NDA is approved, the product covered thereby becomes a “reference listed drug” in the FDA’s publication, “Approved Drug Products withTherapeutic Equivalence Evaluations.” Manufacturers may seek approval of generic versions of reference listed drugs through submission of ANDAs in theUnited States, or through a similar process in foreign jurisdictions. In support of an ANDA, a generic manufacturer need not conduct clinical studies. Rather,the applicant generally must show that its product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use orlabeling as the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning it is absorbed in the body at the samerate and to the same extent. Generic products may be significantly less costly to bring to market than the reference listed drug and companies that producegeneric products are generally able to offer them at lower prices. Thus, following the introduction of a generic drug, a significant percentage of the sales ofany branded product or reference listed drug may be typically lost to the generic product. The FDA may not approve an ANDA for a generic product until any applicable period of non-patent exclusivity for the reference listed drug hasexpired. Manufacturers may seek to launch these generic products following the expiration of the applicable marketing exclusivity period, even if we stillhave patent protection for our product. Competition that our products may face from generic versions of our products could materially and adversely impact our future revenue,profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in those product candidates. Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization of any products thatwe may develop. We face an inherent risk of product liability claims as a result of the clinical testing of our product candidates despite obtaining appropriateinformed consents from our clinical trial participants. We will face an even greater risk if we commercially sell any product that we may develop. Forexample, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing,marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangersinherent in the product, negligence, strict liability or a breach of warranties. For example: · improper use or failure of INOpulse may result in rebound pulmonary hypertension, which can be fatal in some patients; · rebound pulmonary hypertension may also occur if both the primary and back-up devices fail before we can replace them, if the built-in back-up with a device does not work properly or if the patient does not carry or have access to his or her back-up device; and · rebound pulmonary hypertension can also occur in patients who were not previously considered at risk for this reaction and who may not havebeen provided an adequate back-up device. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, wemay incur substantial liabilities or be required to limit commercialization of our product candidates. Regardless of the merits or eventual outcome, liabilityclaims may result in: · decreased demand for products that we may develop; 75Table of Contents · injury to our reputation and significant negative media attention; · withdrawal of clinical trial participants; · significant costs to defend resulting litigation; · substantial monetary awards to trial participants or patients; · loss of revenue; · reduced resources of our management to pursue our business strategy; and · the inability to commercialize any products that we may develop. Although we maintain general liability insurance of $1.0 million in the aggregate, umbrella insurance in the amount of $10.0 million in theaggregate and clinical trial liability insurance of $20.0 million in the aggregate, this insurance may not fully cover potential liabilities that we may incur.The cost of any product liability litigation or other proceeding, even if resolved in our favor, could be substantial. We will need to increase our insurancecoverage if and when we begin the commercial sale of any product candidate that receives marketing approval. In addition, insurance coverage is becomingincreasingly expensive. If we are unable to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potentialproduct liability claims, it could prevent or inhibit the development and commercial production and sale of our product candidates, which could adverselyaffect our business, financial condition, results of operations and prospects. Our INOpulse devices use lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame, and these events may raise concernsabout the batteries we use. The battery pack used in our INOpulse devices makes use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energythey contain by venting smoke and flames in a manner that can ignite nearby materials. Highly publicized incidents of laptop computers and cell phonesbursting into flames have focused consumer attention on the safety of these cells. There can be no assurance that the battery packs we use would not fail,which could lead to property damage, personal injury or death, and may subject us to lawsuits. We may also have to recall our products, if any, which wouldbe time consuming and expensive. Also, negative perceptions in the healthcare and patient communities regarding the suitability of lithium-ion cells formedical applications or any future incident involving lithium-ion cells could seriously harm our business, even in the absence of an incident involving us. Risks Related to Our Dependence on Third Parties The intellectual property underlying INOpulse is exclusively licensed from Ikaria. If Ikaria terminates the license agreement, or fails to prosecute,maintain or enforce the underlying patents, our business will be materially harmed. We have licensed the intellectual property underlying INOpulse from Ikaria. Despite our best efforts, Ikaria may conclude that we have breached amaterial term of the license agreement and, as a result, seek to terminate the agreement. In the event the license agreement is terminated, we will lose ourability to market INOpulse, and, upon Ikaria’s written request, we will be required to transfer any regulatory approvals that we have obtained for INOpulse toIkaria. The license agreement prohibits us from sublicensing to any competitor of Ikaria any intellectual property licensed to us by Ikaria. In addition, weare required to ensure that all of our products, if any, are used solely for the chronic treatment of PAH, PH-COPD and PH-IPF and to enter into writtenagreements with any 76Table of Contents customers that contain restrictions on the use of our products and termination rights in the event such restrictions are violated. Ikaria has the initial right, but not the obligation, to prosecute and maintain all patents that are licensed to us pursuant to the license agreement.While we have certain step-in rights to assume control if Ikaria declines to file, prosecute or maintain certain licensed patents that are core to our business, inthe event Ikaria reasonably determines that our actions could materially impair its business operations or intellectual property rights, Ikaria may prohibit usfrom taking such actions. In addition, Ikaria has the initial right, but not the obligation, to initiate a legal action against a third party with respect to anyactual or suspected infringement of patent rights licensed to us pursuant to the license agreement. We have the right to initiate legal action against a third-party infringer of licensed patents that are core to our business in the event Ikaria declines to take action with respect to such infringement, however, if Ikariadetermines that our pursuit of any such action could materially impair its business operations or intellectual property rights, Ikaria may prohibit us fromtaking any such action. The license agreement terminates, on an INOpulse product-by-INOpulse product basis, at such time as we are no longer actively and continuouslyengaged in the development or commercialization of such product. In addition, Ikaria may terminate the license agreement if, among other things, (1) webreach or fail to comply with any material term or condition required to be performed or complied with by us and do not cure such breach or failure within30 days after receiving written notice of such breach from Ikaria, (2) we or any of our affiliates breaches any of our agreements not to compete with Ikaria,(3) we or any of our affiliates challenges the validity or enforceability of the licensed patents or (4) we or any person that is a successor to our license rightsmarkets a generic nitric oxide product that is competitive with Ikaria’s INOmax product. Upon termination of the license agreement with respect to anyINOpulse product candidate, we will lose our ability to market such INOpulse product candidate, and upon, Ikaria’s written request, be required to transferany and all regulatory approvals relating to such INOpulse product candidate to Ikaria. On March 5, 2015, Mallinckrodt and Ikaria announced that the two companies had entered into a definitive agreement under which a subsidiary ofMallinckrodt will acquire Ikaria and that they expect the acquisition will be completed in the second calendar quarter of 2015. While the license agreementimposes binding obligations on Ikaria to perform in accordance with the license agreement’s terms, it is possible that following completion of the sale, as thenew owner’s influence on Ikaria’s operations increases, Ikaria may perform differently under the license agreement than it has to date. Moreover, to the extentthat we desire to expand the scope of the license agreement, it is possible that Ikaria will not be willing to do so on reasonable terms, or at all. In any of thesecircumstances, our business, product development and financial statements could be materially adversely affected. We rely, and expect to continue to rely, on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, includingfailing to meet deadlines for the completion of such trials. We currently rely on third-party clinical research organizations, or CROs, to conduct our clinical trials. We expect to continue to rely on thirdparties, such as CROs, clinical data management organizations, medical institutions and clinical investigators, to conduct our clinical trials. Our agreementswith these third parties generally allow the third party to terminate the agreement at any time. If we are required to enter into alternative arrangements becauseof any such termination, the introduction of our product candidates to market could be delayed. Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of ourresponsibilities. For example, we design our clinical trials and will remain responsible for ensuring that each of our clinical trials is conducted in accordancewith the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with GCPs for conducting, recording and reportingthe results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trialparticipants are protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. We 77Table of Contents also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov,within specified 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 notsuccessfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our statedprotocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may bedelayed in our efforts to, successfully commercialize our product candidates. We also expect to rely on other third parties to store and distribute drug and device supplies for our clinical trials. Any performance failure on thepart of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producingadditional losses and depriving us of potential product revenue. We rely on Ikaria for our supply of nitric oxide for the clinical trials of INOpulse. Ikaria is the sole supplier of nitric oxide. Ikaria’s inability to continuemanufacturing adequate supplies of nitric oxide, or its refusal to supply us with commercial quantities of nitric oxide on commercially reasonable terms,or at all, could result in a disruption in the supply of, or impair our ability to market, INOpulse. We have entered into a drug clinical supply agreement with Ikaria, pursuant to which Ikaria will manufacture and supply our requirements for nitricoxide for inhalation and corresponding placebo for use in clinical trials of INOpulse. Ikaria manufactures pharmaceutical-grade nitric oxide at its facility inPort Allen, Louisiana, which is the only FDA-inspected site for manufacturing pharmaceutical-grade nitric oxide in the world. Ikaria’s Port Allen facility issubject to the risks of a natural disaster or other business disruption. We maintain under controlled storage conditions a two- to three-month supply of clinicaltrial drug product, but there can be no assurance that we would be able to meet our requirements for INOpulse if there were a catastrophic event or failure ofIkaria’s manufacturing system. Because Ikaria’s Port Allen facility is the only FDA-inspected site that can manufacture INOpulse and because themanufacture of a pharmaceutical gas requires specialized equipment and expertise, there are few, if any, third-party manufacturers to which we could contractthis work in a short period of time. Therefore, any disruption in Ikaria’s Port Allen facility, or the failure by Ikaria for any other reason to provide us withnitric oxide, could materially and adversely affect supplies of INOpulse and our ongoing and planned clinical trials. In addition, we do not currently haveany arrangements with Ikaria to provide us with commercial quantities of nitric oxide. If we are unable to arrange for Ikaria to provide such quantities oncommercially reasonable terms, or at all, we may not be able to successfully produce and market INOpulse or may be delayed in doing so. On March 5, 2015, Mallinckrodt and Ikaria announced that the two companies had entered into a definitive agreement under which a subsidiary ofMallinckrodt will acquire Ikaria and that they expect the acquisition will be completed in the second calendar quarter of 2015. While the drug clinicalsupply agreement imposes binding obligations on Ikaria to perform in accordance with the agreement’s terms, it is possible that following completion of thesale, as the new owner’s influence on Ikaria’s operations increases, Ikaria may not continue to provide the same level of performance under the drug clinicalsupply agreement as Ikaria has provided to date. Moreover, to the extent that we desire to expand the scope of the drug clinical supply agreement (to covercommercial quantities of nitric oxide or otherwise), it is also possible that Ikaria will not be willing to do so on reasonable terms, or at all. In any of thesecircumstances, our business, product development and financial statements could be materially adversely affected. 78Table of Contents We rely on third-party suppliers and manufacturers to produce and deliver clinical devices and supplies as well as for the servicing of these devices for ourINOpulse product candidate, and may also do so for other product candidates. Any failure by a third-party supplier or manufacturer to produce or deliversupplies for us or to provide necessary servicing may delay or impair our ability to complete our clinical trials. We currently rely, and expect to continue to rely, on third parties for supply of the device, cannula and certain other supplies for our INOpulseproduct candidate. These suppliers are, and any future third-party suppliers with whom we enter into agreements may be, our sole suppliers of these devices orany of our other current or future devices used in the INOpulse program. These suppliers are commonly referred to as single-source suppliers. In addition, inFebruary 2015, we entered into an agreement with Flextronics to manufacture and service the Mark2 devices needed for our clinical trials planned in thesecond half of 2015. If our suppliers fail to deliver materials and provide services needed for the production of the INOpulse device and related supplies orfor our other product candidates in a timely and sufficient manner, if they fail to comply with applicable regulations, or if we do not qualify alternatesuppliers, clinical development or regulatory approval of our product candidates or commercialization of our products could be delayed, increasing our coststo complete clinical development and to obtain regulatory approval, which could deprive us of potential additional product revenue. We rely on third-party suppliers and manufacturers to produce and deliver clinical drug supplies for our BCM product candidate and may also do so forother product candidates. Any failure by a third-party supplier or manufacturer to produce or deliver supplies for us may delay or impair our ability tocomplete our clinical trials. We currently rely, and expect to continue to rely, on third parties for supply of the ingredients for our BCM product candidate. These suppliers are,and any future third-party suppliers with whom we enter into agreements may be, our sole suppliers of BCM or any of our other current or future productcandidates. These suppliers are commonly referred to as single-source suppliers. If our suppliers fail to deliver materials and provide services needed for theproduction of BCM or our other product candidates in a timely and sufficient manner, if they fail to comply with applicable regulations, or if we do notqualify alternate suppliers, clinical development or regulatory approval of our product candidates or commercialization of our products could be delayed,increasing our costs to complete clinical development and to obtain regulatory approval, which could deprive us of potential additional product revenue. In addition, we currently outsource the manufacture of BCM for use in clinical trials pursuant to the terms of a manufacturing and supply agreementwith a third-party which expires in April 2017. We plan to enter into a manufacturing and supply agreement for BCM with a new third-party manufacturerprior to April 2017. If we fail to enter into a new manufacturing and supply agreement for BCM with a third-party prior to the expiration of our existingmanufacturing and supply agreement or if such new agreement is on less favorable terms, our ability to complete our clinical trials for BCM may be impaired. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, includingreliance on the third party for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third partybecause of factors beyond our control (including a failure to synthesize and manufacture our product candidates in accordance with our productspecifications) and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that iscostly or damaging to us. In addition, the FDA and other regulatory authorities require that our product candidates be manufactured according to cGMP andsimilar foreign standards. Any failure by our third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including anyfailure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of ourproduct candidates. In addition, such failure could be the basis for action by the FDA or other regulatory authorities to withdraw approvals for productcandidates previously granted to us and for other regulatory action, including recall or seizure, fines, imposition of operating restrictions, total or partialsuspension of production or injunctions. 79Table of Contents We rely on our manufacturers to purchase the materials necessary to produce our product candidates for our clinical trials from third-party suppliers.There are a small number of suppliers for certain capital equipment and raw materials that are used to manufacture our product candidates. Such suppliers maynot sell these raw materials to our manufacturers at the times we need them or on commercially reasonable terms. We do not have any control over the processor timing of the acquisition of these raw materials by our manufacturers. Any significant delay in the supply of a product candidate or the raw materialcomponents thereof for an ongoing clinical trial due to the need to replace a third-party manufacturer could considerably delay completion or increase thecosts of our clinical trials, product testing and potential regulatory approval of our product candidates. If our manufacturers or we are unable to purchasethese raw materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would bedelayed or there would be a shortage in supply, which would impair our ability to generate revenues from the sale of our product candidates. We intend to rely on third parties to produce commercial supplies of any approved product candidates. Any failure by a third-party supplier ormanufacturer to produce or deliver supplies for us may delay or impair our ability to commercialize our product candidates. To date, our product candidates have been manufactured in small quantities for pre-clinical studies and clinical trials. If one or more of our productcandidates are approved by the FDA or comparable regulatory authorities in other countries for commercial sale, we will need to manufacture such productcandidate in larger quantities. We do not currently have any arrangements with Ikaria or another third-party manufacturer to provide commercial quantities ofour product candidates. If we are unable to arrange for such a third-party manufacturing source, or fail to do so on commercially reasonable terms, we may notbe able to successfully produce and market our product candidates or may be delayed in doing so. If we successfully commercialize any of our product candidates, we may be required to establish or access large-scale commercial manufacturingcapabilities. We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates, and wecurrently have no plans to build our own clinical or commercial scale manufacturing capabilities. Our BCM product candidate currently in development is exclusively licensed from BioLineRx Ltd., and we may enter into additional agreements to in-license technology from third parties. If BioLineRx Ltd. or other future licensors terminate the applicable license, or fail to maintain or enforce theunderlying patents, our competitive position and market share will be harmed. We have an exclusive worldwide license for our BCM product candidate, subject to certain retained rights of the licensor, from BioLine. Under theterms of the license agreement, we are obligated to use commercially reasonable efforts to develop and commercialize at least one product containing BCM.BioLine has the right to terminate its license agreement with us for an uncured material breach by us, upon which our exclusive license for BCM willterminate. We have also exclusively licensed INOpulse, for certain indications and settings, and subject to certain retained rights of the licensor, from Ikaria.See “Certain Relationships and Related Person Transactions—Relationship with Ikaria” for a summary of our exclusive cross-license, technology transfer andregulatory matters agreement with Ikaria. We may enter into additional license agreements as part of the development of our business in the future. Such licensors, if any, may be responsiblefor prosecution of certain patent applications and maintenance of certain patents. Such licensors may not successfully prosecute such patent applications ormaintain such patents, which we have licensed and on which our business depends. Our licensors may fail to pursue litigation against third-party infringers,may fail to prove infringement, or may fail to defend against counterclaims of patent invalidity or unenforceability. If these in-licenses are terminated, or ifthe underlying patents fail to provide the intended market exclusivity, competitors would have the freedom to seek regulatory approval of, 80Table of Contents and to market, products identical to ours. This could have a material adverse effect on our competitive business position and our business prospects. We may have received better terms from unaffiliated third parties than the terms we received in our agreements with Ikaria. The agreements related to the Spin-Out, including the separation and distribution agreement, TSA, license agreement, drug clinical supplyagreement, device clinical supply agreement, agreements not to compete and the other agreements, were negotiated in the context of our separation fromIkaria while we were still part of Ikaria and, accordingly, may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliatedthird parties. The terms of the agreements we negotiated in the context of our separation related to, among other things, allocation of assets, liabilities, rights,indemnifications and other obligations among Ikaria and us. We may have received better terms from third parties because third parties may have competedwith each other to win our business. Some of our board members are also members of the Ikaria board. See “Certain Relationships and Related PersonTransactions—Relationship with Ikaria.” Third parties may seek to hold us responsible for liabilities of Ikaria that we did not assume in our agreements. In connection with our separation from Ikaria, Ikaria has generally agreed to retain all liabilities that did not historically arise from our business.Third parties may seek to hold us responsible for Ikaria’s retained liabilities. Under our agreements with Ikaria, Ikaria has agreed to indemnify us for claimsand losses relating to these retained liabilities. However, if those liabilities are significant and we are ultimately liable for them, we cannot assure ourstockholders that we will be able to recover the full amount of our losses from Ikaria. Any disputes that arise between us and Ikaria with respect to our past and ongoing relationships could harm our business operations. Disputes may arise between Ikaria and us in a number of areas relating to our past and ongoing relationships, including: · intellectual property, technology and business matters, including failure to make required technology transfers and failure to comply with non-compete provisions applicable to Ikaria and us; · labor, tax, employee benefit, indemnification and other matters arising from our separation from Ikaria; · distribution and supply obligations; · employee retention and recruiting; · business combinations involving us; · the nature, quality and pricing of transitional services Ikaria has agreed to provide us; and · business opportunities that may be attractive to both Ikaria and us. We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with anunaffiliated party. 81Table of Contents We may seek to enter into collaborations with third parties for the development and commercialization of our product candidates. If we fail to enter intosuch collaborations, or such collaborations are not successful, we may not be able to capitalize on the market potential of our product candidates. We may seek third-party collaborators for development and commercialization of our product candidates. Our likely collaborators for anymarketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical and medical devicecompanies, regional and national biotechnology companies and pharmaceutical companies. We are not currently party to any such arrangement. However, ifwe do enter into any such arrangements with any third parties in the future, we will likely have limited control over the amount and timing of resources thatour collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements willdepend 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 developmentor commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or externalfactors 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 productcandidate, 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 orproduct candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercializedunder terms that are more economically attractive than ours; · collaborators with marketing and distribution rights to one or more of our products may not commit sufficient resources to the marketing anddistribution 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 toinvite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; · collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; · disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization ofour 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 orcommercialization of the applicable product candidates. Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If acollaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercializationprogram could be delayed, diminished or terminated. 82Table of Contents If we are not able to establish collaborations, we may have to alter our development and commercialization plans. Our drug and device development programs and the potential commercialization of our product candidates will require substantial additional cashto fund expenses. For some of our product candidates, we may decide to collaborate with biotechnology and pharmaceutical companies for the developmentand potential commercialization of those product candidates. 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 theproposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by theFDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities ofmanufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to ourownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and marketconditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available tocollaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of our current or futurelicense agreements may restrict our ability to enter into agreements on certain terms with future collaborators. For example, our license agreement with Ikariaprohibits us from granting a sublicense under any of the intellectual property licensed to us under such license agreement to any of our affiliates or any thirdparty, in each case, that directly or indirectly competes with the Ikaria nitric oxide business, and any future license agreements may contain similarrestrictions. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent businesscombinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail thedevelopment of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potentialcommercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercializationactivities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need toobtain 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 furtherdevelop our product candidates or bring them to market and generate product revenue. Risks Related to Our Intellectual Property If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is notsufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfullycommercialize our technology and products may be impaired. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to ourproprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to ournovel technologies and product candidates. The patents we have licensed from Ikaria relating to INOpulse’s feature of providing delivery of nitric oxide toensure a consistent dose over time expire as late as 2027 in the United States and as late as 2026 in certain other countries, as well as a patent with respect tothe triple-lumen cannula that allows for safer and more accurate dosing of pulsed inhaled nitric oxide, which expires in 2033. The patents we have licensedfrom BioLine relating to our BCM product candidate expire as late as 2029 in the United States, with a possible patent term extension to 2032 to 2034, and2024 in certain other countries. 83Table of Contents The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patentapplications 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 developmentoutput before it is too late to obtain patent protection. Moreover, pursuant to our license agreement with Ikaria, we do not have the right to control thepreparation, filing and prosecution of patent applications, or to maintain the patents, covering the INOpulse technology that we license from Ikaria, except inthe event that Ikaria declines to prosecute or maintain certain licensed patents that are core to our business, elects to allow any of such patents to lapse orelects to abandon any such patents, in which case we would have step-in rights to assume control of the prosecution and/or maintenance of such patents,subject to Ikaria’s right to prohibit us from taking such actions if it reasonably determines that such actions could materially impair its business, operations orintellectual property rights. Similarly, under the terms of any future agreements that we may enter into with other third parties, we may not have the right tocontrol the preparation, filing and prosecution of patent applications, or to maintain the patents, covering the technology that is licensed to us under suchagreements. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questionsand has in recent years been the subject of much litigation. In addition, the laws of non-U.S. countries may not protect our rights to the same extent as thelaws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does.Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and otherjurisdictions are typically not published until 18 months after filing, and in some cases not at all. Therefore, we cannot know with certainty whether we werethe 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 forpatent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.Our pending and future patent applications may not issue as patents that protect our technology or products, in whole or in part, or which effectively preventothers from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the UnitedStates and other countries may diminish the value of our patents or narrow the scope of our patent protection. Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and theenforcement or defense of our owned or licensed issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, wassigned into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. The Leahy-Smith Act includes provisions that affect theway patent applications are prosecuted and affect patent litigation. The USPTO recently developed new regulations and procedures to govern administrationof the Leahy-Smith Act. Many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions,became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business.However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our owned or licensed patentapplications and the enforcement or defense of our owned or licensed issued patents, all of which could have a material adverse effect on our business andfinancial condition. Moreover, we may be subject to third-party preissuance submissions of prior art to the USPTO, or become involved in opposition, derivation,reexamination, inter partes review, post-grant review or interference proceedings challenging our owned or licensed patent rights or the patent rights ofothers. For example, Notices of Opposition to two European patents covering BCM that we licensed from BioLine have been filed with the European PatentOffice. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow thirdparties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture orcommercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection 84Table of Contents provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercializecurrent or future product candidates. Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningfulprotection, prevent competitors from competing with us, or otherwise provide us with any competitive advantage. Our competitors may be able to circumventour owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner. We may not receive patent termextension under the Hatch-Waxman Act that we expect or our rights during the extension period may be more limited than the full scope of the patent,making it easier for our competitors to develop and market non-infringing technologies or products. 85Table of Contents The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may bechallenged in courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate, or in patentclaims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializingsimilar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time requiredfor the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after suchcandidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others fromcommercializing products similar or identical to ours. We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming andunsuccessful. Competitors may infringe our owned or licensed patents or other intellectual property. To counter infringement or unauthorized use, we may berequired to file or participate in infringement claims, which can be expensive and time consuming. Any claims we or our licensors assert against perceivedinfringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringementproceeding, a court may decide that a patent of ours or our licensor is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly orrefuse 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 inany litigation proceeding could put one or more of our owned or licensed patents at risk of being invalidated or interpreted narrowly. Under the terms of our license agreement with Ikaria, in the event a third party is suspected of infringing any patent rights licensed to us byIkaria, Ikaria has the initial right, but not the obligation, to initiate a legal action against such third party. In the event that Ikaria declines to take any actionwith respect to an alleged infringement of certain licensed patents that are core to our business, we have the right, in certain circumstances, to initiate a legalaction against such third party, provided that, if Ikaria reasonably determines that our pursuit of any action with respect to infringement of any of such corepatents could materially impair Ikaria’s business operations or intellectual property rights, Ikaria may require us to not undertake or to cease any such action.Our inability to initiate a legal action against a third party suspected of infringing intellectual property rights important to our business may have a materialadverse effect on our competitive business position and our business prospects. If we fail to comply with our obligations under license agreements, we could lose rights that are important to our business. We are party to a license agreement with BioLine relating to our BCM product candidate that imposes, and we may enter into additional licenseagreements that may impose, various diligence, milestone payment, royalty and other obligations on us. Under our existing license agreement with BioLine,we are obligated to pay royalties on the net sales of product candidates or related technologies to the extent they are covered by the agreement. We also havediligence and development obligations under this agreement. Moreover, under our license agreement with Ikaria, we have granted Ikaria a sole and exclusiveworldwide license to any intellectual property rights that we control for use in Ikaria’s nitric oxide business, are required to ensure that all of our products, ifany, are used solely for the chronic treatment of PAH, PH-COPD and PH-IPF and to enter into written agreements with any customers that contain restrictionson the use of our products and termination rights in the event such restrictions are violated, and have agreed to pay 100% of the reasonable and documentedcosts incurred by Ikaria for the prosecution and maintenance of certain licensed patents that are core to our business and 10% of such costs incurred by Ikariafor all other licensed patents. If we fail to comply with our obligations under current or future license agreements, our counterparties may have the right toterminate these agreements, in which event we might not be able to develop, manufacture or market any product that is covered by the agreement or faceother penalties under the agreement. Such an occurrence could materially adversely affect the value of the product candidate being developed under anysuch agreement. 86Table of Contents For example, BioLine recently indicated to us that it believed that we had breached our license agreement in several ways. We were able to reachagreement with BioLine and resolve the dispute through an amendment to the license agreement that includes a release of claims by BioLine. However, hadwe not been able to reach resolution and had BioLine brought and prevailed in a lawsuit against us, one of the potential remedies could have been thetermination of the license agreement and our consequent loss of rights to BCM. Termination of our license agreement with BioLine, or any future licenseagreements we may enter into, or reduction or elimination of our rights under such agreements may result in our having to negotiate new or reinstatedagreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property ortechnology. Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain andcould have a material adverse effect on the success of our business. Our commercial success depends upon our ability to develop, manufacture, market and sell our product candidates and use our proprietarytechnologies without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the pharmaceutical,biotechnology and medical device industries. We may become party to, or be threatened with, future adversarial proceedings or litigation regardingintellectual property rights with respect to our products and technology, including interference or derivation proceedings before the USPTO. Third partiesmay 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 continuedeveloping and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or atall. 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. Wecould be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetarydamages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us fromcommercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we havemisappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership ofwhat we regard as our own intellectual property. Many of our employees were previously employed at other pharmaceutical, biotechnology or medical device companies, including our competitorsor 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, wemay be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, ofany such employee’s former employer. Litigation may be necessary to defend against these claims. In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property toexecute agreements assigning such intellectual property to us, we may be unsuccessful in timely obtaining such an agreement with each party who in factdevelops intellectual property that we regard as our own. Even if timely obtained, such agreements may be breached, and we may be forced to bring claimsagainst third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. If we fail in prosecuting or defending any such claims, we may lose valuable intellectual property rights or personnel, in addition to payingmonetary damages. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distractionto management. 87Table of Contents 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 theresults of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it couldhave a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses andreduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial orother resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation orproceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patentlitigation or other proceedings could compromise 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 product candidates, we also rely on trade secrets, including unpatented know-how,technology and other proprietary information, to maintain our competitive position. 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, outside scientific collaborators, contractmanufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with ouremployees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including ourtrade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated atrade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. Even if we are successful in prosecuting such claims, any remedyawarded may be insufficient to fully compensate us for the improper disclosure or misappropriation. In addition, some courts inside and outside the UnitedStates are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by acompetitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. Ifany of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. Intellectual property rights do not necessarily address all potential threats to our competitive advantage. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and maynot adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative: · Others may be able to develop and commercialize treatments that are similar to our product candidates but that are not covered by the claims ofthe patents that we own or have exclusively licensed. · We or our licensors might not have been the first to make the inventions covered by the issued patent or pending patent application that weown or have exclusively licensed. · We or our licensors might not have been the first to file patent applications covering certain of our inventions. · Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectualproperty rights. 88Table of Contents · It is possible that our pending patent applications will not lead to issued patents. · Issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid orunenforceable, as a result of legal challenges by our competitors. · Our competitors might conduct research and development activities in countries where we do not have patent rights and then use theinformation learned from such activities to develop competitive products for sale in our major commercial markets. · We may not develop additional proprietary technologies that are patentable. · The patents of others may have an adverse effect on our business. · Another party may be granted orphan exclusivity for an indication that we are seeking before us or may be granted orphan exclusivity for one ofour products for another indication. Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters Even if we complete the necessary clinical trials, the marketing approval process is expensive, time consuming and uncertain and may prevent us fromobtaining approvals for the commercialization of some or all of our product candidates. 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 materiallyimpaired. Our product candidates 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 FDAand other regulatory agencies in the United States and by the EMA and similar regulatory authorities outside the United States. Failure to obtain marketingapproval for a product candidate will prevent us from commercializing the product candidate. Our product candidates are in the early stages of developmentand are subject to the risks of failure inherent in drug and device development. We have not received approval to market any of our product candidates fromregulatory authorities in any jurisdiction. We have only limited experience in conducting and managing the clinical trials, and in filing and supporting theapplications necessary to gain marketing approvals and expect to rely on third-party CROs to assist us in this process. Securing marketing approval requiresthe submission of extensive pre-clinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish theproduct candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing processto, and inspection of manufacturing facilities by, the regulatory authorities. Our product candidates may not be effective, may be only moderately effective ormay prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent orlimit commercial use. The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trialsare required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of theproduct candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes orregulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application.Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data areinsufficient for approval and require additional pre-clinical, clinical or other studies. In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may belimited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. If we experience delays 89Table of Contents 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 ourability to generate revenues will be materially impaired. Our failure to obtain marketing approval in foreign jurisdictions would prevent our product candidates from being marketed abroad, and any approval weare granted for our product candidates in the United States would not assure approval of product candidates in foreign jurisdictions. In order to market and sell our products in the European Union and many other jurisdictions, we must obtain separate marketing approvals andcomply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The timerequired to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United Statesgenerally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that theproduct be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory authoritiesoutside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries orjurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries orjurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products inany market. Even if we obtain marketing approval for our product candidates, the terms of approvals and ongoing regulation of our products may limit how wemanufacture and market our products and compliance with such requirements may involve substantial resources, which could materially impair ourability to generate revenue. Even if marketing approval of a product candidate is granted, an approved product and its manufacturer and marketer are subject to ongoing reviewand extensive regulation, including the requirement to implement a risk evaluation and mitigation strategy or to conduct costly post-marketing studies orclinical trials and surveillance to monitor the safety or efficacy of the product. We must also comply with requirements concerning advertising and promotionfor any of our product candidates for which we obtain marketing approval. Promotional communications with respect to prescription drugs are subject to avariety of legal and regulatory restrictions and must be consistent with the information in the product’s approved labeling. Thus, we will not be able topromote any products we develop for indications or uses for which they are not approved. In addition, manufacturers of approved products and thosemanufacturers’ facilities are required to ensure that quality control and manufacturing procedures conform to cGMP, which include requirements relating toquality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We and ourcontract manufacturers could be subject to periodic unannounced inspections by the FDA and other regulatory authorities to monitor and ensure compliancewith cGMP. Accordingly, assuming we receive marketing approval for one or more of our product candidates, we and our contract manufacturers will continue toexpend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and quality control. If we arenot able to comply with post-approval regulatory requirements, we could have the marketing approvals for our products withdrawn by regulatory authoritiesand our ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain profitability. Thus, the cost ofcompliance with post-approval regulations may have a negative effect on our operating results and financial condition. 90Table of Contents Any product candidate for which we obtain marketing approval will be subject to strict enforcement of post-marketing requirements and we could besubject to substantial penalties, including withdrawal of our product from the market, if we fail to comply with all regulatory requirements or if weexperience 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, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketinginformation and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance andcorresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and recordkeeping. The FDA and other federal and state agencies, including the Department of Justice, closely regulate compliance with all requirements governingprescription drug and device products, including requirements pertaining to marketing and promotion of drugs and devices in accordance with the provisionsof the approved labeling and manufacturing of products in accordance with cGMP requirements. Violations of such requirements may lead to investigationsalleging violations of the Food, Drug, and Cosmetic Act and other statutes, including the False Claims Act and other federal and state health care fraud andabuse laws as well as state consumer protection laws. Our failure to comply with all regulatory requirements, and later discovery of previously unknownadverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including: · litigation involving patients taking our products; · restrictions on such products, manufacturers or manufacturing processes; · restrictions on the labeling or marketing of a product; · restrictions on product distribution or use; · requirements to conduct post-marketing studies or clinical trials; · untitled or warning 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 revenues; · suspension or withdrawal of marketing approvals; · damage to relationships with any potential collaborators; · unfavorable press coverage and damage to our reputation; · refusal to permit the import or export of our products; · product seizure; or 91Table of Contents · injunctions or the imposition of civil or criminal penalties. Non-compliance by us or any future collaborator with regulatory requirements regarding safety monitoring or pharmacovigilance, and withrequirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to complywith regulatory requirements regarding the protection of personal information can also lead to significant penalties and sanctions. Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws andregulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and futureearnings. Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidatesfor which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuseand other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell anddistribute any products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations, include thefollowing: · the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving orproviding remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, orthe purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such asMedicare and Medicaid; · the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals orentities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federalgovernment program, or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing anobligation to pay money to the federal government; · the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology forEconomic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program andalso imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission ofindividually identifiable health information; · HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, alsoimposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individuallyidentifiable health information; · the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making anymaterially false statement in connection with the delivery of or payment for healthcare benefits, items or services; · the federal transparency requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act of 2010, or collectively the PPACA, requires applicable manufacturers of covered drugs, devices, biologics and medicalsupplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physiciansand teaching hospitals and physician ownership and investment interests; and 92Table of Contents · analogous state laws and regulations such as state anti-kickback and false claims laws and analogous non-U.S. fraud and abuse laws andregulations, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmentalthird-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceuticalindustry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition torequiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and therelevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related topayments and other transfers of value to physicians and other healthcare providers or marketing expenditures. State and non-U.S. laws alsogovern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and oftenare not preempted by HIPAA, thus complicating compliance efforts. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involvesubstantial 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 ofthese laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages,fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment orrestructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not incompliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcareprograms. Laws and regulations governing any international operations we may have in the future may preclude us from developing, manufacturing and sellingcertain product candidates and products outside of the United States and require us to develop and implement costly compliance programs. If we expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations ineach jurisdiction in which we plan to operate. The Foreign Corrupt Practices Act, or the FCPA, prohibits any U.S. individual or business from paying,offering, authorizing payment or offering anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose ofinfluencing any act or decision of such third party in order to assist the individual or business in obtaining or retaining business. The FCPA also obligatescompanies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books andrecords that accurately and fairly reflect all transactions of the company, including international subsidiaries, and to devise and maintain an adequate systemof internal accounting controls for international operations. Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPApresents particular challenges in the medical device industry, because, in many countries, hospitals are operated by the government, and doctors and otherhospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to beimproper payments to government officials and have led to FCPA enforcement actions. Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expandour presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us fromdeveloping, manufacturing or selling certain product candidates and products outside of the United States, which could limit our growth potential andincrease our development costs. 93Table of Contents The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension ordebarment from government contracting. The Securities and Exchange Commission, or the SEC, also may suspend or bar issuers from trading securities onU.S. exchanges for violations of the FCPA’s accounting provisions. 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 couldharm our business. Currently, we do not operate any research and development or production facilities, including laboratory, development or manufacturing facilities.However, if we decided to operate our own research and development and production facilities, we would be subject to numerous environmental, health andsafety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materialsand wastes. Such operations may involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations mayalso produce hazardous waste products. Even if we contract with third parties for the disposal of these materials and wastes, we would not be able to eliminatethe risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use or disposal of hazardous materials, wecould be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil orcriminal fines and penalties for failure to comply with such laws and regulations. Although we would increase our level of workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to ouremployees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not expect tomaintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our possible future storage or disposalof biological, hazardous or radioactive materials. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. Thesecurrent or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations alsomay result in substantial fines, penalties or other sanctions. 94Table of Contents Risks Related to Employee Matters and Managing Growth Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. We are dependent on the scientific, business development and clinical expertise of our management team, including Jonathan Peacock, our chiefexecutive officer, Manesh Naidu, our chief business officer, Reinilde Heyrman, our chief clinical development officer, and Martin Meglasson, our chiefscientific officer. We recently hired our chief executive officer. Leadership transitions can be inherently difficult to manage and may cause some disruptionsin our business. Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. Any ofour employees may terminate their employment with us at any time. The loss of the services of our executive officers or other key employees could impedethe achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our businessstrategy. We do not maintain “key person” insurance for any of our executives or other employees. Furthermore, replacing executive officers and keyemployees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skillsand experience required to successfully develop, gain regulatory approval of and commercialize products. Competition to hire from this limited pool isintense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerouspharmaceutical, biotechnology and medical device companies for similar personnel. We also experience competition for the hiring of scientific and clinicalpersonnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist usin formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us andmay have commitments under consulting or advisory contracts with other entities that may limit their availability to us. Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insidertrading. We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDAregulations, to provide accurate information to the FDA, to comply with federal and state healthcare fraud and abuse laws and regulations, to report financialinformation or data accurately, to disclose unauthorized activities to us or to comply with our code of business conduct and ethics. In particular, sales,marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, falseclaims, inappropriate promotion, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing,discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could alsoinvolve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to ourreputation. The precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or inprotecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If anysuch actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impacton our business, including the imposition of significant fines or other sanctions. In addition, during the course of our operations, our directors, executives and employees may have access to material, non-public informationregarding our business, our results of operations or potential transactions we are considering. We may not be able to prevent a director, executive or employeefrom violating our insider trading policies and trading in our common stock on the basis of, or while having access to, material, non-public information. If adirector, executive or employee was to be investigated, or an action was to be brought against a director, executive or employee for insider trading, it couldhave a negative impact on our 95Table of Contents reputation and our stock price. Such a claim, with or without merit, could also result in substantial expenditures of time and money, and divert attention ofour management team from other tasks important to the success of our business. We expect to expand our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as aresult, we may encounter difficulties in managing our growth, which could disrupt our operations. As of December 31, 2014, we had 48 full-time employees, of which 41 employees were engaged in research and development. We expect to experiencesignificant growth in the number of our employees and the scope of our operations, particularly in the areas of development, regulatory affairs and, if any ofour product candidates receives marketing approval, sales, marketing and distribution. To manage our anticipated future growth, we must continue toimplement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualifiedpersonnel. 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 expansion of our operationsmay lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay theexecution of our business plans or disrupt our operations. Risks Related to Ownership of Our Common Stock Our principal stockholders have substantial control over us, which could limit ability of our stockholders to influence the outcome of key transactions,including any change of control. Our executive officers, directors and stockholders who are known by us to beneficially own more than 5% of our common stock, in the aggregate,beneficially owned 77.4% our outstanding common stock as of March 16, 2015. As a result, if these stockholders were to choose to act together, they wouldbe able to exert a significant degree of influence over matters submitted to our stockholders for approval, as well as our management and affairs. For example,these persons, if they choose to act together, could delay, defer or prevent a change in control; entrench our management or board of directors; or impede amerger, consolidation, takeover or other business combination involving us that other stockholders may desire. In addition, as of March 16, 2015, our largest stockholder, investment funds affiliated with New Mountain Capital, or the New Mountain Entities,owned, in the aggregate, approximately 37.7% of our outstanding common stock. Pursuant to the terms of a stockholders agreement, the New MountainEntities is entitled to designate one director for nomination to our board of directors and to designate one director to the board of directors (or equivalentgoverning body) of each of our subsidiaries and to appoint the lead director of our board of directors, in each case, for so long as the New Mountain Entitiesor certain of their respective assignees beneficially own (i) 50% or more of the sum of (a) the aggregate number of shares of our common stock that theycollectively owned immediately prior to the closing of our initial public offering and (b) the number of shares of our common stock, if any, acquiredfollowing the closing of our initial public offering and (ii) 15% or more of our common stock outstanding (as set forth on the cover of our then most recentlyfiled annual report on Form 10-K or quarterly report on Form 10-Q). The New Mountain Entities also have certain other rights conferred by the stockholders agreement. The New Mountain Entities may exertsignificant influence over matters requiring board approval. In addition, their consent is required for certain matters requiring approval by our stockholders,including the compensation and hiring and firing of our chief executive officer, business combinations, issuance of shares of our capital stock and incurrenceof debt. These stockholder approval rights will terminate when the New Mountain Entities own either (i) less than 50% of the sum of (a) the number of sharesof our common stock that they collectively owned immediately prior to the closing of our initial public offering and (b) the number of shares of our commonstock, 96Table of Contents if any, acquired following the closing of our initial public offering or (ii) less than 15% of our common stock outstanding (as set forth on the cover of ourthen most recently filed annual report on Form 10-K or quarterly report on Form 10-Q). Our second largest stockholder, Linde North America, Inc., an indirect wholly-owned subsidiary of Linde AG, or Linde, owned approximately 12.6%of our outstanding common stock. Pursuant to the terms of a stockholders agreement, Linde is entitled to designate one director to our board of directors andto designate one director to the board of directors (or equivalent governing body) of each of our subsidiaries, in each case, for so long as Linde and/or certainof its assignees beneficially own (i) 50% or more of the sum of (a) the aggregate number of shares of our common stock that they collectively ownedimmediately prior to the closing of our initial public offering and (b) the number of shares of our common stock, if any, acquired following the closing of ourinitial public offering and (ii) 10% or more of our common stock outstanding (as set forth on the cover of our then most recently filed annual report onForm 10-K or quarterly report on Form 10-Q). The New Mountain Entities and Linde may have interests that differ from the interests of our other stockholders, and they may vote in ways withwhich our other stockholders disagree and that may be adverse to interests of our other stockholders. The concentration of ownership of our capital stock mayhave the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive apremium for their common stock as part of a sale of our company and may adversely affect the market price of our common stock. 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 couldcause the market price of our common stock to drop significantly, even if our business is performing well. Sales of a substantial number of shares of our common stock in the public market could occur at any time, subject to certain restrictions describedbelow. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our commonstock. As of March 16, 2015, we had outstanding 12,905,392 shares of common stock. This includes the 5,000,000 shares that we sold in our initial publicoffering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates. The remaining 7,905,392 sharescurrently are restricted as a result of securities laws or lock-up agreements entered into in connection with our initial public offering but will be able to besold into the public market in the near future. Moreover, as of March 16, 2015, holders of an aggregate of approximately 8,733,628 shares of our commonstock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registrationstatements that we may file for ourselves or other stockholders. In February 2015, we filed a registration statement registering all shares of common stock thatwe may issue under our equity compensation plans. As of March 16, 2015, we had outstanding options to purchase an aggregate of 1,333,047 shares of ourcommon stock, of which options to purchase approximately 689,906 were vested. These shares can be freely sold in the public market upon issuance, subjectto volume limitations applicable to affiliates and the lock-up agreements entered into in connection with our initial public offering. If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price or trading volumeof our stock could decline. The trading market for our common stock relies, in part, on the research and reports that industry or financial analysts publish about us or ourbusiness. If no, or few, analysts commence coverage of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if oneor more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more of these analystscease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price or trading volume to decline. 97Table of Contents The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our stockholders. Our stock price may be volatile. The stock market in general, and the market for pharmaceutical companies in particular, has experienced extremevolatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to selltheir shares of common stock at or above the price they paid for their shares. The market price for our common stock may be influenced by many factors,including: · actual or anticipated results from and any delays in our clinical trials, including our expected and ongoing clinical trials of our INOpulse andBCM product candidates, as well as results of regulatory input on our clinical trial programs and regulatory reviews relating to the approval ofour product candidates; · the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; · failure or discontinuation of any of our clinical development programs; · the level of expenses related to any of our product candidates or clinical development programs; · commencement or termination of any collaboration or licensing arrangement; · disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection forour technologies; · announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures and capital commitments; · additions or departures of key scientific or management personnel; · variations in our financial results or those of companies that are perceived to be similar to us; · new products, product candidates or new uses for existing products introduced or announced by our competitors, and the timing of theseintroductions or announcements; · results of clinical trials of product candidates of our competitors; · general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance ofour competitors, including changes in market valuations of similar companies; · regulatory or legal developments in the United States and other countries; · changes in the structure of healthcare payment systems; · conditions or trends in the pharmaceutical, biotechnology and medical device industries; · actual or anticipated changes in earnings estimates, development timelines or recommendations by securities analysts; · announcement or expectation of additional financing efforts; 98Table of Contents · sales of common stock by us or our stockholders in the future, as well as the overall trading volume of our common stock; and · the other factors described in this “Risk Factors” section. If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could declinesubstantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially. We believethat quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation often has been instituted againstthat company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention andresources, which could seriously harm our business, financial condition, results of operations and prospects. An active trading market for our common stock may not be sustained. Our shares of common stock began trading on the NASDAQ Global Market on February 13, 2015. Given the limited trading history of our commonstock, there is a risk that an active trading market for our shares may not continue to develop or be sustained. If an active market for our common stock doesnot continue to develop or is not sustained, it may be difficult for investors to sell shares without depressing the market price for the shares, or at all. We have broad discretion in the use of our cash and cash equivalents and may not use them effectively. Our management will have broad discretion in the application of our cash and cash equivalents and could spend these funds in ways that do notimprove our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could result infinancial 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 ourproduct candidates. Pending their use, we may invest our cash and cash equivalents in a manner that does not produce income or that loses value. We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stockless attractive to investors. We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerginggrowth company until the earlier of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) December 31,2020; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we aredeemed to be a large accelerated filer under the rules of the SEC, which means the first day of the year following the first year in which the market value ofour common stock that is held by non-affiliates exceeds $700 million as of June 30. For so long as we remain an emerging growth company, we are permittedand intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies.These exemptions include: · not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002; · not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regardingmandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financialstatements; · reduced disclosure obligations regarding executive compensation; and · exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any goldenparachute payments not previously approved. 99Table of Contents We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of reduced reporting burdens in thisAnnual Report on Form 10-K. In particular, we have not included all of the executive compensation information that would be required if we were not anemerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on certain or all of these exemptions. Ifsome investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may bemore volatile. In addition, the JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with newor revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards wouldotherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and,therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We are currently incurring and expect to continue to incur increased costs as a result of operating as a public company, and our management will berequired to devote substantial time to new compliance initiatives. As a newly public company, we are incurring and expect to continue to incur significant legal, accounting and other expenses that we did not incuras a private company. We expect that these expenses will further increase after we are no longer an “emerging growth company.” We expect that we will needto hire additional accounting, finance and other personnel to comply with the requirements of being a public company, and our management and otherpersonnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. In addition, the Sarbanes-Oxley Act of2002 and rules subsequently implemented by the SEC and NASDAQ have imposed various requirements on public companies, including establishment andmaintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote asubstantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs andwill make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and moreexpensive for us to obtain director and officer liability insurance. Overall, we estimate that our incremental costs resulting from operating as a publiccompany may be between $2.0 million and $4.0 million per year, which costs are in addition to our expected incremental costs resulting from operating as astand-alone company. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to furnish a report by our management on ourinternal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registeredpublic accounting firm. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal controlover financial reporting issued by our independent registered public accounting firm. We became a stand-alone company in February 2014 following theSpin-Out and, as such, have a very limited operating history. Accordingly, many of the internal controls over financial reporting have only recently beenimplemented and therefore have not been tested. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process todocument and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicateinternal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control overfinancial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented andimplement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we norour independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reportingis effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of ourfinancial statements. 100Table of Contents Our certificate of incorporation provides that the doctrine of “corporate opportunity” will not apply to any of our stockholders or directors, except inlimited circumstances, which may adversely affect our business or prospects. Our certificate of incorporation provides that the doctrine of “corporate opportunity” will not apply to any of our stockholders or directors, otherthan any stockholder or director that is an employee of ours. The doctrine of corporate opportunity generally provides that a corporate fiduciary may notdevelop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to thepresent or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented tothe corporation and the corporation chooses not to pursue that opportunity. The doctrine of corporate opportunity is intended to preclude officers or directorsfrom personally benefiting from opportunities that belong to the corporation. We have renounced any prospective corporate opportunity so that ourstockholders and directors (other than those that are employees of ours) and their respective representatives have no duty to communicate or presentcorporate opportunities to us, including any opportunity that becomes known to Ikaria and its directors, and have the right to either hold any corporateopportunity for its (and its representatives’) own account and benefit or to recommend, assign or otherwise transfer such corporate opportunity to personsother than us, including to Ikaria. As a result, our stockholders, directors and their respective affiliates will not be prohibited from investing in competingbusinesses or doing business with our customers. Therefore, we may be in competition with our stockholders, directors or their respective affiliates, and wemay not have knowledge of, or be able to pursue, a transaction that could potentially be beneficial to us. Accordingly, we may lose a corporate opportunityor suffer competitive harm, which could negatively impact our business or prospects. Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputesbetween us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors,officers or employees. Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action orproceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DelawareGeneral Corporation Law, our certificate of incorporation or our bylaws, or any action asserting a claim against us that is governed by the internal affairsdoctrine. This provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were tofind this provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated withresolving such action in other jurisdictions, which could adversely affect our business and financial condition. Provisions in our certificate of incorporation, our bylaws or Delaware law might discourage, delay or prevent a change in control of our company orchanges in our management and, therefore, depress the trading price of our common stock. Provisions of our certificate of incorporation, our bylaws or Delaware law may discourage, delay or prevent a merger, acquisition or other change incontrol that stockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. Theseprovisions may also prevent or frustrate attempts by our stockholders to change the composition of our board of directors or to replace or remove ourmanagement. These provisions include: · limitations on the removal of directors; · a classified board of directors so that not all members of our board are elected at one time; 101Table of Contents · advance notice requirements for stockholder proposals and nominations; · limitations on the ability of stockholders to call and bring business before special meetings and to take action by written consent in lieu of ameeting; · limitations on the liability of, and the provision of indemnification to, our director and officers; and · the ability of our board of directors to authorize the issuance of blank check preferred stock, which could be issued with voting, liquidation,dividend and other rights similar to our common stock. In addition, we are subject to Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation fromengaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three yearshas owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unlessthe business combination is approved in a prescribed manner. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future forshares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that investors could receive apremium for their shares of our common stock in an acquisition. Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be the sole sourceof gain for our stockholders. 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 thegrowth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capitalappreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future. Item 1B. Unresolved Staff Comments None. Item 2. Properties Our principal facilities consist of approximately 25,000 square feet of office space at Ikaria’s headquarters located in Hampton, New Jersey andapproximately 3,200 square feet of office space and research lab facilities at the Commercialization Center for Innovative Technologies located in NorthBrunswick, New Jersey. We have access to the office space at Ikaria’s headquarters until February 2016, pursuant to the TSA. We lease the space in NorthBrunswick, New Jersey under a lease that expires in March 2016. Item 3. Legal Proceedings We are not presently a party to any material litigation or regulatory proceeding, and we are not aware of any pending or threatened litigation orregulatory proceeding against us that could have a material adverse effect on our business, operating results, financial condition or cash flows. Item 4. Mine Safety Disclosures None. 102Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been publicly traded on the NASDAQ Global Market under the symbol “BLPH” since February 13, 2015. Prior to that time,there was no public market for our common stock. As a result, we have not set forth quarterly information with respect to the high and low sales prices for ourcommon stock for the two most recent fiscal years. The following table sets forth the high and low sales prices per share for our common stock on theNASDAQ Global Market from February 13, 2015, our first day of trading on NASDAQ, to March 25, 2015: 2015 High Low First Quarter (February 13, 2015 through March 25, 2015)$12.92$8.01 Holders As of March 25, 2015, there were approximately 258 holders of record of our common stock. This number does not include beneficial owners whoseshares are held by nominees in street name. Dividend Policy We have not declared or paid any cash dividends on our common stock since our inception. We intend to retain future earnings, if any, to financethe operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Information About Our Equity Compensation Plans Information regarding our equity compensation plans is incorporated by reference to Item 12, “Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters—Equity Compensation Plan Information” of Part III of this Annual Report on Form 10-K. Recent Sales of Unregistered Securities Set forth below is information regarding shares of common stock issued, and options and restricted stock units, or RSUs, granted, by us during 2014and prior to our initial public offering in February 2015 that were not registered under the Securities Act of 1933, as amended, or the Securities Act. Includedis the consideration, if any, we received for such shares, options and RSUs and information relating to the section of the Securities Act or rule of the SECunder which exemption from registration was claimed. On February 9, 2014, we, Ikaria and Ikaria Acquisition Inc. entered into a separation and distribution agreement which provided for and containedthe key terms of our separation from Ikaria, which we refer to as the Spin-Out. Prior to the Spin-Out, we issued to certain employees and directors of ours or ofour then parent company, Ikaria, and certain accredited investors, options to purchase an aggregate of 618,212 of our non-voting units, at a weighted averageexercise price of $7.24 per unit. Between February 10, 2014 and February 12, 2015, we issued to certain employees options to purchase an aggregate of514,266 of our non-voting units, at a weighted average exercise price of $13.28 per unit. Prior to the Spin-Out, in February 2014, we issued to certain employees and directors of ours or of Ikaria and certain accredited investors RSUs inrespect of an aggregate of 372,947 of our non-voting units, 103Table of Contents which we refer to as the Bellerophon RSUs. We subsequently settled such Bellerophon RSUs by issuing and delivering an aggregate of 372,947 non-votingunits to the holders of Bellerophon RSUs. In February 2015, prior to our initial public offering, we issued and sold 67 non-voting units to Mr. Peacock, our president and chief executiveofficer, at a price per unit of $15.03 for an aggregate purchase price of $1,007. Prior to our initial public offering, we converted from a Delaware limited liability company into a Delaware corporation. In connection with theconversion, all of our outstanding voting units and non-voting units converted into shares of voting common stock and non-voting common stock,respectively, and options to purchase our non-voting units became options to purchase non-voting shares of our common stock. Pursuant to their terms, uponthe consummation of our initial public offering, the non-voting common stock converted into voting common stock and options to purchase non-votingcommon stock became options to purchase voting common stock. Each of the foregoing issuances was made by us in a transaction not involving a public offering pursuant to an exemption from the registrationrequirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Rule 701 promulgated under Section 3(b) of the Securities Act. Wedid not pay or give, directly or indirectly, any commission or other remuneration, including underwriting discounts or commissions, in connection with anyof the issuances of securities listed above, and no underwriters were involved in the foregoing issuances of securities. All recipients either received adequateinformation about the registrant or had access, through employment or other relationships, to such information. Use of Proceeds We effected the initial public offering of our common stock through a Registration Statement on Form S-1 (File No. 333-201474) that was declaredeffective by the SEC on February 13, 2015. On February 19, 2015, we completed the sale of 5,000,000 shares of common stock in our initial public offeringat a price to the public of $12.00 per share, resulting in net proceeds to us of $52.6 million, after deducting underwriting discounts and commissions of $4.2million and offering costs of $3.2 million. In addition, we granted the underwriters a 30-day option to purchase up to 750,000 additional shares of commonstock at the initial public offering price to cover over allotments, if any. The offering commenced on February 13, 2015 and terminated before the sale of allof the securities registered in the offering. None of the underwriting discounts and commissions or other offering expenses were paid to directors or officers ofours or their associates or to persons owning 10% or more of our common stock or to any affiliates of ours. Leerink Partners LLC and Cowen and Company,LLC acted as joint book-running managers of the offering and as representatives of the underwriters. SunTrust Robinson Humphrey, Inc. and FBR CapitalMarkets & Co. acted as co-managers for the offering. There were no selling stockholders in the offering. None of the net proceeds were paid directly or indirectly to directors or officers of ours or their associates or to persons owning 10% or more of ourcommon stock or to any affiliates of ours, other than payments in the ordinary course of business to officers for salaries and to non-employee directors ascompensation for board or board committee service. We have invested the net proceeds from the offering in a variety of capital preservation investments,including short-term, interest bearing, investment grade securities. There has been no material change in our planned use of the balance of the net proceedsfrom the offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act. Item 6. Selected Financial Data The following selected financial data should be read together with our financial statements and the related notes appearing elsewhere in thisAnnual Report on Form 10-K and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this AnnualReport on Form 10-K. We have derived the statements of operations and comprehensive loss data for the years ended December 31, 2014, 2013 and 2012and the balance sheet data as of December 31, 2014 and 2013 from our audited financial statements included elsewhere in this Annual Report on Form 10-K, which have been audited by KPMG LLP, an independent registered public accounting firm. The balance sheet data as of December 31, 2012 are from ouraudited financial statements that are not included in this Annual Report on Form 10-K. Our historical results for any prior period are not necessarilyindicative of results to be 104Table of Contents expected in any future period. Year Ended December 31,(in thousands, except per unit data)20142013 2012 Statement of Operations and Comprehensive Loss InformationOperating expenses:Research and development$45,978$52,985$38,727General and administrative13,7759,0137,185Other operating expense——315Total operating expenses59,75361,99846,227Other expense (income)(79)——Net loss and comprehensive loss$(59,674)$(61,998)$(46,227)Net loss per unit:Basic and diluted (1)$(7.56) As of December 31,(in thousands)2014 2013 2012 Balance Sheet Information Cash and cash equivalents$16,815$—$—Restricted cash, current9,264——Restricted cash, non-current1,548——Working capital (deficit)17,227(12,440)(10,892)Total assets33,3913,6363,349Allocated portion of Ikaria special dividend bonus payable, non-current—4,2732,865Other non-current liabilities—1,108389Total long term liabilities—5,3813,254Investment by Ikaria, Inc.—160,778103,401Members’ capital77,156——Accumulated deficit(54,219)(176,515)(114,517)Members’ equity / invested (deficit)$22,937$(15,737)$(11,116) (1) The weighted average units outstanding for basic and diluted net loss per unit for the year ended December 31, 2014 is 7,898,289. No net loss per unitinformation is presented for periods prior to the Spin-Out. 105Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with our financialstatements and related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis orset forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and relatedfinancing, includes forward-looking statements that involve risks and uncertainties and should be read together with the “Risk Factors” section of thisAnnual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in orimplied by the forward-looking statements contained in the following discussion and analysis. Overview Business We are a clinical-stage therapeutics company focused on developing innovative products at the intersection of drugs and devices that addresssignificant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases. We have two programs in advanced clinical development. Thefirst program, INOpulse, is based on our proprietary pulsatile nitric oxide delivery device. We are currently developing two product candidates under ourINOpulse program: one for the treatment of pulmonary arterial hypertension, or PAH, for which we intend to commence Phase 3 clinical trials in the secondhalf of 2015, and the other for the treatment of pulmonary hypertension associated with chronic obstructive pulmonary disease, or PH-COPD, which is inPhase 2 development. Our second program is bioabsorbable cardiac matrix, or BCM, which is currently in a placebo-controlled clinical trial designed tosupport CE mark registration in the European Union. We completed enrollment of this trial in December 2014, with 303 patients having completed thetreatment procedure, and we expect to report top line results in mid-2015. Assuming positive results from this trial, we intend to conduct a pivotal pre-marketapproval trial of BCM beginning in the first half of 2016, which will be designed to support registration in the United States. We are developing BCM for theprevention of cardiac remodeling, which often leads to congestive heart failure following an ST-segment elevated myocardial infarction, or STEMI. We have devoted substantially all of our resources to our drug discovery and development efforts, including conducting clinical trials for ourproduct candidates, protecting our intellectual property and the general and administrative support of these operations. We have devoted significant time andresources to developing and optimizing our drug delivery system, INOpulse, which operates through the administration of nitric oxide as brief, controlledpulses that are timed to occur at the beginning of a breath. In addition, we have incurred significant costs to scale up manufacturing for BCM from pre-clinical studies to clinical trials. To date, we have generated no revenue from product sales. We expect that it will be several years before we commercialize a product candidate, ifever. Separation and Spin-Out from Ikaria Prior to February 2014, we were a wholly-owned subsidiary of Ikaria. As part of an internal reorganization of Ikaria in October 2013, Ikariatransferred to us exclusive worldwide rights, with no royalty obligations, to develop and commercialize pulsed nitric oxide in PAH, PH-COPD and pulmonaryhypertension associated with idiopathic pulmonary fibrosis, or PH-IPF. Following the internal reorganization, in February 106Table of Contents 2014, Ikaria distributed all of our then outstanding units to its stockholders through the payment of a special dividend on a pro rata basis based on eachstockholder’s ownership of Ikaria capital stock, which we refer to as the Spin-Out, and as a result we became a stand-alone company. Our inception date is August 26, 2009, which is the date that BCM was licensed to us by BioLine. Our operations since that date have includedorganization and staffing, business planning, in-licensing technology, developing product candidates in clinical programs, evaluating potential futureproduct candidates, as well as undertaking pre-clinical studies and clinical trials of our product candidates. We are in the process of developing and implementing plans to replace services currently provided to us by Ikaria under the TSA and the 2015Services Agreement. These services include, among others, accounting and financial management support, human resources support, drug and device safetyservices, biometrics support, information technology services and manufacturing and device servicing support. We expect the costs related to replacing theservices currently provided by Ikaria under the TSA will be approximately the same as the $772,000 per month that we are currently paying under the TSA,and we expect the costs related to replacing the services currently provided by Ikaria under the 2015 Services Agreement will be approximately the same asthe amounts we are paying under the 2015 Services Agreement. However, although we believe our estimates are reasonable based on the information we haveto date, certain significant components of our estimates are preliminary and subject to change. Accounting for the Separation and Spin-Out Our historical financial statements for periods prior to February 12, 2014, the date of the Spin-Out, included in this Annual Report on Form 10-K anddiscussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations were derived from the audited historical financialstatements and accounting records of Ikaria and include allocations for direct costs and indirect costs attributable to the research and development segment ofIkaria. In particular, for periods prior to February 12, 2014, our financial statements include expense allocations for (1) certain corporate functions historicallyprovided by Ikaria, including finance, audit, legal, information technology and human resources services, (2) research and development expenses and(3) stock-based compensation. These allocations are based on either specific identification or allocation methods such as time and wage studies, headcount orother measures determined by us. Management believes that the statements of operations for periods prior to the Spin-Out include a reasonable allocation ofcosts and expenses incurred by Ikaria from which we benefited. See Notes 1 and 2 to our consolidated financial statements appearing elsewhere in thisAnnual Report on Form 10-K. Our balance sheet as of December 31, 2013 includes assets and liabilities of Ikaria that were identified as specifically attributable to our INOpulseand BCM product candidates and those that were allocated from Ikaria to us based on an estimate of the benefit derived by us from the underlying asset orliability. Ikaria historically used a centralized approach to cash management and financing of its operations. Cash transfers to us have been accounted for as acapital contribution from Ikaria. Due to this presentation, the financial information included in this Annual Report on Form 10-K does not reflect what our financial position, resultsof operations and cash flows will be in the future or what our financial position, results of operations and cash flows would have been in the past had we beena public, stand-alone company during the periods presented. Financial Position and Outlook Since inception, we have never been profitable and have incurred significant operating losses. Our net losses were $59.7 million, $62.0 million and$46.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, our sole source of funding was investments inus by our former parent company, Ikaria. 107Table of Contents On February 19, 2015, we completed the sale of 5,000,000 shares of common stock at a price to the public of $12.00 per share, resulting in netproceeds to us of $52.6 million after deducting underwriting discounts and commissions of $4.2 million and offering costs of $3.2 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we continue the development and clinicaltrials of, and seek regulatory approval for, our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incursignificant commercialization expenses. We do not currently have the infrastructure for the sale, marketing, manufacture and distribution of any products. Todevelop a commercial infrastructure, we will have to invest financial and management resources, some of which would have to be deployed prior to havingany certainty of marketing approval. We have entered into license agreements with Ikaria and BioLine pursuant to which we obtained rights to our product candidates. In the future, wemay enter into additional licensing agreements for new product candidates or strategic or co-promotion agreements with partners for the development and/orcommercialization of product candidates in the United States or other countries. We are currently incurring and expect to continue to incur additional costs associated with operating as a public company. Unless and until wegenerate sufficient revenue to be profitable, we will seek to fund our operations primarily through public or private equity or debt financings or other means,which may include strategic partnerships with third parties in the United States or other countries with respect to certain or all of our programs. Otheradditional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed could have a material adverseeffect on our business, results of operations, financial condition, cash flows and future prospects. Financial Operations Overview Revenue To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the next severalyears, if ever. In the future, we may generate revenue from a combination of product sales, license fees and milestone payments in connection with strategicpartnerships, and royalties from the sale of products developed under licenses of our intellectual property. Our ability to generate revenue and becomeprofitable depends primarily on our ability to successfully develop and commercialize or partner our INOpulse and/or BCM product candidates, each ofwhich is currently in clinical development, as well as any product candidates we may advance in the future. We expect that any revenue we may generate willfluctuate from quarter to quarter as a result of the timing and amount of any payments we may receive under future partnerships, if any, and from sales of anyproducts we successfully develop and commercialize. If we fail to complete the development of any of our product candidates currently in clinicaldevelopment or any future product candidates in a timely manner, or to obtain regulatory approval for such product candidates, our ability to generate futurerevenue, and our business, results of operations, financial condition and cash flows and future prospects would be materially adversely affected. Research and Development Expenses Research and development expenses consist of costs incurred in connection with the discovery and development of our product candidates,including upfront and development milestone payments, related to in-licensed product candidates and technologies. In order to fairly present our historical information for periods prior to the Spin-Out, certain departmental expenses from Ikaria have been allocatedto us. The allocations were applied to us for the purpose of presenting our company as a stand-alone entity. Direct and indirect costs for periods prior to theSpin-Out related to the INOpulse and BCM clinical programs have been allocated to us. All allocations were based on actual costs 108Table of Contents incurred. For purposes of allocating non-project specific expenses, each Ikaria department head provided information as to the percentage of employee timeincurred on our behalf. Research and development expenses primarily consist of: · employee-related expenses, including salary, benefits and stock-based compensation expense; · expenses incurred under agreements with contract research organizations, investigative sites that conduct our clinical trials and consultants thatconduct a portion of our pre-clinical studies; · expenses relating to vendors in connection with research and development activities; · the cost of acquiring and manufacturing clinical trial materials; · facilities, depreciation of fixed assets and allocated expenses; · lab supplies, reagents, active pharmaceutical ingredients and other direct and indirect costs in support of our pre-clinical and clinical activities; · device development and drug manufacturing engineering; · license fees related to in-licensed products and technology; and · costs associated with non-clinical activities and regulatory approvals. We expense research and development costs as incurred. Conducting a significant amount of research and development is central to our business model. Product candidates in late stages of clinicaldevelopment generally have higher development costs than those in earlier stages of clinical development primarily due to the increased size and duration oflate-stage clinical trials. We plan to increase our research and development expenses for the foreseeable future as we seek to continue multiple clinical trialsfor our INOpulse and BCM programs, including to potentially advance INOpulse for PH-IPF, and seek to identify additional early-stage product candidates. We track external research and development expenses and personnel expenses on a program-by-program basis. We use our employee andinfrastructure resources, including regulatory affairs, quality, biometrics support and program management, across our two clinical development programsand have included these expenses in research and development infrastructure. Research and development laboratory and depreciation expenses are also notallocated to a specific program and are included in research and development infrastructure. Engineering activities related to INOpulse and the manufactureof cylinders related to INOpulse are included in INOpulse engineering. INOpulse for PAH We completed a randomized, placebo-controlled, double-blind Phase 2 clinical trial of INOpulse for PAH in October 2014. The goal of the trial is todetermine the safety, tolerability and efficacy of two different doses of INOpulse for PAH. We believe the results of this trial provide sufficient indication ofclinical benefit and safety to continue development of INOpulse for PAH in pivotal Phase 3 clinical trials. We had an End of Phase 2 meeting with the FDAon January 8, 2015. Based on feedback from the FDA at this meeting, we are moving forward with Phase 3 development and plan to conduct two adequateand well-controlled confirmatory Phase 3 clinical trials, either sequentially or in parallel. In March 2015, we requested feedback on the proposed trial designfrom the Scientific Advice Working Party of the EMA. We intend to finalize the clinical trial design following additional discussions with the FDA as well aswith other regulatory authorities, including with the EMA. 109Table of Contents INOpulse for PH-COPD We completed a randomized, placebo-controlled, double-blind, dose-confirmation Phase 2 clinical trial of INOpulse for PH-COPD in July 2014. Wehave received results from this trial, and we are currently evaluating our trial design for a Phase 2b clinical trial and plan to finalize our protocol followingdiscussions with regulatory authorities in the United States and the European Union. BCM We initiated a clinical trial of BCM, which we refer to as our PRESERVATION I trial, in December 2011 and enrolled the first patient in April 2012.This trial is a CE mark registration trial in the European Union and, if the results are positive, we intend to conduct a pivotal trial designed to supportregistration in the United States. We completed enrollment of this trial in December 2014, with 303 patients having completed the treatment procedure atalmost 90 clinical sites in Europe, Australia, North America and Israel. We expect to report top line results in mid-2015. Research and Development Infrastructure We invest in regulatory, quality, pharmacovigilance and program management activities, which are expensed as incurred. These activities primarilysupport our INOpulse and BCM clinical development programs. INOpulse Engineering We have invested a significant amount of funds in INOpulse, which is configured to be highly portable and compatible with available modes oflong-term oxygen therapy via nasal cannula delivery. Our Phase 2 clinical trials of INOpulse for PAH and INOpulse for PH-COPD utilized the first generationINOpulse DS device. We are near completion of a second generation INOpulse Mark2 device, which we refer to as the Mark2, as well as a custom triple-lumencannula, each of which we believe will significantly improve several characteristics of our INOpulse delivery system but will require prototypemanufacturing and bench top testing, as well as verification and validation. We have also invested in design and engineering technology, through Ikaria, forthe manufacture of our drug cartridges. We currently rely on Ikaria for manufacturing of our INOpulse drug cartridges. In addition, Ikaria is conductingsubstantial engineering and stability testing work with respect to the INOpulse devices on our behalf pursuant to the TSA. In February 2015, we entered intoan agreement with Flextronics to manufacture and service the Mark2 devices that we expect to use in future clinical trials of INOpulse for PAH and INOpulsefor PH-COPD. It is difficult to determine with certainty the duration and completion costs of our current or any future pre-clinical programs and any of our currentor future clinical trials for our INOpulse and BCM programs and any future product candidates we may advance, or if, when or to what extent we will generaterevenue from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achievingregulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates willdepend on a variety of factors, including the uncertainties of any future clinical trials and pre-clinical studies, uncertainties in clinical trial enrollment rateand significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors,including competition, manufacturing capability and commercial viability. A change in the outcome of any of these variables with respect to thedevelopment of a product candidate could change significantly the costs and timing associated with the development of that product candidate. For example,if the FDA or other regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for thecompletion of clinical development of a product candidate, or if we experience significant delays in enrollment in any of our clinical trials, we could berequired to expend significant additional financial resources and time with respect to the development of that product candidate. We will determine whichprograms to pursue and how much to fund each program in 110Table of Contents response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate’s commercial potential,including the likelihood of regulatory approval on a timely basis. General and Administrative Expenses General and administrative expenses consist principally of salaries and costs related to executive, finance, business development, marketing, legaland human resources functions, either through direct expenses or the TSA. Other general and administrative expenses include patent filing, patentprosecution, professional fees for legal, insurance, consulting, information technology and auditing and tax services not otherwise included in research anddevelopment expenses. We believe that the following factors, among others, will affect the amount of our general and administrative expenses in the future: · we expect to incur additional general and administrative expenses to support ourselves as a stand-alone company, such as investing in newtelecommunications services; · we expect to incur, prior to the termination of the TSA and the 2015 Services Agreement, expenses in preparation for replacing services that arecurrently provided by Ikaria pursuant to the TSA and the 2015 Services Agreement, which will likely include dedicated accounting and humanresources functions and certain information technology services; · we expect to incur reduced general and administrative expenses payable to Ikaria upon the expiration of the TSA and the 2015 ServicesAgreement, in each case in February 2016; · we expect to incur increased general and administrative expenses to support our research and development activities, which we expect willexpand as we continue to pursue the development of our product candidates; · we expect our general and administrative expenses will increase as a result of increased payroll, expanded infrastructure, higher consulting,legal, accounting and investor relations costs, director compensation and director and officer insurance premiums associated with being a publiccompany; and · we may begin to incur expenses related to sales and marketing of our product candidates in anticipation of commercial launch before we receiveregulatory approval of a product candidate. Results of Operations Comparison of Years Ended December 31, 2014 and 2013 The following table summarizes our results of operations for the years ended December 31, 2014 and 2013, together with the changes in these itemsin dollars and as a percentage. Year Ended December 31, (Dollar amounts in thousands)20142013 $ Change % Change Research and development expenses:BCM$13,660$17,266$(3,606)(21)%PAH11,3198,0993,22040%PH-COPD3,0268,420(5,394)(64)%Clinical programs28,00533,785(5,780)(17)%Research and development infrastructure11,67514,000(2,325)(17)%INOpulse engineering6,2985,2001,09821%Total research and development expenses45,97852,985(7,007)(13)%General and administrative13,7759,0134,76253%Total operating expenses59,75361,998(2,245)(4)%Interest income(79)—(79)N/ANet loss and comprehensive loss$(59,674)$(61,998)$2,324(4)% 111Table of Contents Total Operating Expenses. Total operating expenses for the year ended December 31, 2014 were $59.8 million compared to $62.0 million for theyear ended December 31, 2013, a decrease of $2.2 million, or 4%. This decrease was primarily due to reductions in research and development expensespertaining to our BCM and INOpulse for PH-COPD programs and to research and development infrastructure expenses, partially offset by increases in generaland administrative expenses, research and development expenses pertaining to INOpulse for PAH and INOpulse engineering expenses. Research and Development Expenses. Total research and development expenses for the year ended December 31, 2014 were $46.0 millioncompared to $53.0 million for the year ended December 31, 2013, a decrease of $7.0 million, or 13%. Total research and development expenses consisted ofthe following: · BCM research and development expenses for the year ended December 31, 2014 were $13.7 million compared to $17.3 million for the yearended December 31, 2013, a decrease of $3.6 million, or 21%. The decrease primarily resulted from the effect of certain non-recurringmanufacturing costs in the 2013 period, as well as a decrease in the pre-clinical activities that we conducted with respect to BCM during theyear ended December 31, 2014. This decrease was partially offset by an increase in clinical trial costs as a result of an increase in patientenrollments in the year ended December 31, 2014 as compared to the prior year period. · PAH research and development expenses for the year ended December 31, 2014 were $11.3 million compared to $8.1 million for the year endedDecember 31, 2013, an increase of $3.2 million, or 40%. The increase was primarily due to higher clinical trial expenses in the year endedDecember 31, 2014, driven by higher patient enrollment costs as compared to the prior year period, as well as increased spending in respect ofdevelopment of the Mark2 in preparation for our anticipated Phase 3 clinical trial. · PH-COPD research and development expenses for the year ended December 31, 2014 were $3.0 million compared to $8.4 million for the yearended December 31, 2013, a decrease of $5.4 million, or 64%. The decrease primarily resulted from lower dosing trial costs as a result of thecompletion of our Phase 2 clinical trial. · Research and development infrastructure expenses for the year ended December 31, 2014 were $11.7 million compared to $14.0 million for theyear ended December 31, 2013, a decrease of $2.3 million, or 17%. The decrease was primarily the result of reductions in headcount inconnection with managing staffing needs to support our INOpulse and BCM clinical programs. 112Table of Contents · INOpulse engineering expenses for the year ended December 31, 2014 were $6.3 million compared to $5.2 million for the year endedDecember 31, 2013, an increase of $1.1 million, or 21%. The increase was primarily due to increases in development costs as we transitionedfrom the INOpulse DS device to the Mark2. General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2014 were $13.8 million compared to$9.0 million for the year ended December 31, 2013, an increase of $4.8 million, or 53%. The increase was primarily due to the incremental costs of operatingas a stand-alone entity, including professional service fees, executive search costs, the payment of certain retention bonuses and information technologyexpenditures. Comparison of Years Ended December 31, 2013 and 2012 The following table summarizes our results of operations for the years ended December 31, 2013 and 2012, together with the changes in these itemsin dollars and as a percentage. Year Ended December 31, (Dollar amounts in thousands)20132012 $ Change % Change Research and development expenses:BCM$17,266$14,609$2,65718%PAH8,0998,544(445)(5)PH-COPD8,4201,7676,653377Clinical programs33,78524,9208,86536Research and development infrastructure14,00010,3873,61335INOpulse engineering5,2003,4201,78052Total research and development expenses52,98538,72714,25837General and administrative9,0137,1851,82825Other operating expenses—315(315)(100)Total operating expenses61,99846,22715,77134Net loss and comprehensive loss$(61,998)$(46,227)$(15,771)34% Total Operating Expenses. Total operating expenses for the year ended December 31, 2013 were $62.0 million compared to $46.2 million for theyear ended December 31, 2012, an increase of $15.8 million, or 34%. This increase was primarily due to an increase in research and development expensespertaining to our BCM and INOpulse for PH-COPD clinical programs, research and development infrastructure, INOpulse engineering and manufacturing,and general and administrative expenses. Research and Development Expenses. Total research and development expenses for the year ended December 31, 2013 were $53.0 millioncompared to $38.7 million for the year ended December 31, 2012, an increase of $14.3 million, or 37%. Total research and development expenses consistedof the following: · BCM research and development expenses for the year ended December 31, 2013 were $17.3 million compared to $14.6 million for the yearended December 31, 2012, an increase of $2.7 million, or 18%. The increase was primarily due to increased enrollment in our PRESERVATIONI trial to 120 patients in 2013 from 19 patients in 2012. · PAH research and development expenses for the year ended December 31, 2013 were $8.1 million compared to $8.5 million for the year endedDecember 31, 2012, a decrease of $0.4 million, or 5%. The decrease was primarily due to a smaller number of devices being manufactured forour INOpulse for PAH trial in 2013 as compared to 2012, partially offset by increased patient enrollment in the Phase 2 clinical trial of INOpulsefor PAH to 47 patients in 2013 from ten patients in 2012. 113Table of Contents · PH-COPD research and development expenses for the year ended December 31, 2013 were $8.4 million compared to $1.8 million for the yearended December 31, 2012, an increase of $6.7 million, or 377%. The increase resulted from commencement of the first part of the Phase 2clinical trial of INOpulse for PH-COPD in 2013. · Research and development infrastructure expenses for the year ended December 31, 2013 were $14.0 million compared to $10.4 million for theyear ended December 31, 2012, an increase of $3.6 million, or 35%. The increase was primarily due to a higher level of professional andconsulting fees to support our INOpulse and BCM clinical programs, including those related to program risk analysis, regulatory, biometricsand drug and device safety in 2013. · INOpulse engineering expenses for the year ended December 31, 2013 were $5.2 million compared to $3.4 million for the year endedDecember 31, 2012, an increase of $1.8 million, or 52%. The increase was primarily due to increased engineering activity related to theINOpulse devices in 2013. General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2013 were $9.0 million compared to$7.2 million for the year ended December 31, 2012, an increase of $1.8 million, or 25%. The increase was primarily due to allocated finance costs. Other Operating Expenses. In 2012, we incurred a $0.3 million restructuring charge recorded for the impairment of fixed assets related to theclosure of the research and development facility in Seattle, Washington, as we moved research and development operations to our facilities in NorthBrunswick, New Jersey. Liquidity and Capital Resources Since our inception, we have incurred net losses and negative cash flows from our operations. We incurred net losses of $59.7 million and $62.0million for the years ended December 31, 2014 and 2013, respectively. Our operating activities used $70.6 million and $57.2 million of cash during the yearsended December 31, 2014 and 2013, respectively. As of December 31, 2014, all of the cash used in our operating activities was contributed to us by ourformer parent company, Ikaria. In addition, we had $17.2 million of working capital and $27.6 million of cash and cash equivalents and restricted cash as ofDecember 31, 2014. We subsequently raised net proceeds of $52.6 million, after deducting underwriting discounts and commissions of $4.2 million andoffering costs of $3.2 million, from the sale of common stock in our initial public offering in the first quarter of 2015. Cash Flows The following table summarizes our cash flows for the years ended December 31, 2014, 2013 and 2012: Year Ended December 31,(Dollar amounts in thousands)2014 2013 2012 Operating activities$(70,562)$(57,231)$(36,224)Investing activities—(727)(3,478)Financing activities87,37757,95839,702 Increase in cash and cash equivalents$16,815$—$— 114Table of Contents Net Cash Used in Operating Activities Cash used in operating activities for the year ended December 31, 2014 was $70.6 million compared to $57.2 million for the year endedDecember 31, 2013, an increase of $13.4 million, or 23%. The increase in cash used in operating activities was primarily due to the deposit of escrowed cashin connection with the TSA. Cash used in operating activities for the year ended December 31, 2013 was $57.2 million compared to $36.2 million for the year endedDecember 31, 2012, an increase of $21.0 million, or 58%. The increase was primarily driven by clinical development expenses attributable to activity in theINOpulse and BCM clinical programs. Net Cash Used in Investing Activities Cash used in investing activities for the year ended December 31, 2014 was $0 compared to $0.7 million of cash used in investing activities for theyear ended December 31, 2013. The decrease in cash used in investing activities was primarily the result of a reduction in capital expenditures due to thetiming of device investments to support our clinical trials. Cash used in investing activities for the year ended December 31, 2013 was $0.7 million compared to $3.5 million for the year ended December 31,2012, a decrease of $2.8 million, or 79%. The decrease was primarily the result of a reduction in capital expenditures due to the timing of device investmentsto support our clinical trials. Net Cash Provided by Financing Activities Cash provided by financing activities for the year ended December 31, 2014 was $87.4 million compared to $58.0 million for the year endedDecember 31, 2013, an increase of $29.4 million, or 51%. The increase was primarily due to a cash contribution of $80.0 million from Ikaria in connectionwith the Spin-Out. Cash provided by financing activities for the year ended December 31, 2013 was $58.0 million compared to $39.7 million for the year endedDecember 31, 2012, an increase of $18.3 million, or 46%. The increase was due to the increased net investment by Ikaria in 2013. Plan of Operations and Future Funding Requirements Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and developmentservices, contract manufacturing services, laboratory and related supplies, clinical costs, legal and other regulatory expenses and general overhead costs. We believe our existing cash and cash equivalents and restricted cash as of December 31, 2014, together with the proceeds of our initial publicoffering completed in February 2015, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements at least into mid-2016. We have based these estimates on assumptions that may prove to be wrong, and we may exhaust our capital resources sooner than we expect. Inaddition, the process of testing product candidates in clinical trials is costly, and the timing of progress in clinical trials is uncertain. Because our productcandidates are in clinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts that will be necessary tosuccessfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability. Our futurecapital requirements will depend on many factors, including: · the timing, progress and results of our ongoing and planned clinical trials of INOpulse for PAH, INOpulse for PH-COPD and BCM; · our ability to manufacture sufficient supply of our product candidates and the costs thereof; · discussions with regulatory agencies regarding the design and conduct of our clinical trials and the costs, timing and outcome of regulatoryreview of our product candidates; · the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution for any of ourproduct candidates for which we receive marketing approval; · the number and development requirements of any other product candidates we pursue; · our ability to enter into collaborative agreements and achieve milestones under those agreements; · the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; 115Table of Contents · the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights anddefending any intellectual property-related claims; · our expenses as a stand-alone company; and · the extent to which we acquire or in-license other products and technologies. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity anddebt offerings, existing working capital and funding from potential future collaboration arrangements. To the extent that we raise additional capital throughthe future sale of equity or debt, the ownership interest of our existing stockholders will be diluted, and the terms of such securities may include liquidationor other preferences that adversely affect the rights of our existing stockholders. If we raise additional funds through strategic partnerships in the future, wemay have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorableto us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate ourproduct development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to developand market ourselves. Contractual Obligations and Commitments The following is a summary of our long-term contractual cash obligations as of December 31, 2014 (in thousands): Payments Due by Period ($)Contractual ObligationsTotal Less than1 year 1 to 3 years 3 to 5 years More than5 yearsOperating Lease Obligations(1)2323———Transition Services Agreement(2)10,8129,2641,548—— (1) Operating lease obligations reflect our obligation to make payments in connection with a lease for our operating facilities. The amounts in the tabledo not include our rent obligation of $115,000 from March 15, 2015 through March 15, 2016 under an extension to our lease that we signedsubsequent to December 31, 2014. (2) Under the TSA, Ikaria provides certain administrative and other services to us for a period of 24 months following February 9, 2014, unlessterminated earlier. Ikaria also provides us with the use of office space and research laboratory facilities at Ikaria’s headquarters located in Hampton,New Jersey. In exchange for the services provided by Ikaria pursuant to the TSA, we pay to Ikaria a service fee in the amount of $772,000 per monthand reimburse Ikaria for any out of pocket expenses, any taxes imposed on Ikaria in connection with the provision of services under the TSA andIkaria’s costs and expenses incurred in connection with the performance of any extraordinary services. The monthly service fee is payable by usregardless of the frequency or quantity of services actually utilized by us, and our obligation to pay such monthly service fee for 24 months willsurvive any early termination of the TSA. At the time of the Spin Out, we deposited the sum of $18.5 million, representing the aggregate of the$772,000 monthly service fees payable by us under the TSA, in escrow to guarantee payment of the monthly service fees. Under the 2015 Services Agreement, which became effective on January 1, 2015 and expires in February 2016, Ikaria provides to us certaininformation technology and device servicing services. In exchange for the services provided by Ikaria pursuant to the 2015 Services Agreement, we will payto Ikaria fees that total, in the aggregate, approximately $215,000, subject to the termination of the 2015 Services Agreement. Milestone and royalty payments associated with our license agreement with BioLine have not been included in the above table of contractualobligations as we cannot reasonably estimate if or when they will occur. Under the terms of the license agreement, if we achieve certain clinical andregulatory events specified in 116Table of Contents the license agreement, we will be obligated to pay milestone payments to BioLine, which could total, in the aggregate, up to $115.5 million, and if weachieve certain commercialization targets specified in the license agreement, we will be obligated to pay additional milestone payments to BioLine, whichcould total, in the aggregate, up to $150.0 million. In addition, we will be obligated to pay BioLine a specified percentage of any upfront consideration wereceive for sublicensing BCM, as well as royalties on net sales, if any, at a percentage ranging from 11% to 15%, depending on net sales level, of anyapproved product containing BCM, subject to offsets for specified payments to third parties made in connection with BCM. Further, we have agreed toreimburse BioLine for certain legal fees in the amount of $250,000 following completion of our initial public offering. In the course of our normal business operations, we also enter into agreements with contract service providers and others to assist in the performanceof our research and development and manufacturing activities. We can elect to discontinue the work under these contracts and purchase orders at any timewith notice, and such contracts and purchase orders do not contain minimum purchase obligations. 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 applicableSecurities and Exchange Commission rules. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have beenprepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to makeestimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities inour financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to research and development expense,impairment of long-lived assets, stock-based compensation and income taxes. We base our estimates on historical experience, known trends and events andvarious other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carryingvalues of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions orconditions. While our significant accounting policies are described in Note 2 of the notes to our consolidated financial statements appearing elsewhere in thisAnnual Report on Form 10-K, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of ourfinancial statements. Research and Development Expense Research and development costs are expensed as incurred. These expenses include the costs of our proprietary research and development efforts, aswell as costs incurred in connection with certain licensing arrangements. Upfront and milestone payments made to third parties in connection with researchand development collaborations are expensed as incurred up to the point of regulatory approval. Payments made to third parties upon or subsequent toregulatory approval are capitalized and amortized over the remaining useful life of the related product. We also expense the cost of purchased technologyand equipment in the period of purchase if we believe that the technology or equipment has not demonstrated technological feasibility and does not have analternative future use. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities aredeferred and are recognized as research and development expense as the related goods are delivered or the related services are performed. 117Table of Contents As part of the process of preparing our financial statements, we are required to estimate our accrued research expenses. This process involvesreviewing open contracts and purchase orders, communicating with applicable personnel to identify services that have been performed on our behalf andestimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actualcost. The majority of our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued research and developmentexpenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. We periodically confirm theaccuracy of our estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expensesinclude: · fees paid to contract research organizations in connection with clinical trials; · fees paid to investigative sites in connection with clinical trials; · fees paid to contract manufacturers in connection with the production of clinical trial materials; and · fees paid to vendors in connection with the pre-clinical development activities. We base our expenses related to research and development and clinical trials on our estimates of the services received and efforts expended pursuantto contracts with multiple third parties, including research institutions and contract research organizations that conduct and manage clinical trials on ourbehalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Paymentsunder some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing theresearch and development service fees, we consider the terms of each agreement, the time period over which the services will be performed and the level ofeffort required to complete the service. If the actual timing of the performance of the services or the level of effort varies from our estimate, we adjust theaccrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status andtiming of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too highor too low in any particular period. Based on our level of accrued research and development expenses as of December 31, 2014, if our estimates are too highor too low by 5%, this may result in an adjustment to our accrued research and development expenses in future periods of approximately $0.3 million. Impairment of Long-Lived Assets Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of anasset to estimated undiscounted expected future cash flows. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge isrecognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be sold are no longer depreciated and arereclassified outside of property, plant and equipment at the lower of the carrying amount or fair value less costs to sell. Stock-Based Compensation We issue, and prior to the Spin-Out Ikaria, our former parent, issued, stock-based awards to employees and non-employees in the form of stockoptions and RSUs. The stock-based compensation expense recorded for the periods prior to the Spin-Out presented in our audited financial statements,included elsewhere in this Annual Report on Form 10-K, represents an allocation of Ikaria’s stock-based compensation expense for employees and non-employees whose time was attributed to our business prior to the Spin-Out and, as a result, has been allocated to us for accounting purposes. 118Table of Contents Ikaria applied, and we apply, the fair value recognition provisions of the Financial Accounting Standards Board, or FASB, Accounting StandardsCodification, or ASC, Topic 718, Compensation-Stock Compensation, or ASC 718. ASC 718 requires all stock-based payments to employees, includinggrants of employee stock options and RSUs and modifications to existing stock options and RSUs, to be recognized in the statements of operations based ontheir fair values. Ikaria recognized, and we recognize, the compensation expense of stock-based awards on a straight-line basis over the vesting period of theaward for employees and non-employees or sooner if the award is immediately vested. Compensation expense related to stock-based awards is subject to anumber of estimates, including the estimated volatility and underlying fair value of our common stock, as well as the estimated life of the awards. Ikaria estimated, and we estimate, the fair value of stock-based awards to employees and non-employees using the Black-Scholes-Merton option-pricing model, which requires the input of highly subjective assumptions, including (a) the fair value of the underlying stock, (b) the expected volatility ofthe underlying stock, (c) the expected term of the award, (d) the risk-free interest rate and (e) expected dividends. Due to the lack of a public market for thetrading of Ikaria common stock and our equity securities and a lack of company-specific historical and implied volatility data for either company, we andIkaria based our respective estimates of expected volatility on the historical volatility of a group of similar companies that are publicly traded. For thevolatility analyses, we and Ikaria selected companies with comparable characteristics to our respective companies, including enterprise value, risk profile andposition within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. We and Ikariacomputed the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculatedexpected term of our respective stock-based awards. We will apply this process for purposes of our future stock-based compensation expense until a sufficientamount of historical information regarding the volatility of our own stock price becomes available. Because we and Ikaria had minimal historical informationto develop expectations about future exercise patterns for our respective stock option grants, in each case, the expected term is based on an average of theexpected term of options granted by our respective publicly traded industry peers. The risk-free interest rates for periods within the expected life of the awardsare based on the U.S. Treasury yield curve in effect during the period in which the awards were granted. In addition, Ikaria was, and we are, required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actualforfeitures differ from estimates. Ikaria used, and we use, historical data to estimate pre-vesting forfeitures and record stock-based compensation expense onlyfor those awards that are expected to vest. To the extent that actual forfeitures differ from estimates, the difference is recorded as a cumulative adjustment inthe period the estimates were revised. Stock-based compensation expense recognized in the financial statements is based on awards that are ultimatelyexpected to vest. For the periods presented prior to the Spin-Out, the weighted average grant date fair value of stock options granted to employees and directors ofIkaria and the weighted average assumptions used by Ikaria to estimate the grant date fair value of the options using the Black-Scholes-Merton optionpricing model were: 2013 2012 Weighted average grant date fair value$1.95$2.40Valuation assumptions:Risk-free interest rate0.90%0.83%Expected volatility46.5%47.6%Expected term (in years)5.005.00Expected dividend yield—— There were no Ikaria options issued during the period from January 1, 2014 through February 11, 2014. 119Table of Contents Ikaria has historically granted its stock options at exercise prices not less than the fair value of its common stock. Ikaria was a private company withno active public market for its common stock. Therefore, its board of directors periodically determined for financial reporting purposes the estimated fairvalue of its common stock using valuations performed in accordance with the guidance outlined in the American Institute of Certified Public AccountantsPractice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation, also known as the Practice Aid. The compensation expense for the RSUs was based on the grant date fair value of the RSU, which was based on the fair value of the underlyingstock. Prior to the Spin-Out, Ikaria adjusted its outstanding stock options to reflect the Spin-Out. In connection with such adjustment, we issued to certainemployees and directors of ours or of Ikaria, as well as certain accredited investors, options to purchase an aggregate of 618,212 of our non-votingmembership units, at a weighted average exercise price of $7.24 per unit, which we refer to as the Bellerophon Options. The exercise price of eachBellerophon Option was determined by allocating the exercise price of each outstanding Ikaria stock option held by such individuals to Ikaria and us using aratio of 85% and 15%, respectively, which reflected the relative value of each entity at the time of the Spin-Out. Each Bellerophon Option has the sameexpiration date as the corresponding Ikaria stock option. Prior to and in connection with the Spin-Out, we issued to certain employees and directors of ours orof Ikaria and certain accredited investors RSUs in respect of an aggregate of 372,947 of our non-voting membership units, which we refer to as theBellerophon RSUs. In connection with the Spin-Out, the vesting of each Bellerophon Option and each Bellerophon RSU was fully accelerated. Our stock-based compensation expense for periods prior to the Spin-Out represents our allocable portion of Ikaria’s stock-based compensationexpense for the applicable periods based on the allocation percentages of our cost centers, which were determined based on specific identification or theproportionate percentage of employee time or headcount to the respective total Ikaria employee time or headcount. Our allocable portion of Ikaria’s stock-based compensation expense for the years ended December 31, 2014, 2013 and 2012 was approximately $0.3 million, $1.7 million and $1.5 million,respectively. Because certain of these amounts relate to Ikaria stock-based awards, the amounts presented are not necessarily indicative of our futureperformance and do not necessarily reflect the stock-based compensation or compensation expense that we would have experienced as a stand-alonecompany for these periods. In October 2011, Ikaria approved a special dividend plan, which provided for dividend equivalent rights for options, RSUs and other equity awardsgranted under its equity award plans. Pursuant to the special dividend plan, in the event that Ikaria’s board of directors declared a dividend, each employee ofIkaria who held equity awards was eligible to receive a cash payment equal to the amount of the dividend per share, multiplied by the number of equityawards outstanding. The payment was payable as of the declaration date for vested options. For unvested options and unvested RSUs, payment was due uponvesting. As of December 31, 2013, the allocated portion of the special dividend bonus payable was $6.1 million, of which $1.8 million was reflected in othercurrent liabilities and $4.3 million was reflected in non-current liabilities. The full amount of our allocated portion of the special dividend bonus payable wasfully paid on our behalf by Ikaria prior to the Spin-Out. On June 20, 2014, following the Spin-Out, we granted options to purchase 514,266 of our non-voting units with an exercise price of $13.28 per non-voting unit. As we were a private company with no active public market for our equity securities at the time, the estimated fair value of one of our non-votingunits as of June 20, 2014 was determined by our board of directors to be $13.28. In making this determination, our board of directors used a contemporaneousvaluation based on the income approach, performed in accordance with the guidance enumerated in the Practice Aid. For the income approach, we used thediscounted cash flow method to estimate the present value of the future monetary benefits expected to flow to the owners of the business. Thecontemporaneous valuation also considered factors enumerated in Revenue Ruling 59-60, which serves as a 120Table of Contents general guideline for the valuation of closely held securities. In addition, we considered all objective and subjective factors that we believe to be relevant tosuch valuation, including our best estimate of our business condition, prospects and operating performance at the valuation date. Within thecontemporaneous valuation performed, a range of factors and assumptions were used. The significant factors, many of them complex and highly subjective,included: · estimates of our future cash flows and the appropriate discount rate; · the nature and history of our business enterprise; · the assessment of key value drivers for our business enterprise; · the economic outlook in general and the condition and outlook of our industry in particular; · the financial condition of our business and the book value of our equity interests; · the likelihood of our achieving a liquidity event; and · prior sales of equity interests of companies engaged in the same or similar lines of business that have their stocks actively traded in a free andopen market. The following are the assumptions used in estimating the fair value of options issued during the year ended December 31, 2014. Year EndedDecember 31, 2014 Valuation assumptions:Risk-free interest rate1.71%Expected volatility90.00%Expected term (in years)6.1Expected dividend yield0.00% Since our initial public offering, the exercise price per share of all option grants has been set at the closing price of our common stock on theNASDAQ Global Market on the applicable date of grant. For the years ended December 31, 2014, 2013 and 2012, we recorded stock-based expenses as follows: Year EndedDecember 31,(in thousands)2014 2013 2012Research and development$271$1,120$882General and administrative1,568601567Total expense$1,839$1,721$1,449 Income Taxes During the periods presented prior to the Spin-Out, we did not file separate tax returns, as we were included in the tax groupings of other Ikariaentities within the respective entity’s tax jurisdiction. As such, the income tax provision included in our financial statements for such periods has beencalculated using the separate return method, as if we filed a separate tax return in each of our respective tax jurisdictions. 121Table of Contents For financial reporting purposes, we have historically recorded no tax expense or benefit due to our operating loss position. A valuation allowancewas established on net deferred tax assets as of periods prior to the Spin-Out because management believed that it was more likely than not that our netdeferred tax assets will not be realized. For periods prior to the Spin-Out, deferred tax assets and liabilities were recognized for the estimated future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilitieswere measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. When we became astand-alone company at the date of the Spin-Out, deferred taxes are no longer recorded. We have elected to be treated as a partnership for tax purposes.Although we were a limited liability company until we converted into a corporation in February 2015, one of our subsidiaries is a C-corporation and issubject to state and federal income taxes. This subsidiary had an immaterial loss in 2014 and its deferred taxes are fully reserved. For periods prior to the Spin-Out, we recognized the benefit of an uncertain tax position that we have taken on income tax returns prepared under aseparate return method if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits ofthe position. These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.Unrecognized tax benefits related to net operating loss carryforwards or tax credit carryforwards are presented as a reduction to the related gross deferred taxasset. Unrecognized tax benefits for which a net operating loss carryforward or tax credit carryforward is not available are presented as a liability. A liabilityfor unrecognized tax benefits is classified as non-current unless the liability is expected to be settled in cash within 12 months of the reporting date. Certain deferred tax assets and liabilities and uncertain tax positions that arose as a result of Ikaria’s past activities, such as federal and state netoperating loss carryforwards, research and development credit carryforwards and acquired in-process research and development, were not transferred to us inconnection with the Spin-Out and continued to constitute assets and liabilities of Ikaria subsequent to the date of the Spin-Out. Recently Adopted Accounting Standards In May 2014, the FASB issued Accounting Standards Update No. 2014-09, or ASU 2014-09, Revenue from Contracts with Customers (Topic 606).ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Update No. 2009-13, Revenue Recognition (Topic 605) andrequires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the considerationto which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning afterDecember 15, 2016, including interim periods within that reporting period, and is to be applied either retrospectively to each prior reporting period presentedor retrospectively with the cumulative effect recognized at the date of initial application. Early application is not permitted. Although we do not generaterevenues currently, management is in the process of evaluating the potential impact from the adoption of this guidance. In June 2014, the FASB issued Accounting Standards Update No. 2014-10, or ASU 2014-10, Development Stage Entities (Topic 915): Eliminationof Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10eliminates the distinction of a development stage entity as well as certain related disclosure requirements, including the elimination of inception-to-dateinformation on the statements of operations, members’ equity and cash flows. For public business entities, the amendments in ASU 2014-10 are effectiveprospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, and for other entities, theamendments are effective for annual reporting periods beginning after December 15, 2014, and interim reporting periods beginning after December 15, 2015.Early application is permitted. We have adopted ASU 2014-10 for the year ended December 31, 2014. 122Table of Contents In June 2014, the FASB issued Accounting Standards Update No. 2014-12, or ASU 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite ServicePeriod. ASU 2014- 12 clarifies the proper method of accounting for share-based payments when the terms of an award provide that a performance target couldbe achieved after the requisite service period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after therequisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of theaward. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should representthe compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in ASU 2014-12 are effectivefor annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. We will adopt thisguidance if and when we issue share-based awards with performance targets. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, or ASU 2014-15, Presentation of Financial Statements—GoingConcern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 should reduce diversity inthe timing and content of footnote disclosures. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern byincorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, it (1) provides a definition of the termsubstantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect ofmanagement’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires anexpress statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that thefinancial statements are issued (or available to be issued). The amendments in ASU 2014-15 are effective for the annual period ending after December 15,2016, and for annual periods and interim periods thereafter. Early application is permitted. We are currently evaluating the impact the adoption of ASU 2014-15 will have on our financial statements. JOBS Act We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerginggrowth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies.These provisions include: · reduced disclosure about our executive compensation arrangements; · exemption from the non-binding advisory votes on executive compensation, including golden parachute arrangements; and · exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting. Generally, we may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company.We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, we have more than $700.0 million in market valueof our stock held by non-affiliates or we issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage ofsome, but not all, of the available exemptions. We have taken advantage of certain reduced reporting burdens in this Annual Report on Form 10-K.Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new orrevised accounting standards. This allows an emerging growth 123Table of Contents company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocablyelected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revisedaccounting standards as other public companies that are not emerging growth companies. Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk related to changes in interest rates. As of December 31, 2014, we had cash and cash equivalents and restricted cash ofapproximately $27.6 million, consisting primarily of demand deposits with U.S. banking institutions (other than restricted cash, which is held in escrow). Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because ourinvestments are in cash and cash equivalents. Due to the short-term duration of our deposits and the low risk profile of our investments, an immediate 10%change in interest rates would not have a material effect on the fair market value of our deposits. Item 8. Financial Statements and Supplementary Data Index to Financial Statements PageReport of Independent Registered Public Accounting Firm125Balance Sheets as of December 31, 2014 and 2013126Statements of Operations and Comprehensive Loss for the years ended December 31, 2014, 2013 and 2012127Statements of Changes in Members’ Equity and Invested Equity (Deficit) for the years ended December 31, 2014, 2013 and 2012128Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012129Notes to Consolidated Financial Statements130 124Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and StockholdersBellerophon Therapeutics, Inc.: We have audited the accompanying consolidated balance sheets of Bellerophon Therapeutics LLC and subsidiaries as of December 31, 2014 and 2013, andthe related consolidated statements of operations and comprehensive loss, changes in members’ equity and invested equity (deficit) and cash flows for eachof the years in the three-year period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BellerophonTherapeutics LLC and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in thethree-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Short Hills, New JerseyMarch 31, 2015 125Table of Contents BELLEROPHON THERAPEUTICS LLC Consolidated Balance Sheets (Amounts in thousands, except unit amounts) December 31, 2014 December 31, 2013 AssetsCurrent assets:Cash and cash equivalents$16,815$—Restricted cash9,264—Prepaid expenses and other current assets1,6021,552Total current assets27,6811,552Restricted cash, non-current1,548—Deferred transaction costs2,466—Property and equipment, net1,6962,084Total assets$33,391$3,636Liabilities and members’ equity and invested equity (deficit)Current liabilities:Accounts payable$376$1,368Accrued research and development6,6667,591Accrued expenses2,7513,194Due to Ikaria, Inc.661—Other current liabilities—1,839Total current liabilities10,45413,992Allocated portion of Ikaria special dividend payable—4,273Other liabilities—1,108Total liabilities10,45419,373Commitments and contingencies (Note 13)Members’ equity:Members’ equity, 94,273,819 voting units authorized, 7,524,196 voting units issued andoutstanding at December 31, 2014; 19,416,481 non-voting units authorized, 381,129 non-voting units issued and outstanding at December 31, 201477,156—Accumulated deficit(54,219)—Total members’ equity22,937—Invested equity (deficit):Investment by Ikaria, Inc.—160,778Accumulated deficit—(176,515)Total invested deficit—(15,737)Total liabilities and members’ equity and invested equity (deficit)$33,391$3,636 The accompanying notes are an integral part of these consolidated financial statements. 126Table of Contents BELLEROPHON THERAPEUTICS LLC Consolidated Statements of Operations and Comprehensive Loss (Amounts in thousands, except unit and per unit amounts) Year EndedDecember 31,20142013 2012Operating expenses:Research and development$45,978$52,985$38,727General and administrative13,7759,0137,185Other operating expense——315Total operating expenses59,75361,99846,227Interest income79——Pre-tax loss(59,674)(61,998)(46,227)Income tax benefit (expense)———Net loss and comprehensive loss$(59,674)$(61,998)$(46,227)Net loss per unit:Basic and diluted$(7.56)Weighted average units outstanding:Basic and diluted7,898,289 The accompanying notes are an integral part of these consolidated financial statements. 127Table of Contents BELLEROPHON THERAPEUTICS LLC Consolidated Statements of Changes in Members’Equity and Invested Equity (Deficit) (Amounts in thousands) InvestmentbyIkaria, Inc.Accumulateddeficit Totalinvestedequity(deficit) Membershipunits Members’equity Totalmembers’equityBalance December 31, 2011$65,828$(68,290)$(2,462)Net loss—(46,227)(46,227)Investment by Ikaria, Inc., net37,573—37,573Balance December 31, 2012$103,401$(114,517)$(11,116)Net loss—(61,998)(61,998)Investment by Ikaria, Inc., net57,377—57,377Balance December 31, 2013$160,778$(176,515)$(15,737)Net loss from January 1, 2014 throughFebruary 11, 2014, prior to Spin-Out—(5,455)(5,455)Investment by Ikaria, Inc., net prior toSpin-Out7,547—7,547Additional investment by Ikaria, Inc. forsettlement of liabilities prior to Spin-Out9,196—9,196Balance February 11, 2014$177,521$(181,970)$(4,449)Contribution by Ikaria, Inc. of net assets toBellerophon in connection with Spin-Out(177,521)181,9704,4497,899,251$75,551$75,551Net loss from February 12, 2014 throughDecember 31, 2014—(54,219)——(54,219)Stock-based compensation———1,5681,568Exercise of options———8,1826666Repurchase of units———(2,108)(29)(29)Balance December 31, 2014$—$(54,219)$—7,905,325$77,156$22,937 The accompanying notes are an integral part of these consolidated financial statements. 128Table of Contents BELLEROPHON THERAPEUTICS LLC Consolidated Statements of Cash Flows (Amounts in thousands) Year EndedDecember,20142013 2012Cash flows from operating activities:Net loss$(59,674)$(61,998)$(46,227)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation38842985Stock-based compensation1,8391,7211,449Other items—149315Loss on disposal of property, plant and equipment, net——2,840Changes in operating assets and liabilities:(Increase) decrease in other current assets and other assets(50)94(11)Increase in restricted cash(10,812)——(Decrease) increase in accounts payable, accrued research and development andaccrued expenses(2,914)1,6555,346Increase in amounts due to Ikaria, Inc.661——Increase (decrease) in other liabilities—719(21)Net cash used in operating activities(70,562)(57,231)(36,224)Cash flows from investing activities:Capital expenditures—(727)(3,478)Net cash used in investing activities—(727)(3,478)Cash flows from financing activities:Cash contribution from Ikaria, Inc. in connection with Spin-Out80,000——Cash contributions from Ikaria, Inc., net9,25257,95839,702Transaction costs paid(1,912)——Proceeds received from exercise of options66——Repurchase of units(29)——Net cash provided by financing activities87,37757,95839,702Net change in cash and cash equivalents16,815——Cash and cash equivalents at beginning of year———Cash and cash equivalents at end of year$16,815$—$—Non-cash investing activities:Contribution of property, plant and equipment from Ikaria, Inc.$—$83$—Non-cash financing activities:Investment by Ikaria, Inc., net$7,491$(581)$(2,129) The accompanying notes are an integral part of these consolidated financial statements. 129Table of Contents BELLEROPHON THERAPEUTICS LLC Notes to Consolidated Financial Statements (1) Organization and Nature of the Business Bellerophon Therapeutics LLC, or the Company, is a clinical-stage therapeutics company focused on developing innovative products at theintersection of drugs and devices that address significant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases. The Company hastwo programs in advanced clinical development. The first program, INOpulse, is based on the Company’s proprietary pulsatile nitric oxide delivery device.The Company is currently developing two product candidates under its INOpulse program: one for the treatment of pulmonary arterial hypertension, or PAH,for which the Company intends to commence Phase 3 clinical trials in the second half of 2015, and the other for the treatment of pulmonary hypertensionassociated with chronic obstructive pulmonary disease, or PH COPD, which is in Phase 2 development. The Company’s second program is bioabsorbablecardiac matrix, or BCM, which is currently in a placebo-controlled clinical trial designed to support CE mark registration in the European Union. TheCompany completed enrollment of this trial in December 2014, with 303 patients having completed the treatment procedure, and the Company expects toreport top line results in mid-2015. Assuming positive results from this trial, the Company intends to conduct a pivotal pre-market approval trial of BCMbeginning in the first half of 2016, which will be designed to support registration in the United States. The Company is developing BCM for the preventionof cardiac remodeling, which often leads to congestive heart failure following an ST-segment elevated myocardial infarction, or STEMI. The Company’s business is subject to significant risks and uncertainties, including but not limited to: · The risk that the Company will not achieve success in its research and development efforts, including clinical trials conducted by it or itspotential collaborative partners. · The expectation that the Company will experience operating losses for the next several years. · Decisions by regulatory authorities regarding whether and when to approve the Company’s regulatory applications as well as their decisionsregarding labeling and other matters which could affect the commercial potential of the Company’s products or product candidates. · The risk that the Company will fail to obtain adequate financing to meet its future capital and financing needs. · The risk that key personnel will leave the Company and/or that the Company will be unable to recruit and retain senior level officers to manageits business. The Company was formerly the research and development operating segment of Ikaria Inc., or Ikaria. During the third quarter of 2013 in conjunctionwith Ikaria’s financing activities, Ikaria began reporting financial information for two operating segments: its research and development business and itscommercial business. During the fourth quarter of 2013, Ikaria completed an internal reorganization of the assets and subsidiaries of its two operatingsegments. In connection with the internal reorganization, Ikaria formed the Company as a new wholly-owned subsidiary and transferred the research anddevelopment-related assets related to INOpulse for PAH and INOpulse for PH-COPD to the Company and/or its subsidiaries. On December 24, 2013, Ikaria and Madison Dearborn Partners, or MDP, entered into an agreement and plan of merger, under which MDP wouldacquire a majority ownership position in Ikaria and existing shareholders retained a minority ownership position in Ikaria through certain mergertransactions, or the Merger. On February 12, 2014, prior to the Merger, Ikaria distributed all of the Company’s outstanding units to Ikaria’s stockholders in a pro rata distributionthrough a special dividend, which is referred to as the Spin-Out. 130Table of Contents In the Spin-Out, each holder of Ikaria common stock received one voting limited liability company interest in the Company for each share of Ikaria commonstock held. There were 7,905,325 units outstanding as of December 31, 2014. On February 12, 2014, through a series of merger subsidiary transactions, MDP acquired a majority ownership of Ikaria and Ikaria’s existingshareholders retained a minority ownership position in Ikaria. In connection with the Spin-Out, $80.0 million of cash was distributed to the Company. At the time of the Spin-Out, $18.5 million of the$80.0 million cash held by the Company was deposited in escrow to guarantee payment of the monthly services fees payable by the Company to Ikaria inexchange for the services to be provided by Ikaria pursuant to the Company’s transition services agreement with Ikaria, or the TSA, during the 24 monthsfollowing the Spin-Out. At December 31, 2014, the escrowed cash balance was $10.8 million and is classified as restricted cash on the consolidated balancesheet at December 31, 2014, with $9.3 million reflected as current and $1.5 million reflected as non-current. See Note 11—Related-Party Transactions. On February 19, 2015, the Company completed the sale of 5,000,000 shares of common stock, or the IPO, at a price to the public of $12.00 per share,resulting in net proceeds to the Company of $52.6 million after deducting underwriting discounts and commissions of $4.2 million and offering costs of $3.2million. The Company’s common stock began trading on the NASDAQ Global Market under the symbol “BLPH” on February 13, 2015. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The financial statements have been prepared in accordance with generally accepted accounting principles in the United States or GAAP.Intercompany transactions have been eliminated. For periods prior to the Spin-Out, the financial statements were carved out of the consolidated financialstatements of Ikaria. Although the financial statements prior to the Spin-Out were prepared on a combined carve-out basis, the financial statements for allperiods presented have been labeled “consolidated” financial statements for ease of reference since the most recent balance sheet at December 31, 2014 is aconsolidated balance sheet. At the date of the Spin-Out, the historical accumulated deficit of approximately $182.0 million based on the carve-out financialstatements through February 11, 2014 was eliminated in the transfer of net assets to the Company. The net loss for the period February 12, 2014 throughDecember 31, 2014 of $54.2 million has been reflected as the accumulated deficit on the December 31, 2014 consolidated balance sheet, representing the netloss since the date of the Spin-Out. Net assets contributed to the Company in the Spin-Out were $75.6 million, including cash of $80.0 million. The results ofoperations and cash flows from February 12, 2014 through December 31, 2014 and the balance sheet as of December 31, 2014 represent actual results and thefinancial position of the Company on a stand-alone basis. On February 2, 2015, the Company effected a reverse unit split of its outstanding units at a ratio of one unit for every 12.5257 units previously held.All unit and per unit data included in these consolidated financial statements reflect the reverse unit split. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of costs and expenses during thereporting period, including accrued research and development expenses, stock-based compensation, income taxes and valuation of long-lived assets. Actualresults could differ from those estimates. Management believes that the statements of operations for periods prior to the Spin-Out include a reasonable allocation of costs and expensesincurred by Ikaria which benefited the Company. However, such 131Table of Contents amounts may not be indicative of the actual level of costs and expenses that would have been incurred by the Company if it had operated as an independentstand-alone company or of the costs and expenses expected to be incurred in the future. As such, the financial information herein may not necessarily reflectthe financial position, results of operations and cash flows of the Company expected in the future or what it would have been had it been an independentstand-alone company during the periods presented. Direct and indirect costs related to the Company for INOpulse for PAH, INOpulse for PH-COPD and BCM clinical programs have been allocated tothe Company for periods prior to February 12, 2014. These allocations were based on either a specific identification basis or, when specific identification wasnot practicable, proportional cost allocation methods, such as time and wage studies, depending on the nature of the expense. All allocations were based onactual costs incurred. For purposes of allocating non-project specific expenses, each departmental head provided information as to the percentage ofemployee time incurred on behalf of the Company. Allocations of general and administrative expenses by Ikaria to the Company for periods prior to February 12, 2014 include allocations of corporatemanagement, finance, information technology, legal, human resources and other overhead expenses, based on an approximate pro-rata headcount ofemployees. The Company’s balance sheet at December 31, 2013 includes assets and liabilities that were specifically identified and those that were allocated byIkaria to the Company based on an estimate of the benefit derived from the underlying asset or liability. Ikaria has historically used a centralized approach tocash management and financing of its operations. Prior to the date of the Spin-Out, cash funding for the Company from Ikaria had been accounted for as acapital contribution from Ikaria. (b) Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity date of three months or less to be cash equivalents. (c) Restricted Cash Restricted cash represents amounts held on deposit with a bank in relation to the TSA. The funds are held in an account to settle the requiredpayment to Ikaria for services to be provided in connection with the TSA. The required payments to be paid in excess of one year from the balance sheet dateare classified as long-term restricted cash. See Note 11—Related-Party Transactions. (d) Property, Plant and Equipment Property, plant and equipment are recorded at acquisition cost, which for internally developed assets include labor, materials and overhead.Additions and improvements that increase the value or extend the life of an asset are capitalized. Repairs and maintenance costs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives described below: Asset descriptionEstimated usefullife (years)Machinery, equipment and furniture3 - 15 (e) Impairment of Long-Lived Assets Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. 132Table of Contents Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted expected future cashflows. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carryingamount of the asset exceeds the fair value of the asset. Assets to be sold are no longer depreciated and are reclassified outside of property, plant andequipment at the lower of the carrying amount or fair value less costs to sell. (f) Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with Accounting Standards Codification 718, Compensation—StockCompensation, which establishes accounting for stock-based awards exchanged for services and requires companies to expense the estimated fair value ofthese awards over the requisite service period. The Company recognizes stock-based compensation expense in operations based on the fair value of the awardon the date of the grant. The resulting compensation expense is recognized on a straight-line basis over the requisite service period, generally four years orsooner if awards are immediately vested. The Company determines the fair value of stock options issued using a Black-Scholes-Merton option pricing model.Certain assumptions used in the model include expected volatility, dividend yield, risk-free interest rate and expected term. See Note 8—Stock-BasedCompensation for a description of these assumptions. Prior to the date of the Spin-Out, stock-based compensation expense for the Company represented an allocation of Ikaria’s stock-basedcompensation expense based on the allocation percentages of the Company’s cost centers, which were determined based on specific identification or theproportionate percentage of employee time or headcount to the respective total Ikaria employee time or headcount. (g) Deferred Transaction Costs Deferred transaction costs are costs related to the Company’s initial public offering, which primarily consist of third-party professional legal,accounting and printing fees associated with the Company’s registration statement. These initial public offering costs are deferred and charged against thegross proceeds of an offering when the public offering of equity securities is complete as a reduction of additional paid-in capital. Any deferred costs relatedto an unsuccessful public offering are expensed in the period in which the company elects to abort the public offering. The Company had deferred transactioncosts of $2.5 million as of December 31, 2014, of which $1.9 million had been paid as of December 31, 2014. (h) Income Taxes On the date of the Spin-Out, the Company became a stand-alone limited liability company taxed as a partnership. Under this structure, the Companyis not subject to income tax at the federal level, with the exception of its C-corporation subsidiary (see below), as its members are liable for the taxes on theCompany’s income or loss. The Company is subject to various taxes imposed within the states where it operates, however, currently those states do not have apartnership tax. Although the Company was a limited liability company until it converted into a corporation in February 2015, one of its subsidiaries is a C-corporation that is subject to federal and state income taxes. The Company recorded no income tax provision or benefit for the period from February 12,2014, the date of the Spin-Out, to December 31, 2014 as a result of the net operating losses. The Company did not receive any deferred tax assets or liabilitiesas a result of the Spin-Out. Net operating losses are transferred to members as they are incurred. Prior to the date of Spin-Out, the Company did not file a separate tax return as the Company was included in the tax groupings of other Ikariaentities within the respective entity’s tax jurisdiction. As such, the income tax provisions for 2013 and 2012 were calculated using the separate returnmethod, as if the Company filed a separate tax return in each of its respective tax jurisdictions. The income tax provisions for 2013 and 2012 included inthese carve-out financial statements reflects Ikaria’s status as a C-corporation. Subsequent to the date of the Spin-Out, and prior to the conversion of theCompany from a limited liability company to a corporation, the Company is taxed as a partnership and does not record deferred tax assets or liabilities. 133Table of Contents For financial reporting purposes prior to the Spin-Out, the Company historically recorded no tax expense or benefit due to its operating lossposition. A valuation allowance had been established on net deferred tax assets for periods prior to the Spin-Out because management believed that it is morelikely than not that the Company’s net deferred tax assets will not be realized. For periods prior to the Spin-Out, deferred tax assets and liabilities were recognized for the estimated future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilitieswere measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. For periods prior to the Spin-Out, the Company recognized the benefit of an uncertain tax position that it has taken on income tax returns preparedunder a separate return method if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technicalmerits of the position. These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimateresolution. Unrecognized tax benefits related to net operating loss carryforwards or tax credit carryforwards were presented as a reduction to the related grossdeferred tax assets in the pre-Spin-Out period. A liability for unrecognized tax benefits is classified as non-current unless the liability is expected to be settledin cash within 12 months of the reporting date. Certain deferred tax assets and liabilities and uncertain tax positions that arose as a result of Ikaria’s past activities, such as federal and state netoperating loss carryforwards, research and development credit carryforwards and acquired in-process research and development, were not transferred to theCompany in connection with the Spin-Out and continued to constitute assets and liabilities of Ikaria subsequent to the date of the Spin-Out. As of December 31, 2014 and 2013, the Company had no material uncertain tax positions. (i) Research and Development Expense Research and development costs are expensed as incurred. These expenses include the costs of the Company’s proprietary research and developmentefforts, as well as costs incurred in connection with certain licensing arrangements. Upfront and milestone payments made to third parties in connection withresearch and development collaborations are expensed as incurred up to the point of regulatory approval. Payments made to third parties upon or subsequentto regulatory approval are capitalized and amortized over the remaining useful life of the related product. The Company also expenses the cost of purchasedtechnology and equipment in the period of purchase if it believes that the technology or equipment has not demonstrated technological feasibility and itdoes not have an alternative future use. Nonrefundable advance payments for goods or services that will be used or rendered for future research anddevelopment activities are deferred and are recognized as research and development expense as the related goods are delivered or the related services areperformed. (j) New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2014-09, or ASU 2014-09, Revenuefrom Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Update No. 2009-13,Revenue Recognition (Topic 605) and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers inan amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective forannual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and is to be applied eitherretrospectively to each prior reporting period presented or retrospectively with the cumulative effect recognized at the date of initial application. Earlyapplication is not permitted. Although the Company does not 134Table of Contents generate revenues currently, management is in the process of evaluating the potential impact from the adoption of this guidance. In June 2014, the FASB issued Accounting Standards Update No. 2014-10, or ASU 2014-10, Development Stage Entities (Topic 915): Eliminationof Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10eliminates the distinction of a development stage entity as well as certain related disclosure requirements, including the elimination of inception-to-dateinformation on the statements of operations, members’ equity and cash flows. For public business entities, the amendments in ASU 2014-10 are effectiveprospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, and for other entities, theamendments are effective for annual reporting periods beginning after December 15, 2014, and interim reporting periods beginning after December 15, 2015.Early application is permitted. The Company has adopted ASU 2014-10 for the year ended December 31, 2014. In June 2014, the FASB issued Accounting Standards Update No. 2014-12, or ASU 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite ServicePeriod. ASU 2014-12 clarifies the proper method of accounting for share-based payments when the terms of an award provide that a performance target couldbe achieved after the requisite service period. ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after therequisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of theaward. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should representthe compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in ASU 2014-12 are effectivefor annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company willadopt this guidance if and when share-based awards with performance targets are issued. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, or ASU 2014-15, Presentation of Financial Statements—GoingConcern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 should reduce diversity inthe timing and content of footnote disclosures. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern byincorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, it (1) provides a definition of the termsubstantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect ofmanagement’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires anexpress statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that thefinancial statements are issued (or available to be issued). The amendments in ASU 2014-15 are effective for the annual period ending after December 15,2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact the adoption ofASU 2014-15 will have on its financial statements. (3) Liquidity In the course of its development activities, the Company has sustained operating losses and expects such losses to continue over the next severalyears. The Company’s ultimate success depends on the outcome of its research and development activities. As of December 31, 2014, the Company has anaccumulated deficit of approximately $54.2 million. Management expects to incur additional losses in the future to conduct product research anddevelopment. In connection with the Spin-Out, $80.0 million of cash was distributed to the Company. At the time of the Spin-Out, $18.5 million of the$80.0 million cash held by the Company was deposited in escrow to 135Table of Contents guarantee payment of the monthly services fees payable by the Company to Ikaria in exchange for the services to be provided by Ikaria pursuant to thetransition services agreement during the 24 months following the Spin-Out. The remaining escrowed cash has been classified as restricted cash as ofDecember 31, 2014. See Note 11—Related-Party Transactions. The Company received net proceeds of $52.6 million in February 2015 as a result of the IPO, after deducting underwriting discounts andcommissions of $4.2 million and offering costs of $3.2 million. These proceeds, together with the Company’s cash and restricted cash on hand, is expected tobe sufficient to satisfy the Company’s operating cash needs at least into mid-2016. After this time, management recognizes the Company will need to raiseadditional capital through the potential issuance of additional equity or borrowings or entering into strategic alliances with partner companies to fund allnecessary research and development activities to successfully commercialize its product candidates. However, if such additional capital is not available atadequate levels or such strategic alliances do not occur, the Company will need to evaluate its plans. The Company’s estimates and assumptions may proveto be wrong, and the Company may exhaust its capital resources sooner than expected. The process of testing product candidates in clinical trials is costly,and the timing of progress in clinical trials is uncertain. Because the Company’s product candidates are in clinical development and the outcome of theseefforts is uncertain, the Company cannot estimate the actual amounts that will be necessary to successfully complete the development andcommercialization, if approved, of its product candidates or whether, or when, the Company may achieve profitability. (4) Restructuring Charges In December 2011, Ikaria announced the planned closure of its Seattle-based facility. Charges of $1.3 million were allocated to the Company andrecorded in 2011. Accrued severance and related charges were paid in 2012. Facility lease obligations extended through March 2014. In 2012, an additional$0.3 million charge was recorded for the impairment of fixed assets related to the closure of the Seattle-based facility, which was recorded in other operatingexpense in the 2012 statement of operations and comprehensive loss. (5) Property, Plant and Equipment At the date of the Spin-Out, Ikaria transferred specifically identified assets to the Company at the carrying amount of the assets as of February 12,2014. Prior to the date of the Spin-Out, property, plant and equipment and accumulated depreciation were either specifically identified or allocated to theCompany by Ikaria. Property and equipment as of December 31, 2014 and December 31, 2013 consist of the following (in thousands): December 31,2014 December 31,2013 Machinery, equipment and furniture$2,943$2,943Less accumulated depreciation(1,247)(859)$1,696$2,084 (6) Other Current Liabilities Other current liabilities as of December 31, 2013 either specifically identified or allocated to the Company by Ikaria consisted of the followingaccrued expenses (in thousands): 136Table of Contents Other current liabilities — allocated current portion of Ikaria special dividend bonus payable$1,839 See Note 8—Stock-Based Compensation, for a discussion of the Ikaria special dividend bonus payable. No similar liabilities existed at December 31, 2014. (7) Income Taxes Although the Company was a limited liability company as of December 31, 2014 and was not subject to income taxes in any jurisdiction, one of theCompany’s subsidiaries is a C-corporation and is subject to state and federal income taxes. Each member was responsible for the tax liability, if any, relatedto his, her or its proportionate share of the Company’s pre-tax loss. There was an immaterial operating loss in the Company’s C-corporation subsidiary in2014. Accordingly, no provision or benefit for income taxes is reflected in the Company’s 2014 consolidated financial statements. Prior to the date of the Spin-Out, the Company did not file a separate tax return as the Company was included in the tax groupings of other Ikariaentities within the respective entity’s tax jurisdiction. As such, the income tax provisions for 2013 and 2012 were calculated using the separate returnmethod, as if the Company filed a separate tax return in each of its respective tax jurisdictions. The income tax provisions for 2013 and 2012 included inthese carve out financial statements reflects Ikaria’s status as a C-corporation. A reconciliation of the statutory federal income tax rate to the Company’seffective tax rate for the years ended December 31, 2013 and 2012 is as follows: Year EndedDecember 31,2013 Year EndedDecember 31,2012 U.S. federal statutory rate35.0%35.0%State and local taxes, net of federal tax effect5.3%5.2%Research tax credits5.0%5.6%Valuation allowance(44.4)%(44.6)%Incentive stock options(0.1)%(0.2)%Other(0.8)%(1.0)%0.0%0.0% Deferred taxes as of December 31, 2013 and 2012 reflect the tax effects of the differences between the amounts recorded as assets and liabilities forfinancial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the deferred tax assets (liabilities) atDecember 31, 2013 are as follows, as allocated by Ikaria (in thousands): December 31, 2013 Assets (Liabilities) Net operating loss carryforwards$62,295$—Research tax credit carryforwards9,615—Property, plant and equipment—(1,269)Intangible assets5,140—Accrued compensation1,103—Other28—Subtotal78,181(1,269)Valuation allowance(76,912)—Total deferred tax assets (liabilities)$1,269$(1,269)Net deferred tax assets$0 137Table of Contents A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As ofDecember 31, 2013, management believed that it was more likely than not that the deferred tax assets would not be realized, based on future operations,consideration of tax strategies and the reversal of deferred tax liabilities. As of December 31, 2013, the Company had gross deferred tax assets of$78.2 million. The Company maintained a valuation allowance of $76.9 million at December 31, 2013. As of December 31, 2013, the Company had unrecognized tax benefits related to research tax credit carryforwards, which were reflected as areduction to the gross deferred tax asset. As of December 31, 2014 and 2013, the Company had no material uncertain tax positions. Deferred taxes arising from the loss in the Company’s C-corporation subsidiary were fully reserved as of December 31, 2014 and were immaterial. No other deferred taxes existed at December 31, 2014 due to the Company’s limited liability company structure. (8) Stock-Based Compensation Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of the Company’sunits and for options, the expected life of the option and expected volatility. The Company uses the Black-Scholes-Merton option pricing model to value itsstock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherentuncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-basedcompensation expense could be materially different for future awards. The expected term of stock options is estimated using the “simplified method,” as theCompany has no historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behaviorfor its stock options grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For volatility, theCompany uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free interest rate isbased on U.S. Treasury notes with a term approximating the expected term of the option. The estimation of the number of stock awards that will ultimatelyvest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as anadjustment in the period in which estimates are revised. Bellerophon 2014 Equity Incentive Plan During the year ended December 31, 2014, the Company adopted the 2014 Equity Incentive Plan, or the 2014 Plan, which provides for the grant ofoptions. The Company is authorized to issue options in an amount up to an aggregate of 558,851 non-voting units to eligible employees, directors andconsultants, subject to the Board approval and amendments. The granted awards generally have a vesting period of four years, of which 25% of the awardsvest on the second anniversary of grant date, 25% vest on the third anniversary and the remaining 50% vest on the fourth anniversary of the grant date. During the year ended December 31, 2014, the Company awarded a total of 514,266 options to its executives and employees to purchase theequivalent number of non-voting units with an exercise price of $13.28 per unit. Options for non-voting units are granted to employees at exercise pricesequal to the fair value of the Company’s non-voting units based on an independent third-party appraisal report. Approximately 90,000 options granted werefully vested at the grant date, with the remaining options to vest over a four year period from the date of the Spin-Out. Compensation expense is measuredbased on the fair value of the option on the grant date and is recognized on a straight-line basis over the requisite service period, or sooner if vesting occurs 138Table of Contents sooner than on a straight-line basis. Options are forfeited if the employee ceases to be employed by the Company prior to vesting. The following are the assumptions used in estimating the fair value of options issued during the year ended December 31, 2014. Year EndedDecember 31, 2014 Valuation assumptions:Risk-free interest rate1.71%Expected volatility90.00%Expected term (in years)6.1Expected dividend yield0.00% The weighted average grant date fair value of options granted during the year ended December 31, 2014 subsequent to the date of the Spin-Out was$9.90 per option. A summary of option activity under the 2014 Plan for the year ended December 31, 2014 subsequent to the date of the Spin-Out is presented below: Shares ExercisePrice WeightedAverageExercise Price Weighted AverageRemainingContractualLife (in years)Options outstanding as of February 12, 2014——Granted514,266$13.28$13.28Exercised—Forfeited(5,986)13.2813.28Options outstanding as of December 31, 2014508,28013.2813.289.5Options vested and exercisable as of December 31, 201490,082$13.28$13.289.5 As of December 31, 2014, there was approximately $3.5 million of total unrecognized compensation expense related to non-vested options. Thisexpense is expected to be recognized over a weighted-average period of approximately 3.5 years. Ikaria Equity Incentive Plans for Periods Prior to February 12, 2014 The Company presented allocated stock-based compensation expenses from Ikaria for the periods prior to February 12, 2014, the date of Spin-Out inits consolidated statements of operations and comprehensive loss. These allocated expenses were derived from Ikaria’s historical financial statements. SeeNote 2(a)—Summary of Significant Accounting Policies—Basis of Presentation. The following disclosures for dates prior to the date of the Spin-Out pertainto stock-based compensation and the Ikaria special dividend bonus payable that were allocated to the Company related to Ikaria stock-based awards. In February 2014, prior to the Spin-Out, each Ikaria stock option, other than options held by non-accredited investors who were also not employeesof Ikaria, was adjusted such that it became an option to acquire the same number of shares of Ikaria non-voting common stock as were subject to the Ikariastock option, or an Adjusted Ikaria Option, and an option to acquire the same number of non-voting limited liability company units of the Company as thenumber of shares of Ikaria non-voting common stock that were subject to the Ikaria stock option, or a Bellerophon Option. There were 618,212 BellerophonOptions issued as a result of the 139Table of Contents adjustment of Ikaria stock options. The vesting of each Adjusted Ikaria Option and Bellerophon Option was fully accelerated on the date of the Spin-Out andall related compensation expense was recognized as an expense by Ikaria. Ikaria Special Dividend Plan In October 2011, Ikaria approved dividend equivalent rights for options, restricted stock units, or RSUs, and other equity awards granted under itsequity award plans. Pursuant to the special dividend plan, in the event that the Ikaria board declared a dividend, each employee of the Company who heldequity awards was eligible to receive a cash payment equal to the amount of the dividend per share, multiplied by the number of equity awards outstanding.The payment was payable as of the declaration date for vested options. For unvested options and unvested RSUs, payment was due upon vesting. As ofDecember 31, 2013, the Company’s allocated portion of the special dividend bonus payable was $6.1 million of which $1.8 million was reflected in othercurrent liabilities and $4.3 million was reflected in non-current liabilities. The entire allocated portion of the special dividend bonus payable as ofFebruary 11, 2014 was settled in cash on the Company’s behalf by Ikaria. Stock Options Prior to and in connection with the Spin-Out, the exercise price of each Adjusted Ikaria Option and Bellerophon Option was adjusted by allocatingthe relative post Spin-Out estimated fair values of Ikaria and the Company in a ratio of 85% and 15%, respectively, to the original Ikaria option exerciseprice. The expiration date of the options was not modified. The Company’s allocable portion of Ikaria’s stock-based compensation expense related to optionsfor the period from January 1, 2014 through February 11, 2014 and the year ended December 31, 2013 was approximately $0.1 million and $1.7 million,respectively. There were 577,975 Bellerophon options outstanding as of December 31, 2014 at exercise prices ranging from $0.26 to $17.92 per unit. All optionsoutstanding were fully vested at the time of the Spin-Out. A summary of option activity related to the Bellerophon Options for the year ended December 31, 2014 is presented below: Ikaria Equity Incentive Plans for Periods Prior toFebruary 12, 2014 Shares Range ofExercise Price WeightedAverageExercise Price WeightedAverageRemainingContractualLife (in years)Options issued and vested at date of Spin-Out as of February 12,2014618,212$0.26 - 17.92$7.24Granted—Exercised(8,182)7.77 - 8.777.99Forfeited(32,055)7.77 - 14.919.39Options outstanding, vested and exercisable as of December 31,2014577,975$0.26 - 17.92$7.114.5 Restricted Stock Units In February 2014, prior to the Spin-Out, each Ikaria RSU was adjusted such that it became an RSU with respect to the same number of shares of Ikarianon-voting common stock as were subject to the Ikaria RSU, or an Adjusted Ikaria RSU, and an RSU with respect to the same number of non-voting limitedliability company units of the Company as were subject to the Ikaria RSU, or a Bellerophon RSU. In connection with the Merger and the Spin-Out, thevesting of each Adjusted Ikaria RSU and Bellerophon RSU was fully accelerated. The 140Table of Contents compensation expense incurred upon the acceleration of the RSUs was recognized by Ikaria. Fully vested Bellerophon RSUs of 372,947 became Bellerophonnon-voting units as of the date of the Spin-Out. Ikaria had granted RSUs to employees that generally vested over a four-year period. RSUs granted prior to January 1, 2011 vested 25% annually.RSUs granted on and after January 1, 2011 vested 25% on the second and third anniversary of the date of grant and 50% on the fourth anniversary of the dateof grant. Shares of Ikaria non-voting common stock were delivered to the employee upon vesting, subject to payment of applicable withholding taxes, whichwere paid in cash or an equivalent amount of shares withheld. Compensation expense for all RSUs was based on the grant date fair value of the RSU issued,which was based on the fair value of common stock of Ikaria. Compensation expense for RSUs was recognized by Ikaria on a straight-line basis over therequisite service period. The RSU expense allocated from Ikaria totaled $0.2 million for the period from January 1, 2014 through February 11, 2014. Stock-Based Compensation Expense, Net of Estimated Forfeitures The following table summarizes the stock-based compensation expense by the consolidated statement of operations and comprehensive loss lineitem for the years ended December 31, 2014, 2013 and 2012. For comparison purposes, the following disclosures include stock-based compensation expenserecognized under the 2014 Plan and stock-based compensation expense for dates prior to the Spin-Out that were allocated to the Company related to Ikariastock-based awards. Year EndedDecember 31,(in thousands)20142013 2012Research and development$271$1,120$882General and administrative1,568601567Total expense$1,839$1,721$1,449Tax benefit—(232)(140)Expense, net of tax benefit$1,839$1,489$1,309 (9) Investment by Ikaria, Inc. The Company’s historical operating cash requirements prior to the date of the Spin-Out were provided by Ikaria. The balance in the investment byIkaria account as of the date of the Spin-Out of $177.5 million represented the investment by Ikaria in the Company, including cash funding as well as theimpact of stock-based compensation awards, which increased equity, and the Ikaria special dividend bonus payable allocated to the Company, whichdecreased equity. This amount was eliminated with the transfer of net assets at the date of the Spin-Out. (10) Product Acquisitions and Other Agreements The Company has entered, and will consider entering, into agreements to develop and commercialize product candidates, which may includeresearch and development, marketing and selling, manufacturing and distribution agreements. These agreements often require milestone and royalty or profitshare payments, contingent upon the occurrence of certain future events linked to the success of the asset in development, as well as expense reimbursements.Costs incurred pursuant to these agreements are reported in their respective expense line items in the statements of operations. BioLineRx Ltd. In August 2009, the Company entered into a license agreement with BioLineRx Ltd. and BioLine Innovations Jerusalem L.P., which are referred tocollectively as BioLine, under which the Company obtained an exclusive worldwide license to BCM. The Company paid BioLine a $7.0 million upfrontpayment in 2009 and a $10.0 million milestone payment in 2010. Under the terms of the license agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize at leastone product containing BCM. Under the terms of the license agreement, if the Company achieves certain clinical and regulatory events specified in thelicense agreement, the Company will be obligated to pay milestone payments to BioLine that could total, in the aggregate, up to $115.5 million, and if theCompany achieves certain commercialization targets specified in the license agreement, the Company will be obligated to pay additional milestonepayments to BioLine that could total, in the aggregate, up to $150.0 million. In addition, the Company is obligated to pay BioLine a specified percentage ofany upfront consideration it receives for sublicensing BCM, as well as royalties on net sales, if any, at a percentage ranging from 11% to 15%, depending onnet sales level, of any approved product containing BCM, subject to offsets for specified payments to third parties made in connection with BCM. TheCompany’s obligation to pay BioLine royalties will expire on a product-by-product and country-by-country basis on the date on which BCM is no longercovered by a valid claim in the licensed patent rights in the given country. BioLine has the option, exercisable under specified circumstances, to manufacture any product containing BCM for the Company pursuant to termsto be negotiated by the parties. If BioLine exercises this option, the Company would generally be obligated to purchase at least a specified percentage of itsBCM requirements from BioLine at a price calculated using a pre-agreed methodology. Except under specified circumstances, the Company may not directly or indirectly acquire more than a specified percentage of the equity or debtsecurities of BioLine, or urge, induce, entice or solicit any other party to acquire such securities, without BioLine’s consent. The Company and BioLine have the right to terminate the license agreement for an uncured material breach by the other party. In addition, theCompany has the right to terminate the license agreement if at any time the Company determines that further development of products containing BCM isnot warranted. See Note 13—Commitments and Contingencies. (11) Related-Party Transactions Separation and Distribution Agreement In connection with the Spin-Out, in February 2014, the Company and Ikaria entered into a separation and distribution agreement which sets forthprovisions relating to the separation of the Company’s business from Ikaria’s other businesses. The separation and distribution agreement described the assetsand liabilities that remained with or were transferred to the Company and those that remained with or were transferred to Ikaria. The separation anddistribution agreement provides for a full and complete release and discharge of all liabilities between Ikaria and the Company, except as expressly set forthin the agreement. The Company and Ikaria each agreed to indemnify, defend and hold harmless the other party and its subsidiaries, and each of theirrespective past and present directors, officers and employees, and each of their respective permitted successors and assigns, from any and all damages relatingto, arising out of or resulting from, among other things, the Company’s business and certain additional specified liabilities or Ikaria’s business and certainadditional specified liabilities, as applicable. 141Table of Contents License Agreement In February 2014, the Company entered into a cross-license, technology transfer and regulatory matters agreement with a subsidiary of Ikaria.Pursuant to the terms of the license agreement, Ikaria granted to the Company a fully paid-up, non-royalty-bearing, exclusive license under specifiedintellectual property rights controlled by Ikaria to engage in the development, manufacture and commercialization of nitric oxide, devices to deliver nitricoxide and related services for or in connection with out-patient, chronic treatment of patients who have PAH, PH-COPD or idiopathic pulmonary fibrosis, orPH-IPF. Pursuant to the terms of the license agreement, the Company granted Ikaria a fully paid-up, non-royalty-bearing, exclusive license under specifiedintellectual property rights that the Company controls to engage in the development, manufacture and commercialization of products and services for or usedin connection with the diagnosis, prevention or treatment, whether in- or out-patient, of certain conditions and diseases other than PAH, PH-COPD or PH-IPFand for the use of nitric oxide to treat or prevent conditions that are primarily managed in the hospital. The Company agreed that, during the term of thelicense agreement, it will not, without the prior written consent of Ikaria, grant a sublicense under any of the intellectual property licensed to the Companyunder the license agreement to any of its affiliates or any third party, in either case, that directly or indirectly competes with Ikaria’s nitric oxide business. Agreements Not to Compete In September 2013, October 2013 and February 2014, the Company and each of its subsidiaries entered into an agreement not to compete with asubsidiary of Ikaria, or, collectively, the agreements not to compete. Pursuant to the agreements not to compete, the Company and each of its subsidiariesagreed not to engage, anywhere in the world, in any manner, directly or indirectly, until the earlier of five years after the effective date of such agreement notto compete or the date on which Ikaria and all of its subsidiaries are no longer engaged in such business, in: · the development, manufacture, commercialization, promotion, sale, import, export, servicing, repair, training, storage, distribution,transportation, licensing, or other handling or disposition of any product or service (including, without limitation, any product or service thatutilizes, contains or includes nitric oxide for inhalation, a device intended to deliver nitric oxide or a service that delivers or supports thedelivery of nitric oxide), bundled or unbundled, for or used in connection with (a) the diagnosis, prevention, or treatment, in both adult and/orpediatric populations, and whether in- or out-patient, of: (i) hypoxic respiratory failure associated with pulmonary hypertension, (ii) pulmonaryhypertensive episodes and right heart failure associated with cardiovascular surgery, (iii) bronchopulmonary dysplasia, (iv) the management ofventilation—perfusion mismatch in acute lung injury, (v) the management of ventilation—perfusion mismatch in acute respiratory distresssyndrome, (vi) the management of pulmonary hypertension episodes and right heart failure in congestive heart failure, (vii) pulmonary edemafrom high altitude sickness, (viii) the management of pulmonary hypertension episodes and right heart failure in pulmonary or cardiac surgery,(ix) the management of pulmonary hypertension episodes and right heart failure in organ transplant, (x) sickle cell vaso-occlusive crisis,(xi) hypoxia associated with pneumonia, or (xii) ischemia-reperfusion injury, or (b) the use of nitric oxide to treat or prevent conditions that areprimarily managed in the hospital; or · any and all development, manufacture, commercialization, promotion, sale, import, export, storage, distribution, transportation, licensing, orother handling or disposition of any terlipressin or any other product within the pressin family, (a) intended to treat (i) hepatorenal syndrome inany form (HRS), (ii) bleeding esophageal varices or (iii) septic shock or (b) for or in connection with the management of low blood pressure. 142Table of Contents Transition Services Agreement In February 2014, the Company and Ikaria entered into the TSA, pursuant to which Ikaria agreed to use commercially reasonable efforts to providecertain transition services to the Company for a twenty-four month term, which services include management/executive, human resources, real estate,information technology, accounting, financial planning and analysis, legal, quality and regulatory support. Ikaria also has agreed to use reasonable efforts toprovide the Company with the use of office space at Ikaria’s headquarters in Hampton, New Jersey pursuant to the terms of the TSA. In exchange for theservices, beginning in February 2014, the Company is obligated to pay Ikaria monthly services fees in the amount of $772,000 plus out of pocket expensesand certain other expenses. At the time of the Spin-Out, the Company deposited the sum of $18.5 million, representing the aggregate of the$772,000 monthly service fees payable by the Company under the TSA, in escrow to guarantee payment of the monthly services fees by the Company. Theescrowed cash is classified as restricted cash as of December 31, 2014. The Company recorded expenses of $8.2 million from the date of the Spin-Out throughDecember 31, 2014 in connection with the TSA. At December 31, 2014, the Company had accrued expenses due to Ikaria of $0.5 million in connection withthe TSA. Supply Agreements In February 2014, the Company entered into drug supply and device supply agreements with a subsidiary of Ikaria. Under these agreements, Ikariaagreed to use commercially reasonable efforts to supply inhaled nitric oxide and nitric oxide delivery devices for use in the Company’s clinical trials, in eachcase at Ikaria’s manufacturing cost plus a 20% mark-up, and in the case of the drug supply agreement, the Company has agreed to purchase its clinical supplyof inhaled nitric oxide from Ikaria. The Company also granted Ikaria a right of first negotiation in the event that the Company desires to enter into acommercial supply agreement with a third party for supply of nitric oxide for inhalation. The amount due to Ikaria under the drug supply agreement as ofDecember 31, 2014 was approximately $0.2 million. The device supply agreement expired on February 9, 2015 and no amounts were due to Ikaria under thisagreement as of December 31, 2014. (12) Segments and Geographic Information The Company operates in one reportable segment and solely within the United States. Accordingly, no segment or geographic information has beenpresented. (13) Commitments and Contingencies Legal Proceedings The Company periodically becomes subject to legal proceedings and claims arising in connection with its business. The ultimate legal and financialliability of the Company in respect to all proceedings, claims and lawsuits, pending or threatened, cannot be estimated with any certainty. BioLine previously indicated to the Company that it believed that the Company had breached the license agreement in several ways, including, butnot limited to, failure to use commercially reasonable efforts to develop BCM, failure to provide BioLine with material information concerning thedevelopment and commercialization plans for BCM and failure to notify BioLine in advance of material public disclosures regarding BCM. The Companyand BioLine also previously disagreed about the timing of a certain milestone payment that the Company would owe BioLine based upon progress in theCompany’s BCM clinical development program. The Company believed it had complied with its obligations under the license agreement to usecommercially reasonable efforts to develop BCM and was not in breach of its other obligations under the license agreement. No amounts were previouslyaccrued for this matter since no loss was probable as of December 31, 2014. On January 8, 2015, the Company and BioLine agreed to amend the licenseagreement, which resolved the prior disputes and provided for a release of claims by BioLine. The amendment also changed certain milestones and relatedpayments, but the total potential milestone payments to be paid to BioLine under the license agreement remained the same. No additional milestones havebeen met as of March 31, 2015. 143Table of Contents As of the date of this report, there is no proceeding, claim or litigation, pending or threatened, that could, individually or in the aggregate, have amaterial adverse effect on the Company’s business, operating results, financial condition and/or liquidity. Operating Lease and Transition Services Agreement The Company leases an operating facility located in North Brunswick, New Jersey under an operating lease arrangement. Future minimum rentalcommitments under the Company’s non-cancellable operating lease and future required payments under the TSA as of December 31, 2014 are as follows (inthousands): OperatingLease(1) TransitionServicesAgreement(2)2015$23$9,264Thereafter—1,548Total$23$10,812 (1) Reflects the Company’s obligation to make payments in connection with a lease for its operating facilities. The amounts in the table do not includethe Company’s rent obligation of $115,000 from March 15, 2015 through March 15, 2016 under an extension to the Company’s lease that theCompany signed subsequent to December 31, 2014. (2) See Note 11—Related Party Transactions for a description of the TSA. Rent expense, including direct and allocated expenses, is calculated on the straight-line basis and amounted to approximately $0.5 million for eachof the years ended December 31, 2014, 2013 and 2012. (14) Net Loss Per Unit Basic net loss per unit is calculated by dividing net loss by the weighted average number of units outstanding during the period. Diluted net loss perunit is calculated by dividing net loss by the weighted average number of units outstanding, adjusted to reflect potentially dilutive securities (options) usingthe treasury stock method, except when the effect would be anti-dilutive. No net loss per unit information is presented for periods prior to the Spin-Out. The weighted average units outstanding for basic and diluted net loss per unit for the for the year ended December 31, 2014 was 7,898,289, whichrepresents the weighted average number of units outstanding for the period from February 12, 2014 through December 31, 2014. The Company is reporting a net loss for the year ended December 31, 2014, therefore diluted net loss per unit is the same as the basic net loss perunit. As of December 31, 2014, the Company had 1,086,255 options to purchase units outstanding that have been excluded from the computation ofdiluted weighted average units outstanding, because such securities had an antidilutive impact due to the loss reported. 144Table of Contents (15) Subsequent Events Effective as of January 1, 2015, the Company entered into a services agreement with Ikaria, or the 2015 Services Agreement, pursuant to which theCompany has agreed to use commercially reasonable efforts to provide certain services to Ikaria, including services related to regulatory matters, drug anddevice safety, clinical operations, biometrics and scientific affairs. In connection with the execution of the 2015 Services Agreement, Ikaria paid theCompany a one-time service fee in the amount of $916,666 and will be obligated to pay the Company a service fee in the amount of $83,333 per month for13 months, subject to performance of the services. In addition, pursuant to the terms and conditions of the 2015 Services Agreement, Ikaria has agreed to usecommercially reasonable efforts to provide certain services to the Company, including services related to information technology, and servicing andupgrades of INOpulse devices. The Company is obligated to pay Ikaria certain fees under the 2015 Services Agreement that total, in the aggregate,approximately $215,000, subject to termination of the 2015 Services Agreement. The 2015 Services Agreement will terminate in February 2016. On February 2, 2015, the Company effected a reverse unit split of its outstanding units at a ratio of one unit for every 12.5257 units previously held.All unit and per unit data included in these consolidated financial statements reflect the reverse unit split. On February 12, 2015, the Company converted from a Delaware limited liability company to a Delaware corporation in connection with the IPO. On February 19, 2015, the Company completed the sale of 5,000,000 shares of common stock in the IPO at a price to the public of $12.00 per share,resulting in net proceeds to the Company of $52.6 million after deducting underwriting discounts and commissions of $4.2 million and offering costs of $3.2million. The Company’s common stock began trading on the NASDAQ Global Market under the symbol “BLPH” on February 13, 2015. On March 5, 2015, Mallinckrodt plc and Ikaria announced that the two companies had entered into a definitive agreement under which a subsidiaryof Mallinckrodt will acquire Ikaria and that they expect the acquisition will be completed in the second calendar quarter of 2015. While the Company’s TSA,license agreement and drug supply agreement impose binding obligations on Ikaria to perform in accordance with such agreements’ terms, it is possible thatfollowing completion of the sale, as the new owner’s influence on Ikaria’s operations increases, Ikaria may not continue to provide the same level ofperformance under such agreements as it has provided to date, or may perform differently than it has to date. Moreover, to the extent that the Companydesires to extend or renew the TSA or expand the scope of the TSA, license agreement or drug supply agreement, it is also possible that Ikaria will not bewilling to do so on reasonable terms, or at all. (16) Quarterly Financial Data (unaudited) Three Months EndedThree Months EndedThree Months EndedThree Months EndedDecember 31,September 30,June 30,March 31,(in thousands, except unit and per unit data)2014201320142013201420132014 2013 Operating expenses:Research and development$9,610$13,917$11,559$11,762$12,769$14,959$12,040$12,347General and administrative3,1772,8573,9342,5494,1941,8382,4701,769Total operating expenses12,78716,77415,49314,31116,96316,79714,51014,116Interest income18—13—48———Total other income18—13—48———Pre-tax loss(12,769)(16,774)(15,480)(14,311)(16,915)(16,797)(14,510)(14,116)Income tax benefit (expense)————————Net loss and comprehensive loss$(12,769)$(16,774)$(15,480)$(14,311)$(16,915)$(16,797)$(14,510)$(14,116) Weighted average units outstanding:Basic and diluted7,898,9227,897,1437,898,3017,899,251 Net loss per unit:Basic and diluted$(1.62)$(1.96)$(2.14)$(1.84) 145Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of ourdisclosure controls and procedures as of December 31, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by acompany in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified inthe SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’smanagement, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timelydecisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provideonly reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship ofpossible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2014, our principal executive officerand principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or anattestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for “emerging growthcompanies.” Changes in Internal Control Over Financial Reporting No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during thefiscal quarter ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. 146Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Executive Officers, Key Employees and Directors The following table sets forth the name, age and position of each of our executive officers, key employees and directors as of March 25, 2015. Name AgePositionJonathan M. Peacock57Chief Executive Officer, President and Chairman of the BoardManesh Naidu45Vice President and Chief Business OfficerReinilde Heyrman, M.D.54Vice President, Chief Clinical Development Officer and SecretaryMartin Meglasson, Ph.D.65Vice President and Chief Scientific OfficerDavid Abrams40TreasurerDeborah A. Quinn, M.D.60Vice President and Medical Lead for INOpulse ProgramsMartin Dekker42Vice President of Device EngineeringMatthew Holt(2)(3)38DirectorJens Luehring(1)41DirectorAndre V. Moura(1)(3)33DirectorRobert T. Nelsen(2)51DirectorDaniel Tassé55DirectorAdam B. Weinstein(1)36Director (1) Member of the Audit Committee (2) Member of the Compensation Committee (3) Member of the Nominating and Corporate Governance Committee Jonathan M. Peacock has served as our Chief Executive and President and as the Chairman of our board of directors since June 2014. Prior tojoining us, Mr. Peacock served as the Chief Financial Officer of Amgen Inc., a biotechnology company, from September 2010 to January 2014. FromNovember 2005 to September 2010, he served as Chief Financial and Administrative Officer of Novartis Pharmaceuticals AG, the Pharmaceuticals andBiotechnology division of Novartis AG. Mr. Peacock was a partner at McKinsey and Company, a global strategy consulting firm, from 1998 to 2005. Beforethat, he was a partner at Price Waterhouse LLP, a global accounting firm (now PricewaterhouseCoopers LLP), from 1993 to 1998. He currently serves on theboard of directors of Kite Pharma, Inc., a biopharmaceutical company. Mr. Peacock received an M.A. degree in economics from the University of St. Andrews.We believe that Mr. Peacock is qualified to serve on our board of directors because of his global management experience, his experience as an officer of apublic company in our industry, his financial expertise and his position as our Chief Executive Officer and President. Manesh Naidu has served as our Vice President and Chief Business Officer since February 2014. Mr. Naidu previously served as Vice President andGeneral Manager of the INOpulse program of Ikaria, a biotherapeutics company, from August 2011 to February 2014, and prior to that, he served as SeniorDirector, Marketing Strategy of Ikaria from May 2008 to August 2011. Prior to joining Ikaria, Mr. Naidu held several positions at Novartis Corporation andPfizer Inc., both of which are pharmaceutical companies, from 2003 to 2008. He also worked at McKinsey & Company, a global strategy consulting firm,from 2001 to 2003. Mr. Naidu received an M.S. in chemical engineering from Oklahoma State University, a B.E. in chemical engineering and an M.S. inchemistry both from the Birla Institute of Technology and Science, and an M.B.A. from the Kellogg School of Management at Northwestern University. 147Table of Contents Reinilde Heyrman, M.D. has served as our Vice President, Chief Clinical Development Officer and Secretary since February 2014. Prior to joiningus, Dr. Heyrman served as Vice President, Chief Clinical Development Officer of Ikaria from March 2012 to February 2014. Dr. Heyrman held severalpositions at Daiichi Sankyo Pharma Development, a pharmaceutical company, from 2005 to March 2012, most recently as Vice President, ClinicalDevelopment from 2009 to March 2012. From 2001 to 2002 and 2002 to 2005, Dr. Heyrman served as Director Clinical Research and Senior DirectorClinical Research, respectively, at Sankyo Pharma Development, a pharmaceutical company. Dr. Heyrman received an M.D. from the University of Antwerp,Belgium. Martin Meglasson, Ph.D. has served as our Vice President and Chief Scientific Officer since February 2014. From July 2010 to February 2014,Dr. Meglasson served as Chief Scientific Officer of Ikaria. Prior to joining Ikaria, Dr. Meglasson served as Vice President, head of Research and Developmentof Ligand Pharmaceuticals Incorporated, a biotechnology company, from February 2004 to July 2010. From 1996 to 2003, Dr. Meglasson was Director ofPreclinical Pharmacology at Pharmacia, Inc., a pharmaceutical company, and from 1984 to 1992, he was first an Assistant Professor and later an AssociateProfessor of Pharmacology at the University of Pennsylvania School of Medicine. Dr. Meglasson received a B.S. in biology, an M.S. in physiology and aPh.D. in pharmacology, each from the University of Houston. David Abrams has served as our Treasurer since February 2014, with responsibilities for treasury, financial planning and financial reporting. Prior tojoining us, Mr. Abrams held various roles in strategic financial planning at Ikaria from October 2010 to February 2014 and at Johnson & Johnson, ahealthcare products company, from May 2002 to October 2010. Mr. Abrams has previously held roles at Stern Stewart and Deutsche Bank. Mr. Abramsreceived a B.S. in economics from The Wharton School of Business of the University of Pennsylvania and a B.A. in history from the University ofPennsylvania. Deborah A. Quinn, M.D. has served as our Vice President and Medical Lead for the INOpulse programs since January 2015. Prior to joining us,Dr. Quinn held several positions at Novartis Pharmaceuticals AG from December 2006 to January 2015, most recently as medical director for both pulmonaryarterial hypertension and heart failure programs. Previously, Dr. Quinn worked at the Massachusetts General Hospital from 1998 to 2011 where she was anInstructor in Medicine from 1998 to 2006 and a Clinical Assistant Professor in Medicine at Harvard Medical School from 2006 to 2011. Her postdoctoraltraining in Medicine and Pulmonary and Critical Care Fellowship were at Massachusetts General Hospital. She received an M.D. from the University ofMassachusetts Medical School. Martin Dekker has served as our Vice President of Device Engineering since January 2015. Prior to joining us, Mr. Dekker held several positions atSpacelabs Healthcare, a company that develops and manufacturers medical devices, from November 1998 to January 2015, most recently as Director ofGlobal Operations Engineering. During his time at Spacelabs Healthcare, Mr. Dekker led and co-designed new products, developed and launchedtransformative manufacturing technologies and championed cross-functional quality/engineering projects. He is a member of the Institute of Electrical andElectronic Engineers. Mr. Dekker received a B.S. in electronics from Noordelijke Hogeschool Leeuwarden, the Netherlands. Matthew Holt has served as a member of our board of directors since February 2014. Since 2001, Mr. Holt has been employed by New MountainCapital, a private equity group, where he currently serves as a Managing Director. Prior to joining New Mountain Capital, Mr. Holt served in the mergers andacquisitions Group at Lehman Brothers, a financial services firm. Mr. Holt has served on the board of directors of Ikaria since March 2007. Mr. Holt receivedan A.B. in English and American literature and language from Harvard College. We believe that Mr. Holt is qualified to serve on our board of directorsbecause of his financial expertise and his years of experience providing strategic advisory services across many industries. Jens Luehring has served as a member of our board of directors since January 2015. Mr. Luehring has been the Head of Finance, Americas, of TheLinde Group since April 2012. In this position, his responsibilities include accounting, tax, business planning, investments, treasury and insurance. Prior tohis current role, 148Table of Contents Mr. Luehring was the Head of Mergers & Acquisitions of The Linde Group from April 2007 to March 2012. Mr. Luehring received a Master of BusinessEconomics from Hanover University in 1998. Prior to joining The Linde Group in January 2006, Mr. Luehring worked in investment banking, coveringcorporate finance, private equity, equity capital markets and mergers and acquisitions. We believe that Mr. Luehring is qualified to serve on our board ofdirectors because of his financial, business and strategic expertise. Andre V. Moura has served as a member of our board of directors since February 2014. Mr. Moura joined New Mountain Capital in 2005, where hecurrently serves as a Director. Prior to joining New Mountain Capital, Mr. Moura was employed by McKinsey & Company, a global management consultingfirm. Mr. Moura also serves on the board of directors of two privately held companies. Mr. Moura received an A.B. in computer science from Harvard Collegeand an M.B.A. from Harvard Business School. We believe that Mr. Moura is qualified to serve on our board of directors because of his financial expertise andhis years of experience providing strategic advisory services to diverse companies across multiple industries. Robert T. Nelsen has served as a member of our board of directors since February 2014. Since 1986, Mr. Nelsen has served as a Co-Founder andManaging Director of ARCH Venture Partners, a venture capital firm focused on early-stage technology companies. Mr. Nelsen currently serves as a directorof Agios Pharmaceuticals, Inc., Fate Therapeutics, Inc., Kythera Biopharmaceuticals, Inc. and Sage Therapeutics, Inc., each a publicly tradedbiopharmaceutical company. Mr. Nelsen previously served as a director of Adolor Corporation, Array BioPharma Inc., Illumina, Inc., NeurogesX, Inc.,Receptos, Inc. and Trubion Pharmaceuticals, Inc., each a biopharmaceutical company. Mr. Nelsen also serves on the board of several privately heldcompanies, including Sapphire Energy Corporation. Mr. Nelsen received a B.S. from the University of Puget Sound, with majors in biology and economics,and an M.B.A. from the University of Chicago Graduate School of Business. We believe that Mr. Nelsen is qualified to serve on our board of directorsbecause of his extensive experience with biotechnology companies, his financial expertise and his years of experience providing strategic and financialadvisory services to pharmaceutical and biotechnology organizations, including evaluating business plans involving clinical trials. Daniel Tassé has served as a member of our board of directors since February 2014 and served as our Chairman from February 2014 to June 2014.Since January 2008, Mr. Tassé has served as President and Chief Executive Officer and as a member of the board of directors of Ikaria. Mr. Tassé wasappointed chairman of Ikaria’s board of directors in October 2009. Mr. Tassé served as our Interim Chief Executive Officer and President from February 2014to June 2014. From October 2004 to January 2008, Mr. Tassé served as General Manager of the Pharmaceuticals and Technologies Business Unit of BaxterInternational, Inc., a global diversified healthcare company. From July 2001 to October 2004, Mr. Tassé served as Vice President and Regional Director forAustralasia at GlaxoSmithKline, a healthcare company. Mr. Tassé currently serves as a director of Indivior PLC, a publicly traded company, and serves on itsaudit and compensation committees. Mr. Tassé is a member of the Healthcare Leadership Council and a member of the board of directors of the Roundtableon Critical Care Policy. He also is a member of the board of directors and health section governing board of the Biotechnology Industry Organization, wherehe participates on the bioethics, regulatory environment and reimbursement committees. Additionally, Mr. Tassé is a member of the board of directors of thePharmaceutical Research and Manufacturers Association of America, where he participates on the FDA and biomedical research committee. Mr. Tasséreceived a B.S. in biochemistry from the University of Montreal. We believe Mr. Tassé is qualified to serve on our board of directors because of his formerservice as our Chief Executive Officer and President, his extensive track record of business building in the healthcare industry, his strong background withincritical care, his global management experience and his detailed knowledge of the pharmaceutical industry, our company, employees, client base andcompetitors. Adam B. Weinstein has served as a member of our board of directors since February 2014. He is a Managing Director of New Mountain Capital, LLC,and he joined that organization in 2005. At New Mountain, Mr. Weinstein serves as a Chief Financial Officer and is an Executive Vice President and is on theBoard of Directors of New Mountain Finance Corporation, a publicly traded business development company. Prior to joining New Mountain, Mr. Weinsteinheld roles in the mergers and acquisitions and private equity investor 149Table of Contents services areas of Deloitte & Touche, LLP, in that firm’s merger and acquisition and private equity investor services areas. Mr. Weinstein is a New York StateCertified Public Accountant and received his B.S., summa cum laude, in accounting from Binghamton University. We believe that Mr. Weinstein is qualifiedto serve on our board of directors because of his financial and accounting expertise and valuable corporate governance experience. There are no family relationships among any of our directors or executive officers. Audit Committee and Audit Committee Financial Expert Our board of directors has established an audit committee, which operates under a charter that has been approved by our board of directors. Themembers of our audit committee are Messrs. Luehring, Moura and Weinstein. Mr. Weinstein chairs our audit committee. In addition, our board of directorshas determined that Mr. Weinstein is an “audit committee financial expert” as defined in applicable SEC rules. The rules established by the NASDAQ Stock Market, or NASDAQ rules, require that, subject to specified exceptions, each member of a listedcompany’s audit committee be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the ExchangeAct. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or hercapacity as a member of the audit committee, the board of directors or any other board committee, accept, directly or indirectly, any consulting, advisory orother compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. The phase-in periods with respect to director independence under the applicable NASDAQ rules allow us to have only one independent member on the auditcommittee upon the listing date of our common stock, which in our case was February 13, 2015, a majority of independent members on the audit committeewithin 90 days of the listing date and a fully independent audit committee within one year of the listing date. Our board of directors has determined that Mr. Luehring, who is a member of our audit committee, satisfies the independence standards for the auditcommittee established by the SEC and NASDAQ rules, including, the independence requirements of Rule 10A-3 under the Exchange Act. Our board ofdirectors has determined that neither Mr. Moura nor Mr. Weinstein is currently independent under Rule 10A-3 of the Exchange Act, but determined thatMr. Moura will be permitted to remain on the audit committee for a period of up to 90 days following the listing date and Mr. Weinstein will be permitted toremain on the audit committee for a period of up to one year following the listing date, in each case in accordance with the phase-in period under NASDAQrules. Our audit committee assists our board of directors in its oversight of our accounting and financial reporting process and the audits of our financialstatements. Our audit committee’s responsibilities include: · appointing, approving the compensation of, and assessing the independence of our registered public accounting firm; · overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from suchfirm; · reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financialstatements and related disclosures; · monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics; · overseeing our internal audit function; · overseeing our risk assessment and risk management policies; 150Table of Contents · establishing policies regarding hiring employees from our independent registered public accounting firm and procedures for the receipt andretention of accounting related complaints and concerns; · meeting independently with our internal auditing staff, our independent 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 accountingfirm must be approved in advance by our audit committee. Code of Ethics and Code of Conduct We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principalexecutive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a currentcopy of the code on our website, www.bellerophon.com. If we make any substantive amendments to, or grant any waivers from, the code of business conductand ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and certain officers and holders of more than 10% of our common stock to file with the SECinitial reports of ownership of our common stock and other equity securities on a Form 3 and reports of changes in such ownership on a Form 4 or Form 5.These Section 16 reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. However, during the fiscalyear ended December 31, 2014, we did not have any class of equity security registered under Section 12 of the Exchange Act, accordingly no reports wererequired to be filed pursuant to Section 16(a) by these Section 16 reporting persons with respect to our common stock during that fiscal year. Item 11. Executive Compensation This section describes the material elements of compensation awarded to, earned by or paid to each of our named executive officers. We were formedon October 17, 2013 as a subsidiary of Ikaria and we became an independent, stand-alone operating company as a result of the Spin-Out on February 12,2014. Because the costs and liabilities with respect to compensation of our employees for the fiscal year ended December 31, 2013 and for prior periods werepaid by Ikaria on the basis of criteria and methodology not relevant to us and work performed with respect to businesses in addition to ours, we are notpresenting compensation information for historical periods. In connection with becoming a public company, we have begun a thorough review of all elements of our executive compensation program,including the function and design of our equity incentive programs. We have begun to, and expect to continue to in the coming months, evaluate the needfor revisions to our executive compensation program to ensure that our program is competitive with the companies with which we compete for executivetalent and is appropriate for a public company. As we gain experience as a stand-alone, public company, we expect that the specific direction, emphasis andcomponents of our executive compensation program will continue to evolve. Moving forward, our compensation committee will review and approve thecompensation of our executive officers and oversee and administer our executive compensation programs and initiatives. 151Table of Contents 2014 Summary Compensation Table The following table sets forth information regarding compensation earned by Jonathan Peacock, our President and Chief Executive Officer, DanielTassé, our former interim Chief Executive Officer, Reinilde Heyrman, our Chief Clinical Development Officer, and Martin Meglasson, our Chief ScientificOfficer, during our fiscal year ended December 31, 2014. We refer to Mr. Peacock, Dr. Heyrman and Dr. Meglasson as our named executive officers. Name andPrincipal PositionSalary($) Bonus($) OptionAwards($)(1) All OtherCompensation($) Total($)Jonathan PeacockPresident and Chief Executive Officer201,539224,000(2)4,470,83358,351(3)4,954,723Daniel Tassé(4)Former Interim Chief Executive Officer—————Reinilde HeyrmanChief Clinical Development Officer366,808288,720(5)79,246—734,774Martin MeglassonChief Scientific Officer307,154266,160(6)79,246—652,560 (1) The amounts reported in the “Option Awards” column reflect the aggregate fair value of stock-based compensation awarded during the yearcomputed in accordance with the provisions of FASB ASC Topic 718. See Note 8 to our consolidated financial statements appearing elsewhere inthis Annual Report on Form 10-K regarding assumptions underlying the valuation of equity awards. (2) Represents amounts earned in 2014 but paid in 2015, of which $112,000 was paid in cash and $112,000 was paid through the grant of stock options,which amount reflects the aggregate fair value of the stock options computed in accordance with FASB ASC Topic 718. See Note 8 to ourconsolidated financial statements appearing elsewhere in this Annual Report on 10-K regarding assumptions underlying the valuation of equityawards. (3) Consists of $52,197 of relocation costs incurred by us in connection with Mr. Peacock becoming our President and Chief Executive Officer, and$6,154 that we matched pursuant to our 401(k) plan. (4) In 2014, we did not pay a base salary nor did we make any other awards of compensation to our former interim Chief Executive Officer, Daniel Tassé.Prior to our Spin-Out, Mr. Tassé was compensated by our former parent company, Ikaria, of which he continues to serve as President and ChiefExecutive Officer. 152Table of Contents (5) Includes $138,720 earned in 2014 but paid in 2015, of which $69,360 was paid in cash and $69,360 was paid through the grant of stock options,which amount reflects the aggregate fair value of the stock options computed in accordance with FASB ASC Topic 718. See Note 8 to ourconsolidated financial statements appearing elsewhere in this Annual Report on 10-K regarding assumptions underlying the valuation of equityawards. (6) Includes $116,160 earned in 2014 but paid in 2015, of which $58,080 was paid in cash and $58,080 was paid through the grant of stock options,which amount reflects the aggregate fair value of the stock options computed in accordance with FASB ASC Topic 718. See Note 8 to ourconsolidated financial statements appearing elsewhere in this Annual Report on 10-K regarding assumptions underlying the valuation of equityawards. Narrative to Summary Compensation Table Base Salary. In 2014, we paid salaries of $201,539 to Mr. Peacock, $366,808 to Dr. Heyrman and $307,158 to Dr. Meglasson. On an annualizedbasis, the 2014 base salaries of our named executive officers were: $400,000 to Mr. Peacock, $433,500 to Dr. Heyrman and $363,000 to Dr. Meglasson. Basesalaries are used to recognize the experience, skills, knowledge and responsibilities required of all of our employees, including our executive officers. We didnot engage in any form of benchmarking in the determination of base salaries of our executive officers. Our compensation committee will review the salariesof our executives annually at the beginning of each calendar year and recommend to our board of directors changes in salaries based primarily on changes injob responsibilities, experience, individual performance and comparative market data. We will pay our named executive officers the following annualizedbase salaries for the year ending December 31, 2015: $400,000 to Mr. Peacock, $433,500 to Dr. Heyrman and $363,000 to Dr. Meglasson. Bonus Compensation. Our named executive officers are expected to be eligible to receive an annual bonus award in accordance with themanagement incentive program then in effect with respect to such executive officer and based on an annualized target of base salary. Our named executiveofficers are also expected to be eligible for performance-based annual bonus awards based on metrics to be determined by our board of directors, inconsultation with the executive officer, and our board of directors will determine the extent to which the metrics have been satisfied and the amount of theannual bonus, if any. The performance-based bonuses are designed to motivate our employees to achieve annual goals based on our strategic, financial andoperating performance objectives. On February 3, 2014, we delivered a letter to Dr. Heyrman and to Dr. Meglasson offering them each a one-time $150,000 “retention bonus” paymentif she or he remained an active employee of Bellerophon in good standing through December 19, 2014. We paid these retention bonus payments, lessapplicable taxes, to Dr. Heyrman and Dr. Meglasson in December 2014. With respect to 2014, the compensation committee awarded total bonus compensation, paid in 2015 partially in cash and partially in stock options,with a value of $224,000 to Mr. Peacock, $138,720 to Dr. Heyrman and $116,160 to Dr. Meglasson. The cash portion of each named executive officer’sbonus was: $112,000 to Mr. Peacock, $69,360 to Dr. Heyrman and $58,080 to Dr. Meglasson. The remaining portion of each named executive officer’sbonus amount was paid through the grant of stock options in the following amounts: 16,000 shares to Mr. Peacock, 9,909 shares to Dr. Heyrman and 8,297shares to Dr. Meglasson. Long-Term Equity Based Incentive Awards. We believe that equity grants provide our executives with a strong link to our long-term performance,create an ownership culture and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants with a time-basedvesting feature promote executive retention because this feature incentivizes our named executive officers to remain in our employment during the vestingperiod. Accordingly, our compensation committee and board of directors periodically review the equity incentive compensation of our named executiveofficers and from time to time may grant additional equity incentive awards to them in the form of stock options. 153Table of Contents Outstanding Equity Awards at 2014 Fiscal Year-End The following table sets forth information regarding outstanding stock options held by our named executive officers and Mr. Tassé as ofDecember 31, 2014: Option AwardsNameNumber ofSecuritiesUnderlyingUnexercisedOptionsExercisable (#) Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable (#) OptionExercisePrice($) OptionExpirationDateJonathan Peacock90,082360,329(1)$13.286/20/2024Daniel Tassé35,926—$7.7712/16/201959,876—$10.401/20/2018Reinilde Heyrman—7,983(2)$13.286/20/2024Martin Meglasson7,983—$7.7712/07/2020—7,983(2)$13.286/20/2024 (1) This option vested as to 20% of the underlying shares on June 20, 2014 and vests as to an additional 20% of the underlying shares annuallythereafter through June 20, 2018. (2) This option vests as to (i) 25% of the underlying shares on February 12, 2016, (ii) 25% of the underlying shares on February 12, 2017 and (iii) 50%of the underlying shares on February 12, 2018. In connection with the Spin-Out, Ikaria distributed our then outstanding units to its stockholders through the payment of a special dividend on a prorata basis based on each stockholder’s ownership of Ikaria capital stock. Prior to the Spin-Out, we issued to certain employees and directors of ours and ofIkaria, including certain of our executive officers, options to purchase the same number of our non-voting membership units as the number of shares of non-voting Ikaria stock subject to the Ikaria options then held by such employee or director at such time. The vesting of these options was subsequentlyaccelerated and all are now fully vested. Employment Agreements with Our Executive Officers Agreement with Mr. Peacock In June 2014, we entered into an employment agreement with Mr. Peacock in connection with the commencement of his employment with us. Theagreement provides that Mr. Peacock is employed at will, and either we or Mr. Peacock may terminate the employment relationship for any reason, at anytime. Mr. Peacock is required to give us at least 30 days’ prior notice if he elects to terminate his employment other than for good reason (as defined in theemployment agreement). Following the end of each calendar year, Mr. Peacock is eligible to receive an annual bonus for such calendar year in accordancewith the terms of our management incentive program, calculated as a percentage of his annual base salary. As of the date of this Annual Report on Form 10-K,Mr. Peacock’s target bonus percentage is 100%. In March 2015, we entered into an amendment with Mr. Peacock to his employment agreement to providethat, beginning with the 2014 annual bonus and for years thereafter, we, in our sole discretion, may pay such bonus compensation in cash, equity or acombination thereof on such terms as are determined by the compensation committee. If we terminate Mr. Peacock’s employment without cause (as defined in the employment agreement) or if Mr. Peacock terminates his employmentwith us for good reason (as defined in the employment agreement), Mr. Peacock is entitled to receive: (1) a lump sum payment in an amount equal to earnedbut unpaid base salary through the date of his termination of employment and any unpaid annual bonus that was earned by Mr. Peacock and declared dueand owing by us, any accrued but unpaid vacation time, and any incurred but unreimbursed expenses, together with any other benefits to which Mr. Peacockis entitled under our benefit plans and arrangements; and (2) subject to his continued compliance with the restrictive covenants of the agreement and hisexecution and nonrevocation of a general release of claims against us: (a) a pro-rated portion of his annual 154Table of Contents bonus target for the year in which his employment terminates, payable in a single lump sum; (b) payments for a period of 18 months following the date oftermination in an aggregate amount equal to one and one half times the sum of (i) Mr. Peacock’s annual base salary and (ii) the greater of his applicableannual bonus target and the actual annual bonus most recently paid to Mr. Peacock, determined on a monthly basis; and (c) continued coverage, under ourmedical, dental and vision benefit plans at active-employee rates for 18 months following the date of termination. We have agreed to indemnify and hold Mr. Peacock harmless from and against any liabilities Mr. Peacock may incur under Section 409A of theInternal Revenue Code of 1986, as amended, on account of any payments made to Mr. Peacock pursuant to his employment agreement. Mr. Peacock is subject to confidentiality, invention assignment, non-competition and non-solicitation obligations pursuant to the terms of hisemployment agreement. Agreements with Other Named Executive Officers We also have written employment agreements with Dr. Heyrman and Dr. Meglasson. Each agreement provides for an employment term of one year,with the term automatically renewing for successive one-year terms, unless we or the applicable officer gives written notice of non-renewal at least 90 daysprior to the renewal date. Each of these officers is subject to confidentiality, invention assignment, non-competition and non-solicitation agreements. In addition, for each calendar year, each executive officer named below is eligible to receive an annual bonus in accordance with the terms of ourmanagement incentive program. The bonus is calculated as a percentage of the executive’s annual base salary. As of the date of this Annual Report onForm 10-K, the target bonus percentage for each such executive officer is as follows: Dr. Heyrman 40% and Dr. Meglasson 40%. In order to receive her bonus,Dr. Heyrman must be employed by us at the time the bonus is declared due and owing. In March 2015, we entered into an amendment with each ofDr. Heyrman and Dr. Meglasson to her or his respective employment agreement to provide that, beginning with the 2014 annual bonus and for yearsthereafter, we, in our sole discretion, may pay such bonus compensation in cash or a combination of cash and equity, in each instance on such terms as aredetermined by the compensation committee; provided, however, that if the annual bonus is to be paid in a combination of cash and equity, such cash andequity components will be in equal parts. In addition, Dr. Meglasson’s employment agreement amendment provided that if Dr. Meglasson’s employment isterminated by us for any reason other than for cause on or after the date that he reaches age 65 or if Dr. Meglasson retires on after the date that he reaches age67, then any stock options then held by him will continue to vest and be exercisable after his employment is terminated on the same vesting schedule as if heremained employed by us. Both Dr. Heyrman and Dr. Meglasson are entitled to severance payments if her or his employment is terminated under specified circumstances. Dr. Reinilde Heyrman. If we terminate Dr. Heyrman’s employment without cause (as defined in the employment agreement), Dr. Heyrman terminatesher employment with us for good reason (as defined in the employment agreement) or Dr. Heyrman terminates her employment at the end of a term followingdelivery by us of notice that we will not extend the term, Dr. Heyrman is entitled to receive: (1) a lump sum payment in an amount equal to earned but unpaidbase salary through the date of termination of her employment and any unpaid annual bonus that was earned by Dr. Heyrman and declared due and owing byus and any accrued but unpaid vacation time, together with any other benefits to which Dr. Heyrman is entitled under our benefit plans and arrangements;and (2) subject to her continued compliance with the restrictive covenants of the employment agreement and her execution and nonrevocation of a generalrelease of claims against us: (a) payments for a period of 12 months following the date of termination in an aggregate amount equal to the sum of(i) Dr. Heyrman’s annual base salary and (ii) the greater of her applicable annual bonus target and the actual annual bonus most recently paid to Dr. Heyrman,determined on a monthly basis; and (b) continued coverage, under our medical, dental and vision benefit plans at active employee rates for 12 monthsfollowing the date of termination. In the event that we terminate Dr. Heyrman’s employment without cause, Dr. Heyrman terminates her employment with us for good reason, orDr. Heyrman terminates her employment at the end of a term following delivery by us of notice that we will not extend the term, in each case within12 months of the occurrence of a change in control (as defined in the employment agreement), any equity compensation granted to Dr. Heyrman shall becomefully vested as of the date of termination. 155Table of Contents Dr. Martin Meglasson. If we terminate Dr. Meglasson’s employment without cause (as defined in the employment agreement), Dr. Meglassonterminates his employment with us for good reason (as defined in the employment agreement) or Dr. Meglasson terminates his employment at the end of aterm following delivery by us of notice that we will not extend the term, Dr. Meglasson is entitled to receive: (1) a lump sum payment in an amount equal toearned but unpaid base salary through the date of his termination of employment and any unpaid annual bonus that was earned by Dr. Meglasson anddeclared due and owing by us and any accrued but unpaid vacation time, together with any other benefits to which Dr. Meglasson is entitled under ourbenefit plans and arrangements; and (2) subject to his continued compliance with the restrictive covenants of the agreement and his execution andnonrevocation of a general release of claims against us: (a) a pro-rated portion of his annual bonus target for the year in which his employment terminates,payable in a single lump sum, and payments for a period of 12 months following the date of termination in an aggregate amount equal to the sum of(i) Dr. Meglasson’s annual base salary and (ii) the greater of his applicable annual bonus target and the actual annual bonus most recently paid toDr. Meglasson, determined on a monthly basis; and (b) continued coverage, under our medical, dental and vision benefit plans at active-employee rates for12 months following the date of termination. In the event that we terminate Dr. Meglasson’s employment without cause, Dr. Meglasson terminates his employment with us for good reason orDr. Meglasson terminates his employment at the end of a term following delivery by us of notice that we will not extend the term, in each case within18 months of, or in certain circumstances related to a potential change in control prior to, the occurrence of a change in control, Dr. Meglasson is entitled toreceive, in addition to the payments and benefits described in the preceding paragraph and subject to his continued compliance with the restrictive covenantsof the employment agreement and his execution and nonrevocation of a general release of claims against us: (a) a lump sum payment in an amount equal to50% of the sum of (i) Dr. Meglasson’s annual base salary and (ii) the greater of his annual bonus target and the actual annual bonus most recently paid toDr. Meglasson; (b) an additional six months of continued coverage under our medical, dental and vision benefit plans at active employee rates; and (c) theunvested portion of any equity compensation granted to Dr. Meglasson shall become immediately fully vested. We have agreed to indemnify and hold Dr. Meglasson harmless from and against any liabilities Dr. Meglasson may incur under 409A of the InternalRevenue Code of 1986, as amended, on account of any payments made to Dr. Meglasson pursuant to his employment agreement. Stock Option and Other Compensation Plans The four equity incentive plans described in this section are (i) the assumed 2007 Ikaria stock option plan, which we refer to as the 2007 Ikaria plan,(ii) the assumed Ikaria 2010 long term incentive plan, which we refer to as the 2010 Ikaria plan, (iii) our 2014 equity incentive plan and (iv) our 2015 equityincentive plan. Following the effectiveness of the registration statement for our initial public offering, we will grant awards to eligible participants only underthe 2015 equity incentive plan. Assumed 2007 Ikaria Plan The 2007 Ikaria plan was adopted by Ikaria in March 2007, and we assumed the terms of the 2007 Ikaria plan in connection with the Spin-Out. Stockoptions granted under the 2007 Ikaria plan have a contractual life of ten years. Pursuant to the terms of the 2007 Ikaria plan, in the event of a liquidation ordissolution of our company, each outstanding option under the 2007 Ikaria plan will terminate immediately prior to the consummation of the action, unlessthe administrator determines otherwise. In the event of a merger or other reorganization event, each outstanding option will be assumed or an equivalentoption or right will be substituted by the successor entity, unless such successor entity does not agree to assume the award or to substitute an equivalentoption or right in which case such option will terminate upon the consummation of the merger or reorganization event. 156Table of Contents Assumed 2010 Ikaria Plan The 2010 Ikaria plan was adopted by Ikaria in February 2010 and amended and restated in May 2010, and we assumed the terms of the 2010 Ikariaplan in connection with the Spin-Out. Pursuant to the terms of the 2010 Ikaria plan, upon our liquidation, dissolution, merger or consolidation, except asotherwise provided in an applicable option or award agreement, each option or award will be (i) treated as provided in the agreement related to thetransaction, or (ii) if not so provided in such agreement, each holder of an option or award will be entitled to receive, in respect of each share subject tooutstanding options or awards, the same number of stock, securities, cash, property or other consideration that he or she would have received had he or sheexercised such options or awards prior to the transaction. The stock, securities, cash, property or other consideration shall remain subject to all of theconditions, restrictions and performance criteria which were applicable to the options and awards prior to any such transaction. If the consideration paid ordistributed is not entirely shares of common stock of the acquiring or resulting corporation, the treatment of outstanding options and stock appreciationrights may include the cancellation of outstanding options and stock appreciation rights upon consummation of the transaction as long as the holders ofaffected options and stock appreciation rights, at the election of the compensation committee, either: · have been given a period of at least 15 days prior to the date of the consummation of the transaction to exercise the options or stockappreciation rights (whether or not they were otherwise exercisable); or · are paid (in cash or cash equivalents) in respect of each share covered by the option or stock appreciation right being cancelled an amount equalto the excess, if any, of the per share price paid or distributed to stockholders in the transaction (the value of any non-cash consideration to bedetermined by the compensation committee in its sole discretion) over the exercise price of the option or stock appreciation right. 2014 Equity Incentive Plan In June 2014, our board of directors adopted, and our stockholders approved, the 2014 equity incentive plan. The 2014 equity incentive plan isadministered by our board of directors or by a committee appointed by our board of directors. The 2014 equity incentive plan provides for the grant ofoptions. As of December 31, 2014, there were 50,571 shares of non-voting common stock available for the grant of options under the 2014 equity incentiveplan. Our employees, officers, directors, consultants and advisors are eligible to receive awards under the 2014 equity incentive plan. Subject to anylimitation in the 2014 equity incentive plan, our board of directors or any committee to which our board of directors has delegated authority will select therecipients of options and determine: · the number of shares of non-voting common stock covered by options, the dates upon which those options become exercisable and the termsand conditions that apply to such options; · the exercise price of options which may not be less than 100% of the fair market value of our non-voting common stock on the grant date; · the duration of options, which may not be in excess of ten years; · the methods of payment of the exercise price of options; and · any amendments to the 2014 equity incentive plan and/or any option agreement. 157Table of Contents Our board of directors may exercise such powers and perform such acts as it deems necessary or expedient to promote the best interests of ourcompany which are not in conflict with the 2014 equity incentive plan provisions. Awards under the 2014 equity incentive plan are subject to adjustment in the event of a split, reverse split, dividend, recapitalization, combinationor reclassification of Company common stock, spin-off or other similar change in our capitalization or event or any dividend or distribution to holders of ourcommon stock other than an ordinary cash dividend. Upon a merger or other reorganization event (as defined in the 2014 equity incentive plan), our board of directors, may, in its sole discretion, takeany one or more of the following actions pursuant to the 2014 equity incentive plan, as to some or all outstanding options: · provide that all outstanding options will be assumed, or substantially equivalent awards shall be substituted, by the acquiring or successorcorporation or an affiliate thereof; · upon written notice to a participant, provide that the participant’s unvested and/or unexercised options will terminate immediately prior to theconsummation of such transaction unless exercised by the participant; · provide that outstanding options will become exercisable, realizable or deliverable, or restrictions applicable to an option will lapse, in wholeor in part, prior to or upon the reorganization event; · in the event of a reorganization event pursuant to which holders of shares of non-voting common stock will receive a cash payment for eachshare of non-voting common stock surrendered in the reorganization event, make or provide for a cash payment to the participants with respectto each option held by the participant equal to (1) the number of shares of non-voting common stock subject to the vested portion of the option,after giving effect to any acceleration of vesting that occurs upon or immediately prior to such reorganization event, multiplied by (2) theexcess, if any, of the cash payment for each share of non-voting common stock surrendered in the reorganization event over the exercise price ofsuch option and any applicable tax withholdings, in exchange for the termination of such option; and · provide that, in connection with a liquidation or dissolution, options convert into the right to receive liquidation proceeds. At any time, our board of directors may, in its sole discretion, provide that any award under the 2014 equity incentive plan will become immediatelyexercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part. Our board of directors may amend, suspend or terminate the 2014 equity incentive plan at any time, except that stockholder approval will berequired to comply with applicable law or stock market requirements. 2015 Equity Incentive Plan In January 2015, our board of directors adopted, and in February 2015, our stockholders approved, the 2015 equity incentive plan, which becameeffective immediately prior to the effectiveness of the registration statement for our initial public offering. The 2015 equity incentive plan provides for thegrant of incentive stock options, nonstatutory stock options, share appreciation rights, restricted share awards, restricted share unit awards and other share-based awards. Upon the effectiveness of the 2015 equity incentive plan, the number of shares of our common stock that were reserved for issuance under the2015 equity incentive plan was equal to the sum of (1) 449,591 plus (2) the number of shares (up to 558,851 shares) equal to the sum of the number of sharesof our common stock available for issuance under the 2014 equity incentive plan immediately prior to the 158Table of Contents effectiveness of the registration statement for our initial public offering and the number of shares of our common stock subject to outstanding awards underthe 2014 equity incentive plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance pricepursuant to a contractual repurchase right plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year endingDecember 31, 2016 and continuing until, and including, the fiscal year ending December 31, 2025, equal to the least of (i) 798,358 shares of our commonstock, (ii) a number equal to the difference between 5% of the number of shares of our common stock outstanding on the first day of the fiscal year (treatingall shares of our common stock issuable upon the exercise of outstanding options and upon the conversion of outstanding shares of preferred stock, warrantsor other securities convertible into shares of our common stock as outstanding for this purpose) and the number of shares of our common stock available forgrant under the 2015 equity incentive plan on the first day of the fiscal year and (iii) an amount determined by our board of directors. Solely for purposes ofthe 2015 equity incentive plan, from and after the Corporate Conversion until the closing of our initial public offering “shares of our common stock” referredto shares of our non-voting common stock. Upon the closing of our initial public offering, “shares of our common stock” shall refer to shares of our votingcommon stock and awards granted prior to the closing of our initial public offering automatically became awards covering shares of our voting commonstock at such time. Our employees, officers, directors, consultants and advisors are eligible to receive awards under the 2015 equity incentive plan. However, incentivestock options may only be granted to our employees. We granted options to purchase an aggregate of 99,367 shares to certain of our employees upon thecommencement of trading of our common stock on the NASDAQ Global Market under the 2015 equity incentive plan. Pursuant to the terms of the 2015 equity incentive plan, our board of directors (or a committee delegated by our board of directors) administers theplan 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; · the exercise price of options, which must be at least equal to the fair market value of our common stock on the date of grant; · the methods of payment of the exercise of options; and · the number of shares of our common stock subject to and the terms of any share appreciation rights, restricted share awards, restricted share unitsor other share-based awards and the terms and conditions of such awards, including conditions for repurchase, issue price and repurchase price(though the measurement price of share appreciation rights must be at least equal to the fair market value of our common stock on the date ofgrant and the duration of such awards may not be in excess of ten years). If our board of directors delegates authority to an officer to grant awards under the 2015 equity incentive plan, the officer will have the power tomake awards to all of our officers, except executive officers. Our board of directors will fix the terms of the awards to be granted by such officer, including theexercise price of such awards (which may include a formula by which the exercise will be determined), and the maximum number of shares subject to awardsthat such officer may make. Upon a merger or other reorganization event, our board of directors may, except to the extent specifically provided otherwise in an award or otheragreement between us and the plan participant, take any 159Table of Contents one or more of the following actions pursuant to the 2015 equity incentive plan as to some or all outstanding awards other than restricted shares: · provide that all outstanding awards shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring or succeedingcorporation (or an affiliate thereof); · upon written notice to a participant, provide that all of the participant’s unvested and/or unexercised awards will terminate immediately prior tothe consummation of such reorganization event unless exercised by the participant (to the extent then exercisable) within a specified period; · provide that outstanding awards shall become exercisable, realizable or deliverable, or restrictions applicable to an award shall lapse, in wholeor 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 sharesurrendered in the reorganization event, make or provide for a cash payment to the participants with respect to each award held by a participantequal to (1) the number of shares of our common stock subject to the vested portion of the award (after giving effect to any acceleration ofvesting that occurs upon or immediately prior to such reorganization event) multiplied by (2) the excess, if any, of the cash payment for eachshare surrendered in the reorganization event over the exercise, measurement or purchase price of such award and any applicable taxwithholdings, in exchange for the termination of such award; · provide that, in connection with a liquidation or dissolution, awards shall convert into the right to receive liquidation proceeds (if applicable,net of the exercise, measurement or purchase price thereof and any applicable tax withholdings); and/or · any combination of the foregoing. Our board of directors does not need to take the same action with respect to all awards, all awards held by a participant or all awards of the same type. In the case of certain restricted share units, no assumption or substitution is permitted, and the restricted share units will instead be settled inaccordance with the terms of the applicable restricted share unit agreement. Upon the occurrence of a reorganization event other than a liquidation or dissolution, the repurchase and other rights with respect to outstandingrestricted share awards will continue for the benefit of the successor company and will, unless the board of directors may otherwise determine, apply to thecash, securities or other property into which shares of our common stock are converted or exchanged pursuant to the reorganization event, provided that ourboard of directors may provide for the termination or deemed satisfaction of such repurchase or other rights under the applicable award agreement or anyother agreement between the participant and us. Upon the occurrence of a reorganization event involving a liquidation or dissolution, all restrictions andconditions on each outstanding restricted share award will automatically be deemed terminated or satisfied, unless otherwise provided in the agreementevidencing the restricted share award or in any other agreement between the participant and us. At any time, our board of directors may, in its sole discretion, provide that any award under the 2015 equity incentive plan will become immediatelyexercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part. No award may be granted under the 2015 equity incentive plan on or after February 12, 2025. Our board of directors may amend, suspend orterminate the 2015 equity incentive plan at any time, except that stockholder approval may be required to comply with applicable law or stock marketrequirements. 160Table of Contents 401(k) Retirement Plan We maintain a 401(k) retirement plan that is intended to be a tax-qualified defined contribution plan under Section 401(k) of the Internal RevenueCode. In general, all of our employees are eligible to participate, beginning on the first day of the month following commencement of their employment. The401(k) plan includes a salary deferral arrangement pursuant to which participants may elect to reduce their current compensation by up to the statutorilyprescribed limit, equal to $17,500 in 2014, and have the amount of the reduction contributed to the 401(k) plan. Limitations on Liability and Indemnification Our certificate of incorporation limits the personal liability of directors for breach of fiduciary duty to the maximum extent permitted by theDelaware General Corporation Law and provides that no director will have personal liability to us or to our stockholders for monetary damages for breach offiduciary 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; · for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; · for voting for or assenting to unlawful payments of dividends, stock repurchases or other distributions; or · for 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 claimthat occurred or arose prior to such amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on thepersonal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by theDelaware General Corporation Law. In addition, our certificate of incorporation provides that we must indemnify our directors and officers and we must advance expenses, includingattorneys’ fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions. In addition, we have entered into indemnification agreements with each of our directors and officers. These indemnification agreements may requireus, among other things, to indemnify each such director or officer for some expenses, including attorneys’ fees, judgments, fines and settlement amountsincurred by him or her in any action or proceeding arising out of his or her service as one of our directors or officers. We maintain a general liability insurance policy that covers certain liabilities of our directors and officers arising out of claims based on acts oromissions in their capacities as directors or officers. Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilitiesincurred in their capacity as members of our board of directors. Rule 10b5-1 Sales Plans Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sellshares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director orofficer when entering into the plan, without further direction from the director or officer. The director or officer may adopt, amend or terminate a plan whennot in possession of material, non-public information. In addition, our directors 161Table of Contents and executive officers may also buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublicinformation. Director Compensation In January 2015, our board established the following compensation policy for non-employee directors, which became effective upon the closing ofour initial public offering in February 2015: · each non-employee director receives, on an annual basis, a cash retainer of $30,000; · each non-employee director who has then served on our board of directors for at least six months will receive, on the date of the first boardmeeting held after each year’s annual meeting of stockholders, an option to purchase 798 shares of our common stock, which shall vest in fullon the earlier of the first anniversary of the date of grant or immediately prior to the first annual meeting of stockholders occurring after the dateof grant; · the chairman of our board of directors, if a non-employee director, receives an additional cash retainer of $30,000; · each non-employee director who serves on the audit committee receives a cash retainer of $7,500 per year ($15,000 for the chair); · each non-employee director who serves on the compensation committee receives a cash retainer of $5,000 per year ($10,000 for the chair); · each non-employee director who serves on the nominating and corporate governance committee receives a cash retainer of $3,000 ($7,000 forthe chair); and · each non-employee director elected to the board following the closing of our initial public offering will receive a one-time award of an optionto purchase 3,991 shares of our common stock, which option shall vest in three equal annual installments. In addition, we reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending boardof director and committee meetings. Prior to our initial public offering in February 2015, we did not have a formal non-employee director compensation policy. We did not compensateany of our current non-employee directors for his service as a director in 2014. We have historically reimbursed our non-employee directors for reasonabletravel and out-of-pocket expenses incurred in connection with attending board of director and committee meetings. Jonathan Peacock, one of our directorswho also serves as our President and Chief Executive Officer, does not receive any additional compensation for his service as a director. The compensationthat we pay to Mr. Peacock for his service as our President and Chief Executive Officer is discussed in the “Executive Compensation” section of this AnnualReport on Form 10-K. The New Mountain Entities have advised us that, in connection with the affiliation of Messrs. Holt, Moura and Weinstein with the New MountainEntities, all equity based compensation, including grants of stock options in respect of shares of our common stock, received or receivable by Messrs. Holt,Moura and Weinstein in consideration for their services rendered to us will be held by such director for the benefit of New Mountain Capital, L.L.C., anaffiliate of the New Mountain Entities. In addition, the New Mountain Entities have advised us that any cash compensation received by such directors inconsideration for their services rendered to us will be paid to New Mountain Capital, L.L.C. 162Table of Contents 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 equivalentfunction, 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. Noneof the members of our compensation committee is, or has ever been, an officer or employee of our company. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security Ownership of Certain Beneficial Owners and Management The following table sets forth information with respect to the beneficial ownership of our common stock as of March 16, 2015 by: · each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock; · each of our named executive officers; · each of our directors; and · all of our executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect toour common stock. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of March 16, 2015 areconsidered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person butnot for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, to our knowledge, the persons and entities in thistable have sole voting and investing power with respect to all of the shares of our common stock beneficially owned by them, subject to community propertylaws, where applicable. The information is not necessarily indicative of beneficial ownership for any other purpose. The percentage ownership calculations for beneficial ownership are based on 12,905,392 shares of common stock outstanding as of March 16, 2015. Except as otherwise set forth below, the address of the beneficial owner is c/o Bellerophon Therapeutics, Inc., 53 Frontage Road, Suite 301,Hampton, New Jersey 08827. Name of Beneficial Owner Number ofSharesBeneficiallyOwned Percentageof SharesBeneficiallyOwned 5% StockholdersNew Mountain Entities(1)4,859,88537.7%Linde(2)1,629,80412.6%Fidelity Investments (FMR LLC)(3)1,292,88210.0%ARCH(4)965,6607.5%Venrock(5)962,4157.5%Executive Officers and DirectorsJonathan M. Peacock(6)114,949*Manesh Naidu(7)18,769*Reinilde Heyrman(8)11,960*Martin Meglasson(9)28,443*David Abrams(10)2,237*Matthew S. Holt(11)4,859,88537.7%Jens Luehring(12)1,629,80412.6%Andre V. Moura—*Robert Nelsen(13)965,6607.5%Daniel Tassé(14)224,7001.7%Adam B. Weinstein(15)4,859,88537.7%All executive officers and directors as a group (11 persons)(16)7,856,40759.9% * Less than one percent. 163Table of Contents (1) Consists of 346,974 shares held by Allegheny New Mountain Partners, L.P., 80,165 shares held by New Mountain Affiliated Investors II, L.P.,3,842,663 shares held by New Mountain Partners II (AIV-A), L.P. and 590,083 shares held by New Mountain Partners II (AIV-B), L.P. The generalpartner of each of the New Mountain Entities is New Mountain Investments II, L.L.C. and the manager of each of the New Mountain Entities is NewMountain Capital L.L.C. Steven Klinsky is the managing member of New Mountain Investments II, L.L.C. Adam Weinstein, a member of our boardof directors, is a member of New Mountain Investments II, L.L.C. Matthew Holt, a member of our board of directors, is a member of New MountainInvestments II, L.L.C. New Mountain Investments II, L.L.C. has decision-making power over the disposition and voting of shares of portfolioinvestments of each of the New Mountain Entities. New Mountain Capital, L.L.C. also has voting power over the shares of portfolio investments ofthe New Mountain Entities in its role as the investment advisor. New Mountain Capital, L.L.C. is a wholly-owned subsidiary of New MountainCapital Group, L.L.C. New Mountain Capital Group, L.L.C. is 100% owned by Steven Klinsky. Since New Mountain Investments II, L.L.C. hasdecision-making power over the New Mountain Entities, Mr. Klinsky may be deemed to beneficially own the shares that the New Mountain Entitieshold of record or may be deemed to beneficially own. Mr. Klinsky, Mr. Weinstein, Mr. Holt, New Mountain Investments II, L.L.C. and NewMountain Capital, L.L.C. disclaim beneficial ownership over the shares held by the New Mountain Entities, except to the extent of their pecuniaryinterest therein. The address of the New Mountain Entities is c/o New Mountain Capital, L.L.C., 787 Seventh Avenue, 48 Floor, New York, NewYork 10019. (2) Consists of 1,629,804 shares held by Linde North America, Inc., an indirect wholly-owned subsidiary of Linde AG. Jens Luehring, a member of ourboard of directors, is a director and chief financial officer of Linde North America, Inc. Mr. Luehring disclaims beneficial ownership of all shares heldby Linde, except to the extent of his pecuniary interest therein, if any. The address of Linde North America, Inc. is 575 Mountain Avenue, MurrayHill, New Jersey 07974. (3) Based on information provided in a Schedule 13G filed by FMR LLC on March 10, 2015. Edward C. Johnson 3d, a Director and Chairman of FMRLLC, and Abigail P. Johnson, a Director, Vice Chairman, and the Chief Executive Officer of FMR LLC, are the predominant owners, directly orthrough trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group andall other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted inaccordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and theexecution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, asamended, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d nor Abigail P. Johnson has the solepower to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act,which we refer to as the Fidelity Funds, advised by Fidelity Management & Research Company, which we refer to as FMR Co, a wholly ownedsubsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co carries out the voting of the shares under writtenguidelines established by the Fidelity Funds’ Boards of Trustees. FMR LLC reports that it holds sole dispositive power with respect to 1,292,882shares. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. 164thTable of Contents (4) Consists of 965,660 shares held by ARCH Venture Fund VI, L.P., or ARCH VI. ARCH Venture Partners VI, L.P., or the GPLP, as the sole generalpartner of ARCH VI, may be deemed to beneficially own certain of the shares held of record by ARCH VI. The GPLP disclaims beneficial ownershipof all shares held of record by ARCH VI in which the GPLP does not have an actual pecuniary interest. ARCH Venture Partners VI, LLC, or theGPLLC, as the sole general partner of the GPLP, may be deemed to beneficially own certain of the shares held of record by ARCH VI. The GPLLCdisclaims beneficial ownership of all shares held of record by ARCH VI in which it does not have an actual pecuniary interest. Keith Crandell,Clinton Bybee and Robert Nelsen, a member of our board of directors, are the managing directors of the GPLLC and may be deemed to beneficiallyown certain of the shares held of record by ARCH VI. The managing directors disclaim beneficial ownership of all shares held of record by ARCH VIin which they do not have an actual pecuniary interest. ARCH VI reports that it holds shared voting power and shares dispositive power with respectto 965,660 shares. The address of ARCH VI is 8725 West Higgins Road, Suite 290, Chicago, Illinois 60631. (5) Consists of 783,407 shares held by Venrock Associates IV, L.P.; 159,761 shares that are held by Venrock Partners, L.P. and 19,247 shares that areheld by Venrock Entrepreneurs Fund IV, L.P. Venrock Management IV, LLC, Venrock Partners Management, LLC and VEF Management IV, LLCare the sole general partners of Venrock Associates IV, L.P., Venrock Partners, L.P. and Venrock Entrepreneurs Fund IV, L.P., respectively. VenrockManagement IV, LLC, Venrock Partners Management, LLC and VEF Management IV, LLC disclaim beneficial ownership of all shares held byVenrock Associates IV, L.P., Venrock Partners, L.P. and Venrock Entrepreneurs Fund IV, L.P., except to the extent of their pecuniary interest therein. The address of Venrock is 3340 Hillview Avenue, Palo Alto, California 94304. (6) Includes 94,082 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. (7) Includes 7,450 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. (8) Includes 2,477 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. (9) Includes 10,057 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. (10) Consists of 2,237 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. (11) Consists of 346,974 shares held by Allegheny New Mountain Partners, L.P., 80,165 shares held by New Mountain Affiliated Investors II, L.P.,3,842,663 shares held by New Mountain Partners II (AIV-A), L.P. and 590,083 shares held by New Mountain Partners II (AIV-B), L.P. The generalpartner of each of the New Mountain Entities is New Mountain Investments II, L.L.C. and the manager of each of the New Mountain Entities is NewMountain Capital L.L.C. Matthew Holt, a member of our board of directors, is a member of New Mountain Investments II, L.L.C. New MountainInvestments II, L.L.C. has decision-making power over the disposition and voting of shares of portfolio investments of each of the New MountainEntities. New Mountain Capital, L.L.C. also has voting power over the shares of portfolio investments of the New Mountain Entities in its role as theinvestment advisor. New Mountain Capital, L.L.C. is a wholly-owned subsidiary of New Mountain Capital Group, L.L.C. Mr. Holt disclaimsbeneficial ownership over the shares held by the New Mountain Entities, except to the extent of his pecuniary interest therein. 165Table of Contents (12) Consists of 1,629,804 shares held by Linde North America, Inc., an indirect wholly-owned subsidiary of Linde AG. Jens Luehring, a member of ourboard of directors, is a director and the chief financial officer of Linde North America, Inc. Mr. Luehring disclaims beneficial ownership of all sharesheld by Linde, except to the extent of his pecuniary interest therein, if any. (13) Consists of 965,660 shares held by ARCH Venture Fund VI, L.P., or ARCH VI. ARCH Venture Partners VI, L.P., or the GPLP, as the sole generalpartner of ARCH VI, may be deemed to beneficially own certain of the shares held of record by ARCH VI. The GPLP disclaims beneficial ownershipof all shares held of record by ARCH VI in which the GPLP does not have an actual pecuniary interest. ARCH Venture Partners VI, LLC, or theGPLLC, as the sole general partner of the GPLP, may be deemed to beneficially own certain of the shares held of record by ARCH VI. The GPLLCdisclaims beneficial ownership of all shares held of record by ARCH VI in which it does not have an actual pecuniary interest. Robert Nelsen, amember of our board of directors, is a managing director of the GPLLC and may be deemed to beneficially own certain of the shares held of recordby ARCH VI. Mr. Nelsen disclaims beneficial ownership of all shares held of record by ARCH VI in which he does not have an actual pecuniaryinterest. (14) Includes 95,802 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. (15) Consists of 346,974 shares held by Allegheny New Mountain Partners, L.P., 80,165 shares held by New Mountain Affiliated Investors II, L.P.,3,842,663 shares held by New Mountain Partners II (AIV-A), L.P. and 590,083 shares held by New Mountain Partners II (AIV-B), L.P. The generalpartner of each of the New Mountain Entities is New Mountain Investments II, L.L.C. and the manager of each of the New Mountain Entities is NewMountain Capital L.L.C. Adam Weinstein, a member of our board of directors, is a member of New Mountain Investments II, L.L.C. New MountainInvestments II, L.L.C. has decision-making power over the disposition and voting of shares of portfolio investments of each of the New MountainEntities. New Mountain Capital, L.L.C. also has voting power over the shares of portfolio investments of the New Mountain Entities in its role as theinvestment advisor. New Mountain Capital, L.L.C. is a wholly-owned subsidiary of New Mountain Capital Group, L.L.C. Mr. Weinstein disclaimsbeneficial ownership over the shares held by the New Mountain Entities, except to the extent of his pecuniary interest therein. (16) Includes 212,105 shares of common stock issuable upon the exercise of options exercisable within 60 days after March 16, 2015. 166Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The following table contains information about our equity compensation plans as of December 31, 2014. Equity Compensation Plan Information Plan category Number ofsecurities to beissued uponexercise ofoutstandingoptions,warrants andrights Weighted-averageexercise price ofoutstandingoptions, warrantsand rights Number of securitiesremaining available forfuture issuance underequity compensationplans(excluding securitiesreflected in column(a)) (a) (b) (c)Equity compensation plans approved by security holders1,086,255(1)$10.0050,571(2)Equity compensation plans not approved by securityholders——— Total1,086,255$10.0050,571 (1) Consists of stock options outstanding as of December 31, 2014 under the 2007 Ikaria plan, 2010 Ikaria plan and 2014 equity incentive plan. (2) Consists of shares of common stock authorized under the 2014 equity incentive plan that remained available for grant under future awards as ofDecember 31, 2014. In January 2015, in connection with our initial public offering, our board of directors determined that we would not grant anyfurther stock options under our 2014 equity incentive plan following the effectiveness of the registration statement for our initial public offering,which occurred in February 2015. In addition, in January 2015, our board of directors adopted, and in February 2015, our stockholders approved,our 2015 equity incentive plan, which became effective on February 13, 2015. Upon the effectiveness of the 2015 equity incentive plan, thenumber of shares of our common stock that were reserved for issuance under the 2015 equity incentive plan was equal to the sum of (1) 449,591 plus(2) the number of shares (up to 558,851 shares) equal to the sum of the number of shares of our common stock available for issuance under the 2014equity incentive plan immediately prior to the effectiveness of the registration statement for our initial public offering and the number of shares ofour common stock subject to outstanding awards under the 2014 equity 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 plus (3) an annual increase, to be added onthe first day of each fiscal year, beginning with the fiscal year ending December 31, 2016 and continuing until, and including, the fiscal year endingDecember 31, 2025, equal to the least of (i) 798,358 shares of our common stock, (ii) a number equal to the difference between 5% of the number ofshares of our common stock outstanding on the first day of the fiscal year (treating all shares of our common stock issuable upon the exercise ofoutstanding options and upon the conversion of outstanding shares of preferred stock, warrants or other securities convertible into shares of ourcommon stock as outstanding for this purpose) and the number of shares of our common stock available for grant under the 2015 equity incentiveplan on the first day of the fiscal year and (iii) an amount determined by our board of directors. 167Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence The following is a description of transactions since January 1, 2014 to which we have been a party, and in which any of our directors, executiveofficers and holders of more than 5% of our voting securities and affiliates of our directors, executive officers and holders of more than 5% of our votingsecurities, had or will have a direct or indirect material interest. We believe that all of the transactions described below were made on terms no less favorableto us than could have been obtained from unaffiliated third parties. Corporate Conversion On February 12, 2015, we completed transactions pursuant to which we converted from a Delaware limited liability company into a Delawarecorporation and changed our name to Bellerophon Therapeutics, Inc. As required by the limited liability company agreement of BellerophonTherapeutics LLC, the conversion was approved by the board of directors of Bellerophon Therapeutics LLC. In connection with the Corporate Conversion,holders of our outstanding voting units received one share of voting common stock for each voting unit held immediately prior to the Corporate Conversion,holders of our outstanding non-voting units received one share of non-voting common stock for each non-voting unit held immediately prior to theCorporate Conversion and options to purchase non-voting units became options to purchase one non-voting share of common stock for each unit underlyingsuch options immediately prior to the Corporate Conversion, at the same aggregate exercise price in effect prior to the Corporate Conversion. Following the Corporate Conversion and prior to our registration statement being declared effective, certain entities affiliated with certain of ourprincipal stockholders were merged with and into us. We refer to these mergers as the Mergers. In connection with the conversion and the Mergers, thesecertain entities affiliated with certain of our principal stockholders received, in exchange for their equity interests in the entities being merged into us, thenumber of shares of our common stock that they would have held had they held our equity interests directly. In connection with the Corporate Conversion, we entered into the following agreements: Merger Agreement We entered into a merger agreement with certain of our principal stockholders to effect the Mergers. Concurrently with the consummation of theconversion to a corporation, our limited liability company agreement, or the LLC agreement, was terminated (other than the provisions thereof relating tocertain pre-closing tax matters and liabilities for breaches of the LLC agreement). In the merger agreement, the companies that merged into us represented and warrantied that they did not have any liabilities, operations orbusinesses other than activities related to holding our common stock and other than liabilities for (i) deferred income taxes that reflect only timingdifferences between the treatment of items for accounting and income tax purposes and (ii) income taxes with respect to pre-closing periods which are not yetdue and payable and for which we are fully indemnified. The Mergers were structured so that we did not acquire any assets (other than certain income taxreceivables and an amount of cash that has been estimated in good faith to be sufficient to pay all pre-closing income taxes of the entities to be merged intous) or become responsible for any liabilities other than (i) deferred income taxes that reflect only timing differences between the treatment of items foraccounting and income tax purposes and (ii) income taxes with respect to pre-closing periods which are not yet due and payable and for which we are fullyindemnified. Each of our principal stockholders party to the merger agreement will indemnify us with respect to any liabilities (including tax liabilitiesrelated to pre-closing periods, other than with respect to deferred income tax liabilities that reflect only timing differences between the treatment of items foraccounting and income tax purposes) of the entity related to such principal stockholder that we acquire in the merger. Any assets (other than our equityinterests, certain income tax receivables and an amount of cash that has been estimated in good faith to be sufficient to pay all liabilities, including pre-closing income taxes, of the entities to be merged into us) in the entities to be merged into us were distributed to the equity holders of those entities prior tothe Mergers. 168Table of Contents Registration Rights Agreement We have entered into a registration rights agreement with certain holders of our common stock, including our 5% stockholders and their affiliatesand entities affiliated with our directors. The registration rights agreement provides these holders the right to demand that we file a registration statement orrequest that their shares be covered by a registration statement that we are otherwise filing. See “Description of Capital Stock—Registration Rights” foradditional information regarding these registration rights. Stockholders Agreements New Mountain Stockholders Agreement In February 2015, in connection with our initial public offering, we entered into a stockholders agreement with the New Mountain Entities, whichprovides that the New Mountain Entities are entitled to designate one director for nomination to our board of directors, to designate one director to the boardof directors (or equivalent governing body) of each of our subsidiaries and to appoint the lead director of our board of directors, in each case, for so long asthe New Mountain Entities or certain of their respective assignees beneficially own (i) 50% or more of the sum of (a) the number of shares of our commonstock that they owned immediately prior to the closing of our initial public offering and (b) the number of shares of common stock, if any, acquired followingthe closing of our initial public offering (subject to in each case adjustment in the event of any stock split, reverse stock split, stock dividend,recapitalization, combination of shares, reclassification or other similar change in our capitalization) and (ii) 15% or more of our common stock outstanding(as set forth on the cover of our then most recently filed annual report on Form 10-K or quarterly report on Form 10-Q). Subject to the same ownershipthresholds, the director nominated by the New Mountain Entities is entitled to serve on each committee of our board of directors and of the board of directors(or equivalent governing body) of each of our subsidiaries and the consent of the New Mountain Entities is required to establish any new committee of ourboard of directors or the board of directors (or equivalent governing body) of any of our subsidiaries, in each case except to the extent prohibited byapplicable law or applicable listing exchange rules. The New Mountain Entities may assign their rights to designate one director for nomination to our board of directors, to designate a director to theboard of directors (or equivalent governing body) of each of our subsidiaries and to appoint the lead director of our board of directors to a person whoacquires, in a transaction other than a registered public offering or a sale pursuant to Rule 144 under the Securities Act, at least 50% of the aggregate numberof shares of our common stock owned, directly or indirectly, by the New Mountain Entities as of immediately prior to such transaction. In addition, the stockholders agreement provides that, we are required to obtain the prior written approval of the New Mountain Entities to takecertain actions, including, among other things, actions to: · consolidate or merge into or with any other person, sell, lease or transfer all or a significant portion of our assets or capital stock to anotherperson or enter into any other similar business combination transaction, or effect a liquidation; · authorize, issue, sell, offer for sale or solicit offers to buy any shares of our common stock or any convertible securities or any other equity ordebt securities or rights to acquire any of our or our subsidiaries’ equity or debt securities, subject to certain exceptions, including among otherthings, the issuance under our stock incentive plan of grants that have been approved by our board of directors (or a board committee) and atleast one director appointed by the New Mountain Entities; · incur indebtedness or refinance any indebtedness, in each case in an amount in excess of a specified threshold; · hire or replace our chief executive officer; or 169Table of Contents · agree or otherwise commit to do any of the foregoing (unless the commitment is conditioned on obtaining the approval of the New MountainEntities). These approval rights of the New Mountain Entities will terminate when the New Mountain Entities or certain of their respective assigneesbeneficially own either (i) less than 50% of the sum of (a) the aggregate number of shares of our common stock that they collectively owned immediatelyprior to the closing of our initial public offering and (b) the number of shares of our common stock, if any, acquired following the closing of our initial publicoffering (subject to in each case adjustment in the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares,reclassification or similar changes in our capitalization) or (ii) less than 15% of our common stock outstanding (as set forth on the cover of our then mostrecently filed annual report on Form 10-K or quarterly report on Form 10-Q). As of March 16, 2015, the New Mountain Entities held approximately 37.7% ofour outstanding common stock. Linde Stockholders Agreement In February 2015, in connection with our initial public offering, we also entered into a stockholders agreement with Linde, which provides thatLinde is entitled to designate one director for nomination to our board of directors and to designate one director to the board of directors (or equivalentgoverning body) of each of our subsidiaries, in each case, for so long as Linde or certain of its assignees beneficially own (i) 50% or more of the sum of (a) thenumber of shares of our common stock that they owned immediately prior to the closing of our initial public offering and (b) the number of shares of commonstock, if any, acquired following the closing of our initial public offering (subject to in each case adjustment in the event of any stock split, reverse stocksplit, stock dividend, recapitalization, combination of shares, reclassification or other similar change in our capitalization) and (ii) 10% or more of ourcommon stock outstanding (as set forth on the cover of our then most recently filed annual report on Form 10-K or quarterly report on Form 10-Q). Subject tothe same ownership thresholds, the director designated by Linde is entitled to serve on each committee of our board of directors and of the board of directors(or equivalent governing body) of each of our subsidiaries and the consent of Linde is required to establish any new committee of our board of directors orthe board of directors (or equivalent governing body) of any of our subsidiaries, in each case except to the extent prohibited by applicable law or applicablelisting exchange rules. Linde may assign its rights to designate one director for nomination to our board of directors and to designate a director for nomination to the boardof directors (or equivalent governing body) of each of our subsidiaries to a person who acquires, in a transaction other than a registered public offering or asale pursuant to Rule 144 under the Securities Act, at least 50% of the aggregate number of shares of our common stock owned, directly or indirectly, byLinde as of immediately prior to such transaction. As of March 16, 2015, Linde held approximately 12.6% of our outstanding common stock. Management Rights Letters We have entered into management rights letters with entities affiliated with certain of our principal stockholders, pursuant to which such entities areentitled to routinely consult with and advise management regarding our operations and have the right to inspect our books and records. We will also berequired to deliver financial statements to such entities within 45 days after the end of each of the first three quarters of each fiscal year and 120 days after theend of each fiscal year and any other periodic reports as soon as they become available. Our management rights letter with the New Mountain Entities alsoprovides that at any time during which the New Mountain Entities do not have the direct contractual right to designate a representative to serve on our boardof directors, the New Mountain Entities will have the right to designate one observer to our board of directors. Such observer shall be entitled to attend allmeetings of our board of directors and to receive copies of all materials provided to the directors, subject to customary exceptions specified in themanagement rights letter. Each management rights letter will terminate on the date the entity party thereto (or principal stockholder with which such entity isaffiliated) no longer holds any of our securities. 170Table of Contents Indemnification Agreements Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Inaddition, we have entered into indemnification agreements with each of our directors and officers. See “Executive Compensation—Limitations on Liabilityand Indemnification” for additional information regarding these agreements. Relationship with Ikaria Prior to the Spin-Out on February 12, 2014, we were a wholly-owned subsidiary of Ikaria. See “Business—Relationship with Ikaria after the Spin-Out.” Following the Spin-Out, Ikaria ceased to hold any of our equity interests and we became a stand-alone company. On March 5, 2015, Mallinckrodt andIkaria announced that they had entered into a definitive agreement under which a subsidiary of Mallinckrodt will acquire Ikaria. Mallinckrodt and Ikariahave announced that they expect this transaction to be completed in the second calendar quarter of 2015. Separation and Distribution Agreement In connection with the Spin-Out, we and Ikaria entered into a separation and distribution agreement which sets forth the key provisions relating tothe separation of our business from Ikaria’s other businesses. The separation and distribution agreement described the assets and liabilities that remained withor were transferred to us and those that remained with or were transferred to Ikaria and the terms of Ikaria’s distribution of all of our then outstanding units toits stockholders. The separation and distribution agreement provides for a full and complete release and discharge of all liabilities between Ikaria and us,except as set forth in the agreement. We and Ikaria each agreed to indemnify, defend and hold harmless the other party and its subsidiaries, and each of theirrespective past and present directors, officers and employees, and each of their respective permitted successors and assigns, from any and all damages relatingto, arising out of or resulting from, among other things, our business and certain additional specified liabilities or Ikaria’s business and certain additionalspecified liabilities, as applicable. The separation and distribution agreement also provides that we and Ikaria will each use reasonable best efforts, includingby cooperating with the other party, to, among other things, effect the transfer of any assets being transferred in connection with the Spin-Out that had notbeen transferred as of the date of the Spin-Out. In connection with the Spin-Out, we and Ikaria have entered into other agreements that will govern various interim and ongoing relationshipsbetween us and Ikaria. These agreements, the material terms of which are summarized below, include: · transition services agreements; · an exclusive cross-license, technology transfer, and regulatory matters agreement; · an employee matters agreement; · agreements not to compete; and · drug and device supply agreements. The principal agreements described below are filed as exhibits to this Annual Report on Form 10-K, and the summaries of each of these agreementsbelow set forth the terms of the agreements that we believe are material. These summaries are qualified in their entireties by reference to the full text of theapplicable agreements, which are incorporated by reference into this Annual Report on Form 10-K. 171Table of Contents Services Agreements Transition Services Agreement. In February 2014, we entered into the TSA. Pursuant to the terms and conditions of the TSA, Ikaria has agreed to usecommercially reasonable efforts to provide certain services to us, including human resources support, real estate support, information technology support,accounting and tax support, treasury support, financial planning and analysis support, purchasing support, management/executive services, legal services,quality services, regulatory services, drug and device safety services, business development support, biometrics support and manufacturing support. Ikaria isobligated, subject to the terms of the TSA (including the early termination provisions thereof and our obligation to use commercially reasonable efforts toprovide the services for ourselves as soon as practicable), to provide such services until February 2016. Ikaria has also agreed, on the terms and subject to the conditions of the TSA, to use commercially reasonable efforts to allow our employees toremain in Ikaria’s Hampton, New Jersey facility for the continued operation of our business during the term of the TSA. We are obligated to pay Ikaria a service fee in the amount of $772,000 per month and to reimburse Ikaria for any out-of-pocket expenses incurred inconnection with its provisions of services under the TSA, any taxes imposed on Ikaria in connection with the performance or delivery of services under theTSA and any costs and expenses incurred by Ikaria in connection with the performance of any services that require resources outside of the existing resourcesof Ikaria or that otherwise interfere with the ordinary operations of Ikaria’s business. This monthly service fee is payable by us regardless of the frequency orquantity of services actually utilized by us under the TSA, and our obligation to pay such monthly service fee for 24 months will survive any earlytermination of the TSA. We are also obligated to pay any fees, costs, expenses or other amounts incurred by Ikaria to obtain the right to allow our employeesto remain in the Hampton, New Jersey facility during the term of the TSA. At the time of the Spin-Out, we deposited the sum of $18.5 million into escrow,representing the aggregate of the $772,000 monthly service fees payable by us under the TSA, to guarantee payment of the monthly service fees by us. 2015 Services Agreement. We entered into a services agreement with Ikaria, effective as of January 1, 2015, which we refer to as the 2015 ServicesAgreement. Pursuant to the terms of the 2015 Services Agreement, we have agreed to use commercially reasonable efforts to provide certain services to Ikaria,including services related to regulatory matters, drug and device safety, clinical operations, biometrics and scientific affairs. We are obligated, subject to theterms of the 2015 Services Agreement, to provide such services until February 2016. In connection with the execution of the 2015 Services Agreement, Ikariapaid us a one-time service fee in the amount of $916,666 and is obligated to pay us a service fee in the amount of $83,333 per month, subject to ourobligation to perform the services. In addition, pursuant to the terms and conditions of the 2015 Services Agreement, Ikaria has agreed to use commercially reasonable efforts toprovide certain services to us, including services related to information technology, and servicing and upgrades of INOpulse devices. Ikaria is obligated,subject to the terms of the 2015 Services Agreement, to provide such services until February 2016. We are obligated to pay Ikaria certain fees under the 2015Services Agreement that total, in the aggregate, approximately $215,000, subject to termination of the 2015 Services Agreement. Exclusive Cross-License, Technology Transfer and Regulatory Matters Agreement In February 2014, we entered into an exclusive cross-license, technology transfer and regulatory matters agreement with Ikaria. Pursuant to the termsof the license agreement, Ikaria granted to us a fully paid-up, non-royalty bearing, exclusive license under specified intellectual property rights controlled byIkaria to engage in the development, manufacture and commercialization of nitric oxide, devices to deliver nitric oxide and related services for or inconnection with out-patient, chronic treatment of patients with PAH, PH-COPD or PH-IPF, which we refer to collectively as the Bellerophon indications. 172Table of Contents We have granted to Ikaria a fully paid-up, non-royalty-bearing, exclusive license under specified intellectual property rights that we control toengage in the development, manufacture and commercialization of products and services for or used in connection with the diagnosis, prevention ortreatment, whether in- or out-patient, of certain conditions and diseases other than the Bellerophon indications and for the use of nitric oxide to treat orprevent conditions that are primarily managed in the hospital, which we refer to collectively as the Ikaria nitric oxide business. We have agreed that, during the term of the license agreement, we will not, without the prior written consent of Ikaria, grant a sublicense under anyof the intellectual property licensed to us under the license agreement to any of our affiliates or any third party, in either case, that directly or indirectlycompetes with the Ikaria nitric oxide business. We have also agreed that we will include certain restrictions in our agreements with customers of our productsto ensure that such products will only be used for the Bellerophon indications. The license agreement will expire on a product-by-product basis for products for a specific Bellerophon indication at such time as we are no longerdeveloping or commercializing any product for such indication. The license agreement may be terminated by either party in the event an act or order of acourt or governmental authority prohibits either party from substantially performing under the license agreement. Either party may also terminate the licenseagreement in the event of an uncured material breach by the other party or in the event the other party is insolvent or in bankruptcy proceedings. Ikaria mayalso terminate the license agreement if we or any of our affiliates breach the agreements not to compete described below, or if we or any successor to ourrights under the license agreement markets a generic nitric oxide product that is competitive with INOmax. Under certain circumstances, if the licenseagreement is terminated, the licenses granted to Ikaria by us will survive such termination. Employee Matters Agreement In February 2014, we entered into an employee matters agreement with Ikaria, pursuant to which the employment of certain Ikaria employees wastransferred to us or our subsidiaries on the terms and conditions set forth therein. The employee matters agreement also sets forth the treatment of outstandingIkaria stock options and RSUs in connection with the Spin-Out. We have agreed to assume and pay, perform, fulfill and discharge, in accordance with theterms of the employee matters agreement, all liabilities to or relating to such transferred employees. Effective as of the date of the Spin-Out, such transferredemployees terminated participation in Ikaria’s employee benefit plans, and we or our subsidiaries adopted employee benefit plans substantially similar to thefollowing Ikaria plans: a 401(k) plan, a medical and dental plan, long-term disability, short-term disability, life and accidental death and dismemberment andflexible spending accounts, pursuant to the terms of the employee matters agreement. Agreements Not to Compete In September 2013, October 2013 and February 2014, we and each of our subsidiaries entered into an agreement not to compete with a subsidiary ofIkaria, which we refer to collectively as the agreements not to compete. Pursuant to the agreements not to compete, we and each of our subsidiaries agreed notto engage, anywhere in the world, in any manner, directly or indirectly, until the earlier of five years after the effective date of such agreement not to competeor the date on which Ikaria and all of its subsidiaries are no longer engaged in such business, in: · the development, manufacture, commercialization, promotion, sale, import, export, servicing, repair, training, storage, distribution,transportation, licensing or other handling or disposition of any product or service (including, without limitation, any product or service thatutilizes, contains or includes nitric oxide for inhalation, a device intended to deliver nitric oxide or a service that delivers or supports thedelivery of nitric oxide), bundled or unbundled, for or used in connection with (a) the diagnosis, prevention or treatment, in both adult and/orpediatric populations, and whether in- or out-patient, of: (i) hypoxic respiratory failure associated with pulmonary hypertension, 173Table of Contents (ii) pulmonary hypertensive episodes and right heart failure associated with cardiovascular surgery, (iii) bronchopulmonary dysplasia, (iv) themanagement of ventilation-perfusion mismatch in acute lung injury, (v) the management of ventilation-perfusion mismatch in acute respiratorydistress syndrome, (vi) the management of pulmonary hypertension episodes and right heart failure in congestive heart failure, (vii) pulmonaryedema from high altitude sickness, (viii) the management of pulmonary hypertension episodes and right heart failure in pulmonary or cardiacsurgery, (ix) the management of pulmonary hypertension episodes and right heart failure in organ transplant, (x) sickle cell vaso-occlusivecrisis, (xi) hypoxia associated with pneumonia or (xii) ischemia-reperfusion injury or (b) the use of nitric oxide to treat or prevent conditionsthat are primarily managed in the hospital; or · any and all development, manufacture, commercialization, promotion, sale, import, export, storage, distribution, transportation, licensing, orother handling or disposition of any terlipressin or any other product within the pressin family, (a) intended to treat (i) hepatorenal syndrome inany form, (ii) bleeding esophageal varices or (iii) septic shock or (b) for or in connection with the management of low blood pressure. The agreements not to compete expressly exclude the Bellerophon indications. Supply Agreements Device Clinical Supply Agreement. In February 2014, we entered into the device supply agreement, pursuant to which Ikaria will use commerciallyreasonable efforts to manufacture and supply our requirements for certain nitric oxide delivery devices specified in the device supply agreement for use in ourclinical programs for PAH and PH-COPD. Pursuant to the device supply agreement, we will pay to Ikaria an amount equal to Ikaria’s internal and externalmanufacturing cost plus 20%. The device supply agreement expired on February 9, 2015. Drug Clinical Supply Agreement. In February 2014, we entered into the drug supply agreement, pursuant to which Ikaria has agreed to usecommercially reasonable efforts to manufacture and supply, and we have agreed to acquire from Ikaria, our requirements for nitric oxide for inhalation andcorresponding placebo for use in our clinical programs for PAH, PH-COPD and PH-IPF. Pursuant to the drug supply agreement, we will pay to Ikaria anamount equal to Ikaria’s internal and external manufacturing cost plus 20%. Under the terms of the drug supply agreement, we have also granted Ikaria a rightof first negotiation in the event that we desire to obtain supply of nitric oxide for inhalation and corresponding placebo (or any variant thereof or any versionwith different specifications) for commercial use. The drug supply agreement will expire on a product-by-product basis on the date we discontinue clinicaldevelopment of such product. In addition, either party may terminate the drug supply agreement in the event of an uncured material breach by the otherparty. Directors and Officers of Ikaria Daniel Tassé, a member of our board of directors, currently serves as President and Chief Executive Officer and is a member of the board of directorsof Ikaria. Matthew Holt, a member of our board of directors, is a member of the board of directors of Ikaria. Participation in Initial Public Offering In our initial public offering, certain of our directors, executive officers and 5% stockholders and their affiliates purchased an aggregate of 1,914,464shares of our common stock. Each of those purchases was made through the underwriters or through the directed share program at the initial public offeringprice of $12.00 per share. The following table sets forth the aggregate number of shares of our common stock that these directors, executive officers and 5%stockholders and their affiliates purchased in our initial public offering: 174Table of Contents Shares of TotalPurchaser(1)common stock purchase priceNew Mountain Entities1,070,166$12,841,992Linde358,916$4,306,992ARCH212,666$2,551,992Venrock211,916$2,542,992Jonathan M. Peacock20,800$249,600Manesh Naidu1,500$18,000Reinilde Heyrman1,500$18,000Martin Meglasson12,000$144,000Daniel Tassé25,000$300,000 (1) See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for more information about theshares held by the below identified entities, directors and executive officers. 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 we were orare to be a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees or 5% stockholders, or theirimmediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest. If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” therelated person must report the proposed related person transaction to our General Counsel or Chief Financial Officer, or in each case an individual performingsimilar functions. 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, theaudit committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chairman of the audit committee toreview and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by thecommittee 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 audit committee after fulldisclosure 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; 175Table of Contents · 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 bematerial to investors in light of the circumstances of the particular transaction. The audit committee may approve or ratify the transaction only if the committee determines that, under all of the circumstances, the transaction is inour 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 hasdetermined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related persontransactions 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 ofsuch entity) that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of theterms of the transaction and do not receive any special benefits as a result of the transaction and (c) the amount involved in the transaction isless than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under 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 committeein the manner specified in its charter. We did not have a written policy regarding the review and approval of related person transactions prior to our initial public offering. Nevertheless,with respect to such transactions, it was our policy for our board of directors to consider the nature of and business reason for such transactions, how the termsof such transactions compared to those which might be obtained from unaffiliated third parties and whether such transactions were otherwise fair to and in thebest interests of, or not contrary to, our best interests. In addition, all related person transactions required prior approval, or later ratification, by our board ofdirectors. Director Independence NASDAQ rules require that a majority of our board of directors be independent within one year of listing, which in our case was February 13, 2015.In addition, the NASDAQ rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating andcorporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under theExchange Act. Under NASDAQ rules, a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does nothave a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be consideredindependent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of theaudit committee, the board of directors or any other board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fee fromthe listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. Our board of directors hasdetermined that Messrs. Holt, Luehring, Moura, Nelsen and Weinstein are “independent directors,” as defined under Rule 5605(a)(2) of the NASDAQ rules. Inmaking such determination, our board of directors considered the relationships that each such non-employee director has with our company and all otherfacts and circumstances that our board of directors deemed relevant in 176Table of Contents determining their independence, including the beneficial ownership of our capital stock by each non-employee director. The phase-in periods with respect to director independence under the applicable NASDAQ rules allow us to have only one independent member oneach of the audit committee, compensation committee and nominating and corporate governance committee upon the listing date of our common stock, amajority of independent members on each of these committees within 90 days of the listing date and fully independent committees within one year of thelisting date. Our board of directors has determined that Mr. Luehring, who is a member of our audit committee, Messrs. Holt and Nelsen, who are members of ourcompensation committee, and Messrs. Holt and Moura, who are members of our nominating and corporate governance committee, satisfy the independencestandards for their respective committees established by the SEC and NASDAQ rules, as applicable, including, in the case of the audit committee member, theindependence requirements of Rule 10A-3 under the Exchange Act and, in the case of the compensation committee members, the independence requirementsunder Rule 10C-1 under the Exchange Act. In making such determinations, our board of directors considered the relationships that each such non-employeedirector has with our company and all other facts and circumstances that our board of directors deemed relevant in determining independence, including thebeneficial ownership of our capital stock by each non-employee director. Our board of directors has determined that neither Mr. Moura, who is a member ofour audit committee, nor Mr. Weinstein, who is the chair of our audit committee, is currently independent under Rule 10A-3 of the Exchange Act, butdetermined that Mr. Moura will be permitted to remain on the audit committee for a period of up to 90 days following the listing date and Mr. Weinstein willbe permitted to remain on the audit committee for a period of up to one year following the listing date, in each case in accordance with the phase-in periodunder NASDAQ rules. Item 14. Principal Accountant Fees and Services Auditors’ Fees The following table summarizes the fees of KPMG LLP, our registered independent public accounting firm, billed to us for each of the last two fiscalyears. Fee Category2014 2013Audit Fees(1)$843,806$138,000Audit-Related Fees——Tax Fees——All Other Fees——Total Fees$843,806$138,000 (1) Audit fees consist of fees for the audit of our financial statements and the review of our interim financial statements and services associated with ourregistration statement on Form S-1. Pre-Approval Policies and Procedures The audit committee of our board of directors has adopted policies and procedures for the pre-approval of audit and non-audit services for thepurpose of maintaining the independence of our independent auditor. We 177Table of Contents may not engage our independent auditor to render any audit or non-audit service unless either the service is approved in advance by the audit committee, orthe engagement to render the service is entered into pursuant to the audit committee’s pre-approval policies and procedures. Notwithstanding the foregoing,pre-approval is not required with respect to the provision of services, other than audit, review or attest services, by the independent auditor if the aggregateamount of all such services is no more than 5% of the total amount paid by us to the independent auditor during the fiscal year in which the services areprovided, such services were not recognized by us at the time of the engagement to be non-audit services and such services are promptly brought to theattention of the audit committee and approved prior to completion of the audit by the audit committee. 178Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (1) Financial Statements Our consolidated financial statements are set forth in Part II, Item 8 of this Annual Report on Form 10-K and are incorporated herein by reference. (2) Financial Statement Schedules No financial statement schedules have been filed as part of this Annual Report on Form 10-K because they are not applicable or are not required orbecause the information is otherwise included herein. (3) Exhibits The exhibits filed as part of this Annual Report on Form 10-K are set forth on the Exhibit Index immediately following our financial statements. TheExhibit Index is incorporated herein by reference. 179Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. Date: March 31, 2015 BELLEROPHON THERAPEUTICS, INC. By:/s/ Jonathan M. PeacockJonathan M. PeacockChairman, President and Chief Executive Officer(Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. SignatureTitle Date Chairman, President and Chief Executive March 31, 2015/s/ Jonathan M. PeacockOfficer(Principal Executive Officer)Jonathan M. Peacock /s/ David AbramsTreasurer (Principal Financial and Accounting Officer) March 31, 2015David Abrams /s/ Matthew HoltDirector March 31, 2015Matthew Holt /s/ Jens LuehringDirector March 31, 2015Jens Luehring /s/ Andre V. MouraDirector March 31, 2015Andre V. Moura /s/ Robert T. NelsenDirector March 31, 2015Robert T. Nelsen /s/ Daniel TasséDirector March 31, 2015Daniel Tassé /s/ Adam WeinsteinDirector March 31, 2015Adam Weinstein 180Table of Contents EXHIBIT INDEX ExhibitNumber Description of Exhibit2.1*Plan of Conversion2.2*Agreement and Plan of Merger3.1Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report onForm 8-K (File No. 001-36845) filed with the SEC on February 25, 2015)3.2Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K(File No. 001-36845) filed with the SEC on February 25, 2015)4.1Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to the Registrant’sRegistration Statement on Form S-1/A (File No. 333-201474) filed with the SEC on February 3, 2015)4.2Stockholders Agreement, dated February 12, 2015, between the Registrant and Linde North America, Inc.4.3Stockholders Agreement, dated February 12, 2015, among the Registrant and New Mountain Partners II (AIV-A), L.P., New MountainPartners II (AIV-B), L.P., New Mountain Affiliated Investors II, L.P. and Allegheny New Mountain Partners, L.P.10.1+Assumed 2007 Ikaria Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1(File No. 333-201474) filed with the SEC on January 13, 2015)10.2+Assumed 2010 Ikaria Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement onForm S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.3+2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.4+Form of Option Agreement under 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s RegistrationStatement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.5+2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on February 3, 2015)10.6+Form of Incentive Stock Option Agreement under 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registrant’sRegistration Statement on Form S-1 (File No. 333-201474) filed with the SEC on February 3, 2015)10.7+Form of Nonstatutory Stock Option Agreement under 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to theRegistrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on February 3, 2015)10.8†Amended and Restated License and Commercialization Agreement, dated as of August 26, 2009, among Ikaria Development SubsidiaryOne LLC, BioLineRx Ltd. and BioLine Innovations Jerusalem L.P., as amended10.9Form of Agreement Not to Compete, entered into by Ikaria Acquisition LLC and each of the Registrant, Bellerophon BCM LLC,Bellerophon Pulse Technologies LLC and Bellerophon Services, Inc. (incorporated by reference to Exhibit 10.9 to the Registrant’sRegistration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.10†Separation and Distribution Agreement, dated as of February 9, 2014, among the Registrant, Ikaria, Inc. and Ikaria Acquisition LLC(incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with theSEC on January 13, 2015) 181Table of Contents 10.11†Services Agreement, effective as of January 1, 2015, between the Registrant and Ikaria, Inc. (incorporated by reference to Exhibit 10.11 tothe Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on February 3, 2015)10.12†Drug Clinical Supply Agreement, dated as of February 9, 2014, between Bellerophon Pulse Technologies LLC and INO Therapeutics LLC(incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with theSEC on January 13, 2015)10.13†Employee Matters Agreement, dated as of February 9, 2014, between the Registrant and Ikaria, Inc. (incorporated by reference toExhibit 10.13 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.14†Exclusive Cross-License, Technology Transfer and Regulatory Matters Agreement, dated February 9, 2014, between Bellerophon PulseTechnologies LLC and INO Therapeutics LLC, as amended on March 27, 2014 (incorporated by reference to Exhibit 10.14 to theRegistrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.15†Transition Services Agreement, dated as of February 9, 2014, between the Registrant and Ikaria, Inc. (incorporated by reference toExhibit 10.15 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.16Registration Rights Agreement, dated February 12, 2015, among the Registrant, New Mountain Partners II (AIV-A), L.P., New MountainPartners II (AIV-B), L.P., Allegheny New Mountain Partners, L.P., New Mountain Affiliated Investors II, L.P., ARCH Venture Fund VI, L.P.,Venrock Partners, L.P., Venrock Associates IV, L.P., Venrock Entrepreneurs Fund IV, L.P., Linde North America, Inc., 5AM Ventures LLCand Aravis Venture I L.P.10.17Form of Indemnification Agreement between the Registrant and each of its executive officers and directors (incorporated by reference toExhibit 10.17 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.18+Assumed Employment Agreement, dated January 4, 2012, between Manesh Naidu and Ikaria, Inc. (incorporated by reference toExhibit 10.18 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.19+Assumed Employment Agreement, dated August 10, 2010, between Martin Meglasson and Ikaria, Inc. (incorporated by reference toExhibit 10.19 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.20+Assumed Employment Agreement, dated March 26, 2012, between Reinilde Heyrman and Ikaria, Inc. (incorporated by reference toExhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.21+Form of Retention Bonus Letter for Executive Officers (incorporated by reference to Exhibit 10.21 to the Registrant’s RegistrationStatement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)10.22+Employment Agreement, dated June 20, 2014, between Jonathan M. Peacock, the Registrant and Bellerophon Services, Inc. (incorporatedby reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC onJanuary 13, 2015)10.23Form of Management Rights Letter between the Registrant and certain of its stockholders (incorporated by reference to Exhibit 10.23 to theRegistrant’s Registration Statement on Form S-1 (File No. 333-201474) filed with the SEC on January 13, 2015)21.1Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Registration Statement on Form S-1 (FileNo. 333-201474) filed with the SEC on January 13, 2015)23.1Consent of KPMG LLP independent registered public accounting firm31.1Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended31.2Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended 182Table of Contents 32.1Certification of Principal Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of200232.2Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 * Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish copies of any of theomitted schedules and exhibits upon request by the Securities and Exchange Commission. † Confidential treatment has been granted as to certain portions, which portions have been omitted and separately filed with the Securities and ExchangeCommission. + Management contract or compensatory plan or arrangement filed in response to Item 15(a)(3) of the Instructions to the Annual Report on Form 10-K. 183Exhibit 2.1 PLAN OF CONVERSIONConvertingBellerophon Therapeutics LLC(a Delaware limited liability company)intoBellerophon Therapeutics, Inc.(a Delaware corporation) THIS PLAN OF CONVERSION (this “Plan”), dated as of February 12, 2015, is hereby adopted and approved by Bellerophon Therapeutics LLC, alimited liability company formed under the laws of Delaware (the “LLC”), to set forth the terms, conditions and procedures governing the conversion of theLLC to a Delaware corporation pursuant to Section 18-216 of the Delaware Limited Liability Company Act (the “DLLCA”) and Section 265 of the DelawareGeneral Corporation Law (the “DGCL”). WHEREAS, the LLC is a limited liability company formed and existing under the laws of the State of Delaware and is operating under the Amendedand Restated Limited Liability Company Agreement of the LLC, dated as of February 9, 2014, as amended (the “LLC Agreement”), by and among the LLCand the Members (as defined in the LLC Agreement); WHEREAS, the Board (as defined in the LLC Agreement) has determined that it is in the best interests of the LLC for the LLC to convert to a Delawarecorporation pursuant to Section 18-216 of the DLLCA and Section 265 of the DGCL upon the terms and conditions and in accordance with the proceduresset forth herein, and the Board has authorized and approved the Conversion (as defined below) and the execution, delivery and filing of any and allinstruments, certificates and documents necessary or desirable in connection therewith; WHEREAS, pursuant to Section 14.01 of the LLC Agreement, the Board has the right to cause the LLC to convert to a corporation in accordance withthe terms of the LLC Agreement by such means as the Board shall select; WHEREAS, pursuant to the terms of a Merger Agreement, dated as of the date hereof (the “Merger Agreement”), following the Conversion each ofNew Mountain Partners II Special (AIV-A), L.P., IRDO Holding Corp., Venrock IK Holdings BT, Inc. and 5AM-BT, Inc. shall merge with and into theCorporation (as defined below), and the Corporation shall be the surviving entity in such mergers; and WHEREAS, it is intended that the Conversion (as defined below) and each of the mergers undertaken pursuant to the Merger Agreement togetherconstitute an integrated transaction governed by Section 351 of the Internal Revenue Code of 1986, as amended. NOW, THEREFORE, the LLC does hereby adopt this Plan to effectuate the conversion of the LLC to a Delaware corporation as follows: 1. Conversion; Effect of Conversion. Upon and subject to the terms and conditions of this Plan and pursuant to the relevant provisions of theDLLCA and the DGCL, including without limitation Section 18-216 of the DLLCA and Section 265 of the DGCL, the LLC shall convert (the “Conversion”)to a Delaware corporation named “Bellerophon Therapeutics, Inc.” (the “Corporation”) at the Effective Time (as defined below). The Corporation shallthereafter be subject to all of the provisions of the DGCL, except that notwithstanding Section 106 of the DGCL, the existence of the Corporation shall bedeemed to have commenced on the date the LLC commenced its existence. The Conversion shall not affect any obligations or liabilities of the LLC incurredprior to the Effective Time. The LLC shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the Conversion shall notconstitute a dissolution of the LLC and shall constitute a continuation of the existence of the LLC in the form of a Delaware corporation. Upon the EffectiveTime, all of the rights, privileges and powers of the LLC, and all property and all debts due to the LLC, as well as all other things and causes of actionbelonging to the LLC, shall remain vested in the Corporation and shall be the property of the Corporation, and the title to any real property vested by deed orotherwise in the LLC shall not revert or be in any way impaired by reason of the Conversion, and all rights of creditors and all liens upon any property of theLLC shall be preserved unimpaired, and all debts, liabilities and duties of the LLC shall remain attached to the Corporation and may be enforced against it tothe same extent as if such debts, liabilities and duties had been incurred or contracted by it in its capacity as a corporation. 2. Certificate of Conversion; Certificate of Incorporation; Effective Time. The Conversion shall be effected by the filing with the Secretary ofState of the State of Delaware of: (a) a duly executed Certificate of Conversion, substantially in the form of Exhibit A attached hereto (the “Certificate ofConversion”), and (b) a duly executed Certificate of Incorporation of the Corporation, in the form of Exhibit B attached hereto (the “Certificate ofIncorporation”). The Conversion shall be effective immediately upon the filing of (i) the Certificate of Conversion and (ii) the Certificate of Incorporationwith the Secretary of State of the State of Delaware or at such later time as may be specified in both the Certificate of Conversion and the Certificate ofIncorporation (such time of effectiveness, the “Effective Time”). 3. Bylaws of the Corporation. As promptly as practical following the Effective Time, the board of directors of the Corporation shall adopt theBylaws of the Corporation in substantially the form of Exhibit C attached hereto (the “Bylaws”). From and after the Effective Time, except as set forth inSection 7 below, the LLC Agreement shall terminate and no longer govern the affairs of the Corporation, but instead the affairs of the Corporation shall begoverned by the DGCL, the Certificate of Incorporation and, following their adoption by the board of directors of the Corporation, the Bylaws. 4. Directors and Officers. At the Effective Time, (a) the members of the Board of the LLC as of the Effective Time shall be the members of theboard of directors of the Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation orremoval and (b) the officers of the LLC as of the Effective Time shall be the officers of the Corporation and shall hold office until their respective successorsare duly elected and qualified, or their earlier death, resignation or removal. The LLC and, after the Effective Time, the Corporation and its board of directorsshall take all necessary actions to 2 cause each of such individuals to be appointed as a director and/or officer, as the case may be, of the Corporation. 5. Effect of the Conversion on Equity Interests in the LLC. (a) Conversion of Outstanding Securities. Subject to the terms and conditions of this Plan, at the Effective Time, automatically byvirtue of the Conversion and without any further action on the part of the LLC, the Corporation or any holder of Units (as defined in the LLC Agreement) oroptions to purchase Units: (i) each Voting Unit (as defined in the LLC Agreement) of the LLC that is outstanding immediately prior to the EffectiveTime shall be converted into one share of voting common stock, par value $0.01 per share, of the Corporation (“Voting Common Stock”), and as of theEffective Time each such share of Voting Common Stock shall be duly and validly issued, fully paid and nonassessable; (ii) each Non-Voting Unit (as defined in the LLC Agreement) of the LLC that is outstanding immediately prior to theEffective Time shall be converted into one share of non-voting common stock, par value $0.01 per share, of the Corporation (“Non-Voting Common Stock”and, together with the Voting Common Stock, the “Common Stock”), and as of the Effective Time each such share of Non-Voting Common Stock shall beduly and validly issued, fully paid and nonassessable; and (iii) each option to purchase a Non-Voting Unit (each, an “LLC Option”) that is outstanding immediately prior to theEffective Time shall be converted into an option to purchase, upon the same terms and conditions (including, but not limited to, the exercise price), the samenumber of shares of Non-Voting Common Stock (each, a “Corporation Option”) as the number of Non-Voting Units that were subject to the LLC Optionimmediately prior to the Conversion. (b) No Further Ownership Rights in Units. All shares of Voting Common Stock and Non-Voting Common Stock into which Units areconverted pursuant to the Conversion in accordance with the terms of this Section 5 shall be deemed to have been issued in full satisfaction of all rightspertaining to such Units. Immediately following the Effective Time, Units shall cease to exist, and the holder of any Units immediately prior to the EffectiveTime shall cease to have any rights with respect thereto. (c) No Further Ownership Rights in LLC Options. All Corporation Options into which LLC Options are converted in accordance withthe terms of this Section 5 shall be deemed to have been issued in full satisfaction of all rights pertaining to such LLC Options. Immediately following theEffective Time, LLC Options shall cease to exist, and the holder of any LLC Options immediately prior to the Effective Time shall cease to have any rightswith respect thereto. (d) No Impact on Vesting Restrictions and Repurchase Rights. The conversion of Units and LLC Options pursuant to Section 5(a) willnot limit, impair or otherwise modify any vesting restrictions or repurchase rights with respect to any equity issued by the LLC 3 to any officer or employee of the LLC or any other person, which vesting restrictions and repurchase rights shall continue to apply to the shares of CommonStock or Corporation Options, as applicable, issued hereby to any such persons until the expiration of such vesting restrictions and repurchase rights inaccordance with their terms. The Corporation Options shall remain governed by the terms and conditions of the applicable option plan of the Corporation. (e) Transfer Books. At the Effective Time, there shall be no further registration of transfers on the transfer books of the LLC of any Units thatwere outstanding immediately prior to the Effective Time. (f) Registration in Book-Entry. Shares of Common Stock issued in connection with the Conversion shall be uncertificated, and theCorporation shall register, or cause to be registered, such shares into which each outstanding Unit shall have been converted as a result of the Conversion inbook-entry form. 6. Licenses, Permits, Titled Property, Etc. As applicable, following the Effective Time, to the extent required, the Corporation shall apply fornew state tax identification numbers, qualifications to conduct business (including as a foreign corporation), licenses, permits and similar authorizations onits behalf and in its own name in connection with the Conversion and to reflect the fact that it is a corporation. As required or appropriate, following theEffective Time, all real, personal and intangible property of the LLC which was titled or registered in the name of the LLC shall be re-titled or re-registered, asapplicable, in the name of the Corporation by appropriate filings and/or notices to the appropriate parties (including, without limitation, any applicablegovernmental agencies). In addition, following the Effective Time, the LLC’s customer, vendor and other communications (e.g., business cards, letterhead,websites, etc.) shall be revised to reflect the Conversion and the Corporation’s corporate status. 7. Termination of LLC Agreement. As of the Effective Time, the LLC Agreement shall be terminated and of no further force and effect. Notwithstanding the foregoing, the termination of the LLC Agreement shall not relieve any party thereto from any liability arising in connection with anybreach by such party of the LLC Agreement, arising prior to the Effective Time. 8. Further Assurances. If, at any time after the Effective Time, the Corporation shall determine or be advised that any deeds, bills of sale,assignments, agreements, documents or assurances or any other acts or things are necessary, desirable or proper, consistent with the terms of this Plan, (a) tovest, perfect or confirm, of record or otherwise, in the Corporation its right, title or interest in, to or under any of the rights, privileges, immunities, powers,purposes, franchises, properties or assets of the LLC, or (b) to otherwise carry out the purposes of this Plan, the Corporation and its proper officers anddirectors (or their designees) are hereby authorized to solicit in the name of the LLC any third party consents or other documents required to be delivered byany third party, to execute and deliver, in the name and on behalf of the LLC, all such deeds, bills of sale, assignments, agreements, documents andassurances and do, in the name and on behalf of the LLC, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, titleor interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the LLC and otherwise to carry out thepurposes of this Plan. 4 9. Implementation and Interpretation; Termination and Amendment. This Plan shall be implemented and interpreted, prior to the EffectiveTime, by the Board and, following the Effective Time, by the board of directors of the Corporation, (a) each of which shall have full power and authority todelegate and assign any matters covered hereunder to any other party(ies), including, without limitation, any officers of the LLC or any officers of theCorporation, as the case may be, and (b) the interpretations and decisions of which shall be final, binding, and conclusive on all parties. The Board at anytime prior to the Effective Time may terminate, amend or modify this Plan. Upon such termination of this Plan, if the Certificate of Conversion and theCertificate of Incorporation have been filed with the Secretary of State of the State of Delaware, but have not become effective, any person or entity that wasauthorized to execute, deliver and file such certificates may execute, deliver and file a Certificate of Termination of such certificates. 10. Third Party Beneficiaries. This Plan shall not confer any rights or remedies upon any person or entity other than as express provided herein. 11. Severability. Whenever possible, each provision of this Plan will be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Plan is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to theextent of such prohibition or invalidity, without invalidating the remainder of this Plan. 12. Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to theconflicts of laws rules of such state. [Remainder of page intentionally left blank.] 5 IN WITNESS WHEREOF, the LLC has caused this Plan to be executed by its duly authorized representative as of the date first stated above. BELLEROPHON THERAPEUTICS LLC By:/s/ Jonathan M. PeacockName: Jonathan M. PeacockTitle: President and Chief Executive Officer [Signature Page to Plan of Conversion] Exhibit 2.2 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is dated as of February 12, 2015, by and among Bellerophon Therapeutics, Inc., aDelaware corporation (the “Company”), New Mountain Partners II (AIV-B), L.P., a limited partnership organized under the laws of Delaware (“NewMountain”), New Mountain Partners II Special (AIV-A), L.P., a Delaware limited partnership (“New Mountain Blocker”), ARCH Venture Fund VI, L.P., alimited partnership organized under the laws of Delaware (“ARCH Ventures”), IRDO Holding Corp., a Delaware corporation (“IRDO”), Venrock AssociatesIV, L.P., a limited partnership organized under the laws of Delaware (“Venrock Associates”), Venrock Partners, L.P., a limited partnership organized under thelaws of Delaware (“Venrock Partners”), and Venrock Entrepreneurs Fund IV, L.P., a limited partnership organized under the laws of Delaware (“VenrockEntrepreneurs” and, together with Venrock Associates and Venrock Partners, “Venrock”), Venrock IK Holdings BT, Inc., a Delaware corporation (“VenrockBlocker”), 5AM Ventures LLC, a limited liability company organized under the laws of Delaware (“5AM Ventures”), and 5AM Co-Investors LLC, a limitedliability company organized under the laws of Delaware (“5AM Co-Investors” and, together with 5AM Ventures, “5AM”), and 5AM-BT, Inc., a Delawarecorporation (“5AM-BT”). The Company, New Mountain, New Mountain Blocker, ARCH Ventures, IRDO, Venrock, Venrock Blocker, 5AM and 5AM-BT arecollectively referred to herein as the “Parties,” and each individually is referred to herein as a “Party.” All references to the Company include its predecessor,Bellerophon Therapeutics LLC, a Delaware limited liability company. RECITALS WHEREAS, in anticipation of the initial public offering of the Company, on the date hereof, the Company has previously completed a conversion(the “Conversion”) from a limited liability company to a corporation, WHEREAS, (i) the board of directors of the Company and the general partner of New Mountain Blocker deem it advisable that New MountainBlocker merge with and into the Company (the “New Mountain Blocker Merger”), (ii) the board of directors of the Company and the board of directors ofIRDO deem it advisable that IRDO merge with and into the Company (the “IRDO Merger”), (iii) the board of directors of the Company and the board ofdirectors of Venrock Blocker deem it advisable that Venrock Blocker merge with and into the Company (the “Venrock Blocker Merger”) and (iv) the boardof directors of the Company and the board of directors of 5AM-BT deem it advisable that 5AM-BT merge with and into the Company (the “5AM-BTMerger,” and collectively with the New Mountain Blocker Merger, IRDO Merger, Venrock Blocker Merger and 5AM-BT Merger, the “Mergers”), in eachcase, upon the terms and subject to the conditions set forth herein and in accordance with Delaware Law; WHEREAS, the board of managers, board of directors or general partner, as applicable, and, if applicable, the equityholders of each of the Company,New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT have approved the New Mountain Blocker Merger, IRDO Merger, Venrock Blocker Mergerand 5AM-BT Merger, as applicable, in accordance with the requirements of Delaware Law and their respective organizational documents; and WHEREAS, the Parties intend that each of the Mergers qualifies as a “reorganization” within the meaning of Section 368 of the Code and therules and regulations promulgated thereunder and that this Agreement shall constitute a “plan of reorganization” within the meaning of Treasury RegulationSection 1.368-2(g) with respect to each Merger. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows: ARTICLE I Definitions 1.1 Definitions. As used herein, the following terms have the following meanings: “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such otherPerson. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of suchPerson, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled”have meanings correlative to the foregoing. Notwithstanding the foregoing, for purposes of this Agreement, neither the Company nor any of its Subsidiariesshall be considered an Affiliate of any of the other Parties to this Agreement. “Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized orrequired by applicable Law to close. “Closing Date” means the date of the Closing. “Code” means the United States Internal Revenue Code of 1986, as amended. “Common Stock” means the Company’s Voting Common Stock, par value $0.01, with the rights, preferences and privileges as described in theCompany’s certificate of incorporation. “Delaware Law” means, collectively, the DGCL and the DRULPA. “DGCL” means the General Corporation Law of the State of Delaware. “DRULPA” means the Revised Uniform Limited Partnership Act of the State of Delaware. 2 “Law” means any law, statute, regulation, rule, permit, license, certificate, judgment, order, award or other legally binding decision or requirement ofany arbitrator, court, government or governmental agency or instrumentality (domestic or foreign). “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge or security interest in respect of such property or asset. “Material Adverse Effect” means a material adverse effect on (i) the business, assets or results of operations of the applicable Merged Entity, takenas a whole, or (ii) the ability of the applicable Merged Entity to consummate the transactions contemplated by the Transaction Documents. “Merged Entities” means New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT, and the term “Merged Entity” means any one of them, asthe case may be. “Permitted Liens and Exceptions” means Liens for Taxes, assessments and similar charges that are not yet due and payable. “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including agovernment or political subdivision or an agency or instrumentality thereof. “Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date. “Subsidiary” means any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board ofdirectors or other persons performing similar functions are at the time directly or indirectly owned by a Person. “Tax” means (1) any tax or other governmental fee or like assessment or charge in the nature of a tax; including, but not limited to, withholding onamounts paid to or by any Person, federal and state income taxes, real property gains taxes, sales and use taxes, escheat taxes, abandoned or unclaimedproperty taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license taxes, capital stock taxes, real and personal propertytaxes, environmental taxes, transfer taxes, severance taxes, alternative or add-on minimum taxes, and custom duties, together with any interest, penalty,addition to tax or additional amount imposed by any governmental authority (whether federal, state, local, municipal, foreign or otherwise) responsible forthe imposition of any such tax (a “Taxing Authority”) and (2) any liability for the payment of any amount of the type described in the immediatelypreceding clause (1) as a result of a Merged Entity being a member of an affiliated, consolidated or combined group with any other corporation at any time onor prior to the Closing Date. “Transaction Documents” means this Agreement and the Exhibits attached hereto. “Voting Agreement” means that certain Voting Agreement, dated February 12, 2014, by and among the Company, New Mountain Partners II (AIV-A), L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., IRDO, Venrock Blocker, Linde North America, Inc., 5AM-BTand Aravis Venture I L.P. 3 Each of the following terms is defined in the Section set forth opposite such term: Term Section5AMPreamble5AM Co-InvestorsPreamble5AM VenturesPreamble5AM-BTPreamble5AM-BT MergerRecitalsARCH VenturesPreambleAgreementPreambleCertificate of Merger2.1(b)Claim7.3(a)Closing2.2CompanyPreambleConversionRecitalsDamages7.2(a)Indemnified Party7.3(a)Indemnifying Party7.3(a)IRDOPreambleIRDO MergerRecitalsMerger Effective Time2.1(b)MergersRecitalsNew MountainPreambleNew Mountain BlockerPreambleNew Mountain Blocker MergerRecitalsPartiesPreamblePartyPreamblePotential Contributor7.4Registration Statement2.1(b)Returns3.11Securities3.5Surviving Company2.1(a)Third Party Claim7.3(b)Transfer Taxes6.1(b)VenrockPreambleVenrock BlockerPreambleVenrock Blocker MergerRecitalsVenrock AssociatesPreambleVenrock EntrepreneursPreambleVenrock PartnersPreambleWarranty Breach7.2(a) 1.2 Other Definitional and Interpretative Provisions. The words “hereof,” “herein,” and “hereunder” and words of like import used in this Agreementshall refer to this Agreement as a 4 whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in theconstruction or interpretation hereof. References to Articles, Sections, and Exhibits are to Articles, Sections, and Exhibits of this Agreement unless otherwisespecified. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Anycapitalized terms used in any Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in thisAgreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes,” or “including” are used in thisAgreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of likeimport. “Writing,” “written,” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visibleform. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance withthe terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean,unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws,” or to a particular statute or law shall bedeemed also to include any and all Laws. ARTICLE II The Mergers And Other Transactions 2.1 The Mergers. (a) At the Merger Effective Time (as defined below), and in accordance with the applicable provisions of this Agreement and Delaware Law,each of New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT shall be merged with and into the Company. Following the Mergers, the separatecorporate or limited partnership existence, as applicable, of each of New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT shall cease and theCompany shall continue as the surviving company (the “Surviving Company”). (b) At the time determined by the Company, promptly following the Conversion and prior to the effectiveness of the Company’s registrationstatement on Form S-1 (File No. 333-201474) (the “Registration Statement”) filed with the Securities and Exchange Commission pursuant to the SecuritiesAct of 1933, as amended, the Company shall cause a certificate of merger in form and substance as set forth on Exhibit A attached hereto (the “Certificate ofMerger”) to be executed, acknowledged and filed with the Secretary of State of the State of Delaware, all as provided for and in accordance with Section 251and Section 264 of the DGCL and Section 17-211 of the DRULPA. The Mergers shall become effective at the time and date as provided under Delaware Lawand as specified in the Certificate of Merger (the “Merger Effective Time”). References to the Company after the Merger Effective Time shall mean theSurviving Company. (c) Each Merger shall have the effects set forth under Delaware Law. Without limiting the generality of the foregoing, and subject thereto, atthe Merger Effective Time, all the properties, rights, privileges, and powers of each of New Mountain Blocker, IRDO, Venrock 5 Blocker and 5AM-BT shall vest in the Surviving Company, and all debts, liabilities, and duties of each of New Mountain Blocker, IRDO, Venrock Blockerand 5AM-BT shall become the debts, liabilities and duties of the Surviving Company. Notwithstanding the foregoing, it is hereby acknowledged and agreedthat, upon consummation of the Mergers, the respective rights and obligations of IRDO, Venrock Blocker and 5AM-BT under the Voting Agreement shall betransferred to ARCH Ventures, Venrock and 5AM, respectively, in accordance with the terms thereof. (d) The certificate of incorporation and bylaws of the Company, as in effect immediately prior to the Merger Effective Time, shall be thecertificate of incorporation and bylaws of the Surviving Company until thereafter amended in accordance with the provisions thereof and applicable Law. (e) Subject to applicable Law, (i) the directors of the Company immediately prior to the Merger Effective Time shall be the initial directors ofthe Surviving Company and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation, or removal,and (ii) the officers of the Company immediately prior to the Merger Effective Time shall be the initial officers of the Surviving Company and shall holdoffice until their respective successors are duly elected and qualified, or their earlier death, resignation, or removal. (f) All of the equity interests of each of New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT outstanding as of immediately prior tothe Merger Effective Time shall, as of the Merger Effective Time, by virtue of the Merger and without any action on the part of any Party hereto or the holderthereof or any other Person, be canceled and extinguished and converted into the right to receive the consideration specified in Section 2.1(g). All of suchoutstanding equity interests of New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT when so converted, shall no longer be outstanding and shallautomatically be canceled and the former holders thereof shall cease to have any rights with respect thereto, except the right to receive the considerationspecified in Section 2.1(g). (g) At the Merger Effective Time: (i) In respect of the outstanding equity interests of New Mountain Blocker held by New Mountain immediately prior to the MergerEffective Time and canceled and extinguished by virtue of the New Mountain Blocker Merger, New Mountain shall receive the number of shares of CommonStock equal to the number of shares of Common Stock held by New Mountain Blocker immediately prior to the New Mountain Blocker Merger, and suchshares of Common Stock of the Company received pursuant to the New Mountain Blocker Merger shall be free and clear of all security interests, claims, liens,equities or other encumbrances; (ii) In respect of the outstanding equity interests of IRDO held by ARCH Ventures immediately prior to the Merger Effective Time andcanceled and extinguished by virtue of the IRDO Merger, ARCH Ventures shall receive the number of shares of Common Stock equal to the number of sharesof Common Stock held by IRDO immediately prior to the Merger Effective Time, and such shares of Common Stock received pursuant to the IRDO 6 Merger shall be free and clear of all security interests, claims, liens, equities or other encumbrances; (iii) In respect of the outstanding equity interests of Venrock Blocker held by Venrock Associates, Venrock Entrepreneurs and VenrockPartners immediately prior to the Merger Effective Time and canceled and extinguished by virtue of the Venrock Blocker Merger, Venrock Associates,Venrock Entrepreneurs and Venrock Partners shall receive the number of shares of Common Stock in the aggregate equal to the number of shares of CommonStock held by Venrock Blocker immediately prior to the Merger Effective Time (with such shares of Common Stock allocated among Venrock Associates,Venrock Entrepreneurs and Venrock Partners in accordance with the allocations set forth on Schedule 2.1(g)(iii) hereto), and such shares of Common Stockreceived pursuant to the Venrock Blocker Merger shall be free and clear of all security interests, claims, liens, equities or other encumbrances; and (iv) In respect of the outstanding equity interests of 5AM-BT held by 5AM Ventures and 5AM Co-Investors immediately prior to theMerger Effective Time and canceled and extinguished by virtue of the 5AM-BT Merger, 5AM Ventures and 5AM Co-Investors shall receive the number ofshares of Common Stock in the aggregate equal to the number of shares of Common Stock held by 5AM-BT immediately prior to the Merger Effective Time(with such shares of Common Stock allocated between 5AM Ventures and 5AM Co-Investors in accordance with the allocations set forth on Schedule 2.1(g)(iv) hereto), and such shares of Common Stock received pursuant to the 5AM-BT Merger shall be free and clear of all security interests, claims, liens, equitiesor other encumbrances. (h) By their execution of this Agreement, New Mountain, as the sole limited partner of New Mountain Blocker, ARCH Ventures, as the solestockholder of IRDO, Venrock as the sole stockholder of Venrock Blocker and 5AM as the sole stockholder of 5AM-BT, each waives its right to any dissentto the New Mountain Blocker Merger, the IRDO Merger, the Venrock Blocker Merger and the 5AM-BT Merger, respectively, and demand appraisal for itsshares of New Mountain Blocker, IRDO, Venrock Blocker and 5AM-BT, respectively, under the DGCL, or otherwise. 2.2 Closing. The closing (the “Closing”) of the transactions contemplated hereunder shall take place at the offices of Wilmer Cutler Pickering Hale andDorr LLP, 60 State Street, Boston, Massachusetts 02109. At the Closing: (i) The Certificate of Merger shall be filed pursuant to the terms of Section 2.1. (ii) Each of the Parties shall deliver such other documents, instruments and agreements as are required to be delivered by such Party atthe Closing pursuant to this Agreement. 2.3 Contribution of Cash. Prior to the Merger Effective Time, if any Merged Entity does not have an amount of cash sufficient to pay all liabilities ofsuch Merged Entity (as estimated in good faith by each Merged Entity), including Taxes for any Pre-Closing Tax Period, the equity holders of such MergedEntity shall contribute an amount of cash to such Merged Entity such 7 that following such contribution, the Merged Entity will have an amount of cash sufficient to pay all such liabilities. 2.4 Payment of Indebtedness. No later than immediately prior to the Closing, each Merged Entity shall repay all indebtedness for borrowed money(including any capital leases) of such Merged Entity outstanding immediately prior to the Closing, of any kind or nature whatsoever, including anyobligations related thereto (including any accrued interest or prepayment penalties). At Closing, each Merged Entity shall deliver the Company customarypayoff letters from each holder of any indebtedness of such Merged Entity to be repaid at the Closing. ARTICLE III Representations And Warranties Of The Merged Entities Each of the Merged Entities, severally and not jointly, represents and warrants to the Company as of the date hereof that: 3.1 Corporate Existence and Power. Such Merged Entity is a corporation or limited partnership duly incorporated or organized, as applicable, validlyexisting and in good standing under the laws of its jurisdiction of incorporation or organization, as applicable, with full power and authority to conduct itsbusiness as it is now being conducted and to own or use the properties and assets that it purports to own or use. 3.2 Authorization. The execution, delivery and performance by such Merged Entity of the Transaction Documents to which it is or will be a party andthe consummation of the transactions contemplated thereby are within the corporate or limited partnership powers and authority, as applicable, of suchMerged Entity and have been duly authorized by all necessary corporate or limited partnership action, as applicable, on the part of such Merged Entity. Eachof the Transaction Documents to which it is or will be a party constitutes, or will when executed constitute, the legal, valid and binding obligation of suchMerged Entity enforceable against such Merged Entity in accordance with its respective terms, (a) except as enforcement may be limited by applicablebankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including theeffect of statutory and other laws concerning fraudulent conveyances and preferential transfers and (b) subject to the limitations imposed by general equitableprinciples (regardless of whether such enforceability is considered in proceeding at law or in equity). 3.3 Governmental Authorization. The execution, delivery and performance by such Merged Entity of each of the Transaction Documents to which it isor will be a party and the consummation of the transactions contemplated thereby require no action, consent or approval by or in respect of, filing with ornotice to, any governmental body, agency or official other than the Certificate of Merger and any other such action or filing as to which the failure to make orobtain would not have, individually or in the aggregate, a Material Adverse Effect. 3.4 Noncontravention. The execution, delivery and performance by such Merged Entity of any of the Transaction Documents to which it is or will be aparty, and the consummation of the transactions contemplated thereby do not and will not (a) violate or conflict with the 8 organizational documents of such Merged Entity or any resolution adopted by or any action taken by the board of directors, board of managers, generalpartner or equityholders of such Merged Entity, (b) assuming compliance with the matters referred to in Section 3.3, contravene or conflict with or constitutea violation of any provision of any Law binding upon or applicable to such Merged Entity, (c) with or without the giving of notice or the lapse of time, orboth, constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of such Merged Entity, or to aloss of any benefit to which such Merged Entity is entitled, under any provision of any agreement, contract or other instrument to which such Party is a partyor by which it or its properties or assets is bound or (d) result in the creation or imposition of any Lien (other than Permitted Liens and Exceptions) upon orwith respect to such Merged Entity or its assets. 3.5 Capitalization. New Mountain Blocker represents and warrants that New Mountain owns 100% of the limited partnership interests of New MountainBlocker. IRDO represents and warrants that ARCH Ventures owns 100% of the issued and outstanding capital stock of IRDO. Venrock Blocker represents andwarrants that Venrock owns 100% of the issued and outstanding capital stock of Venrock Blocker. 5AM-BT represents and warrants that 5AM owns 100% ofthe issued and outstanding capital stock of 5AM-BT. All of the capital stock or equity interests, as applicable, of such Merged Entity have been dulyauthorized and validly issued and are fully paid and non-assessable. Other than the capital stock or equity interests issued to New Mountain (and the generalpartnership interest in New Mountain Blocker held by the general partner of New Mountain Blocker), ARCH Ventures, Venrock or 5AM described in thisSection 3.5, there are no outstanding (a) capital stock or equity interests or other voting securities of such Merged Entity, (b) securities of such Merged Entityconvertible into or exchangeable for capital stock or equity interests or other voting securities of such Merged Entity or (c) options or other rights to acquirefrom such Merged Entity, or other obligation of such Merged Entity to issue, any capital stock or equity interests or other voting securities of such MergedEntity or securities convertible into or exchangeable for capital stock or equity interests or other voting securities of such Merged Entity (the items in clauses(a) through (c) being referred to collectively as the “Securities”). There are no outstanding obligations of such Merged Entity to repurchase, redeem orotherwise acquire any Securities and there are no agreements or other instruments relating to the issuance, sale or transfer by such Merged Entity of anySecurities. 3.6 Subsidiaries. Such Merged Entity has no Subsidiaries. Such Merged Entity does not control directly or indirectly or have any direct or indirectequity participation in any corporation, partnership, trust, or other business association (other than the Company). 3.7 No Undisclosed Material Liabilities. Such Merged Entity does not conduct any operating or other business or related general business operations,other than its activities as a holding company incident to its direct or indirect ownership of equity interests of the Company. Such Merged Entity does nothave any liabilities of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise), other than (a) deferredincome Taxes that reflect only timing differences between the treatment of items for accounting and income tax purposes, and (b) income Taxes with respectto Pre-Closing Tax Periods that are not yet due and payable. 9 3.8 Related Party Agreements. Except as otherwise provided in the Transaction Documents, there are no agreements, contracts, commitments orunderstandings, other than any such agreements, contracts, commitments or understandings that will be terminated as of Closing without any further liabilityor obligation on the part of such Merged Entity, by and between such Merged Entity, on the one hand, and such Merged Entity’s Affiliates, on the otherhand, including, without limitation, any such agreements, contracts, commitments or understandings pursuant to which such Affiliate provides or receivesany information, assets, properties, support or other services to or from such entity. 3.9 Litigation. There is no claim, action, suit, investigation or proceeding pending against or, to the knowledge of such Merged Entity, threatenedagainst, such Merged Entity or any of its assets before any court or arbitrator or any governmental body, agency or official. As of the date hereof, suchMerged Entity is not aware of any claim, action, suit investigation or proceeding pending or threatened against such Merged Entity or any of its assets, or anyorders or decrees binding on such Merged Entity or any of its assets. 3.10 Compliance with Laws. Such Merged Entity is, and at all times since the date of its incorporation or formation, as applicable, has been, incompliance with all applicable Laws. 3.11 Taxes. Each Merged Entity, severally and not jointly, represents and warrants to the Company as of the date hereof that (a) all Tax returns,statements, reports and forms (collectively, “Returns”) that are material and are required to be filed with any Taxing Authority by, or with respect to, suchMerged Entity on or before the Closing Date (taking into account any duly obtained extensions) have been, or will be, timely filed, (b) such Merged Entityhas timely paid all Taxes due and payable by such Merged Entity shown as due and payable on the Returns that have been filed, (c) the Returns that havebeen filed are true, correct and complete in all material respects, (d) there is no action, suit, proceeding, investigation, audit or claim now proposed (to suchMerged Entity’s knowledge) or pending against or with respect to such Merged Entity in respect of any material Tax, (e) such Merged Entity has properlywithheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any equityholder, employee, creditor,independent contractor, or other third party, (f) there is no claim pending or to such Merged Entity’s knowledge, proposed or threatened by a TaxingAuthority, in a jurisdiction where such Merged Entity does not file Returns that such Merged Entity is or may be subject to taxation in such jurisdiction,(g) assuming the applicable Merger qualifies as Tax-free, such Merged Entity has no liability for Taxes for any Pre-Closing Tax Period in excess of theamount of cash retained by the respective Merged Entity pursuant to Section 2.3 to pay such Taxes, (h) such Merged Entity has not received any notice inwriting from a Taxing Authority of any proposed or pending action, suit, proceeding, investigation, audit or claim with respect to such Merged Entity inrespect of any Tax, and (i) such Merged Entity has not consented to extend the time, nor is the beneficiary of any extension of time, in which any Tax may beassessed or collected by any Taxing Authority. 3.12 Inspections; No Other Representations. No Merged Entity makes any express or implied representations or warranties of any nature, whether inwriting, oral or otherwise, made by or on behalf of or imputed to any Merged Entity or any of its Affiliates, except as expressly set forth in this Agreement.Without limiting the generality of the foregoing, no Merged Entity nor any of its Affiliates makes any representation or warranty with respect to anyprojections, 10 estimates or budgets delivered to or made available to the Company of future revenues, future results of operations (or any component thereof), future cashflows or future financial condition (or any component thereof) or any other information or documents made available to the Company or its counsel,accountants or advisors with respect to any Merged Entity or any of the foregoing business, assets, liabilities or operations. ARTICLE IV Representations And Warranties Of The Company The Company represents and warrants to each of the other Parties, as of the date hereof, that: 4.1 Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of itsjurisdiction of incorporation, with full power and authority to conduct its business as it is now being conducted and to own or use the properties and assetsthat it purports to own or use. The shares of Common Stock to be issued by the Company in the Mergers will be duly authorized, validly issued, fully paidand non-assessable. 4.2 Corporate Authorization. The execution, delivery and performance by the Company of the Transaction Documents to which it is or will be a partyand the consummation of the transactions contemplated thereby are within the corporate powers and authority of the Company and have been dulyauthorized by all necessary corporate action on the part of the Company. Each of the Transaction Documents to which the Company is or will be a partyconstitutes, or will when executed constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance withits respective terms, (a) except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now orhereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws concerning fraudulent conveyances andpreferential transfers, and (b) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in aproceeding at law or in equity). 4.3 Governmental Authorization. The execution, delivery and performance by the Company of each of the Transaction Documents to which it is or willbe a party and the consummation of the transactions contemplated thereby require no action, consent or approval by or in respect of, filing with or materialnotice to, any governmental body, agency or official other than: (a) the filing of the Certificate of Merger; and (b) any other such action or filing as to whichthe failure to make or obtain would not have, individually or in the aggregate, a material adverse effect on the ability of the Company to consummate thetransactions contemplated by the Transaction Documents. 4.4 Noncontravention. The execution, delivery and performance by the Company of any of the Transaction Documents to which it is or will be a partyand the consummation of the transactions contemplated thereby do not and will not (a) violate or conflict with the certificate of incorporation of theCompany or any resolution adopted by or any action taken by the board of directors or stockholders of the Company, (b) assuming compliance with thematters referred 11 to in Section 4.3, contravene or conflict with or constitute a violation of any provision of any Law binding upon or applicable to the Company, (c) with orwithout the giving of notice or the lapse of time, or both, constitute a default under or give rise to any right of termination, cancellation or acceleration of anyright or obligation of the Company, or to a loss of any benefit to which the Company is entitled under any provision of any agreement, contract or otherinstrument to which the Company is a party or by which the Company or its properties or assets are bound or (d) result in the creation or imposition of anyLien (other than Permitted Liens and Exceptions) upon or with respect to the Company or its properties or assets, except, in the case of clauses (b), (c) or (d),for any such contravention, conflict, violation, default, termination, cancellation, acceleration or loss that would not have, individually or in the aggregate, amaterial adverse effect on the Company and its Subsidiaries, taken as a whole. ARTICLE V Covenants Of The Parties Each of the Parties hereto agrees that: 5.1 Reasonable Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, each Party will use its reasonable best efforts totake, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable to consummate the transactions contemplated by any ofthe Transaction Documents. Each Party shall execute and deliver such other documents, certificates, agreements and other writings and to take such otheractions as may be necessary or appropriate in order to consummate or implement expeditiously the transactions contemplated by any of the TransactionDocuments. 5.2 Public Announcements. Other than the Company, none of the other Parties hereto may issue any press release or make any public statement withrespect to any Transaction Document or the transactions contemplated thereby. ARTICLE VI Tax Matters 6.1 Tax Covenants (a) The Company shall prepare and timely file all Returns that are required to be filed after the Closing reflecting the income of each MergedEntity for all Pre-Closing Tax Periods. No later than thirty (30) days prior to filing any such Return, the Company shall submit such Return to New Mountain(in the case of New Mountain Blocker), ARCH Ventures (in the case of IRDO), Venrock (in the case of Venrock Blocker) and 5AM (in the case of 5AM-BT)for review and consent. If an amount of Taxes due with such Return that is less than the amount of cash that was held by the respective Merged Entityimmediately prior to the Closing (after giving effect to the other liabilities, if any, of such Merged Entity immediately prior to the Closing), then within ten(10) Business Days after filing the applicable Return, the Company shall pay the amount of such excess cash to New Mountain (in the case of New MountainBlocker), ARCH Ventures (in 12 the case of IRDO), Venrock (in the case of Venrock Blocker) and 5AM (in the case of 5AM-BT). (b) Returns related to any transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties andinterest) incurred in connection with the Mergers (all such Taxes, “Transfer Taxes”) shall be filed by the Party required to file such Returns under applicableLaw and such Party shall pay the Transfer Taxes shown thereon. The provisions of this Section 6.1(b), and no other provision, will govern the allocationbetween the parties of the economic burden of Transfer Taxes. 6.2 Pre-Closing Tax Refunds. New Mountain, ARCH Ventures, Venrock or 5AM shall be entitled to any Tax refunds attributable to any Pre-ClosingTax Period of New Mountain Blocker, IRDO, Venrock Blocker, or 5AM-BT, respectively, and the Company shall promptly pay by wire transfer ofimmediately available funds any such refunds to New Mountain, ARCH Ventures, Venrock or 5AM, as the case may be, less any applicable Taxes,withholdings or reasonable expenses, after receipt thereof. If New Mountain Blocker, IRDO, Venrock Blocker or 5AM-BT has a net operating loss for a Pre-Closing Tax Period, the Company shall carryback such loss pursuant to Section 172 of the Code and file a claim for refund on IRS Form 1139 with respect tosuch carryback and promptly pay by wire transfer of immediately available funds such refund to New Mountain, ARCH Ventures, Venrock or 5AM, as thecase may be, after receipt thereof. The Company shall file for, at the request of New Mountain, ARCH Ventures, Venrock or 5AM, and use reasonablecommercial efforts to obtain any refund to which New Mountain, ARCH Ventures, Venrock or 5AM, as the case may be, is entitled under this section. 6.3 Tax Reporting. The Parties agree to treat, for U.S. federal, state and local Tax purposes, the transactions contemplated by this Agreement and thePlan of Conversion entered into by the Company in connection with the Conversion as governed by Sections 351 and 368 of the Code and reportconsistently with such treatment for all U.S. federal, state and local Tax purposes. ARTICLE VII Survival; Indemnification 7.1 Survival. The representations and warranties of any of the Parties hereto contained in this Agreement shall survive the Closing Date and shall expireon the date that is one year following the Closing Date. Except as otherwise provided in this Agreement, the covenants and agreements of the Partiescontained in this Agreement shall survive Closing and shall continue in full force and effect indefinitely or for the shorter period specified in this Agreement.Any breach of representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time atwhich it would otherwise terminate pursuant to this Section 7.1 if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall havebeen given to the Party against whom such indemnity may be sought prior to such time. 13 7.2 Indemnification. (a) From and after Closing, the Company hereby indemnifies New Mountain, ARCH Ventures, Venrock and 5AM against and agrees to holdeach of them harmless from (i) any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation andreasonable attorneys’ fees and expenses in connection with any action, suit or proceeding) (“Damages”) actually incurred or suffered by New Mountain,ARCH Ventures, Venrock or 5AM, as applicable, arising out of or resulting from any inaccuracy or breach of any representation and warranty (each suchinaccuracy and breach, a “Warranty Breach”) or breach of a covenant, in each case of the Company contained in the Transaction Documents or in theexhibits, schedules or certificates to, or delivered in connection with, the Transaction Documents or (ii) any and all Damages incurred or suffered by NewMountain, ARCH Ventures, Venrock or 5AM, as applicable, on account of the gross negligence, intentional misrepresentation, willful misconduct or fraud ofthe Company. (b) From and after Closing, New Mountain hereby indemnifies the Company against and agrees to hold it harmless from (i) any and allDamages actually incurred or suffered by the Company arising out of or related in any way to any Warranty Breach or breach of a covenant, in each case ofNew Mountain or New Mountain Blocker contained in the Transaction Documents or in the exhibits, schedules or certificates to, or delivered in connectionwith, the Transaction Documents or (ii) any and all Damages incurred or suffered by the Company on account of the gross negligence, intentionalmisrepresentation, willful misconduct or fraud of New Mountain or New Mountain Blocker. (c) From and after Closing, ARCH Ventures hereby indemnifies the Company against and agrees to hold it harmless from (i) any and allDamages actually incurred or suffered by the Company arising out of or related in any way to any Warranty Breach or breach of a covenant, in each case ofARCH Ventures or IRDO contained in the Transaction Documents or in the exhibits, schedules or certificates to, or delivered in connection with, theTransaction Documents or (ii) any and all Damages incurred or suffered by the Company on account of the gross negligence, intentional misrepresentation,willful misconduct or fraud of ARCH Ventures or IRDO. (d) From and after Closing, Venrock hereby indemnifies the Company against and agrees to hold it harmless from (i) any and all Damagesactually incurred or suffered by the Company arising out of or related in any way to any Warranty Breach or breach of a covenant, in each case of Venrock orVenrock Blocker contained in the Transaction Documents or in the exhibits, schedules or certificates to, or delivered in connection with, the TransactionDocuments or (ii) any and all Damages incurred or suffered by the Company on account of the gross negligence, intentional misrepresentation, willfulmisconduct or fraud of Venrock or Venrock Blocker. (e) From and after Closing, 5AM hereby indemnifies the Company against and agrees to hold it harmless from (i) any and all Damages actuallyincurred or suffered by the Company arising out of or related in any way to any Warranty Breach or breach of a covenant, in each case of 5AM or 5AM-BTcontained in the Transaction Documents or in the exhibits, schedules or certificates to, or delivered in connection with, the Transaction Documents or (ii) anyand all Damages incurred or suffered by the Company on account of the gross negligence, intentional misrepresentation, willful misconduct or fraud of 5AMor 5AM-BT. 14 (f) Notwithstanding anything contained in this Agreement to the contrary, other than in the case of a claim based on gross negligence,intentional misrepresentation, willful misconduct or fraud, no Party shall be entitled to seek, nor be entitled to, incidental, indirect punitive, special orconsequential damages (including damages for any lost profits) in any Claim for indemnification or recovery of Damages pursuant to this Agreement unlesssuch type of damages are sought against such Party by an unaffiliated or unrelated third party. 7.3 Procedures. (a) The Party seeking indemnification under Section 7.2 (the “Indemnified Party”) agrees to give prompt notice to the Party against whomindemnity is sought (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any suit, action or proceeding (“Claim”) in respect ofwhich indemnity may be sought under such Section and will promptly provide the Indemnifying Party such information and access to personnel with respectthereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of itsobligations hereunder, except to the extent such failure shall have adversely prejudiced the Indemnifying Party. (b) The Indemnified Party shall obtain the prior written consent of the Indemnifying Party (which shall not be unreasonably withheld,conditioned or delayed) before entering into any settlement of any Claim asserted by any third party (“Third Party Claim”). (c) Each Party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim andshall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals,as may be reasonably requested in connection therewith. (d) Each Indemnified Party must mitigate in accordance with applicable Law any loss for which such Indemnified Party seeks indemnificationunder this Agreement. If such Indemnified Party mitigates its loss after the Indemnifying Party has paid the Indemnified Party under any indemnificationprovision of this Agreement in respect of that loss, the Indemnified Party must promptly notify the Indemnifying Party and promptly pay to the IndemnifyingParty the extent of the value of the benefit (or, if less, the amount of any such loss previously paid by the Indemnifying Party) to the Indemnified Party of thatmitigation (less the Indemnified Party’s reasonable costs of mitigation). (e) Each Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage or through indemnification,contribution or other reimbursement arrangements from any other Person alleged to be responsible, for any Damages payable under Section 7.2, and theamounts received from such sources shall offset any Damages otherwise payable under Section 7.2 (f) Assignment of Claims. If the Indemnified Party receives any payment from an Indemnifying Party in respect of any Damages pursuant toSection 7.2 and the Indemnified Party could have recovered all or a part of such Damages from a third party (other than any Subsidiary of the Company orany current or former employee or agent of such Persons) (a “Potential Contributor”) based on the underlying Claim asserted against the Indemnifying Party,the 15 Indemnified Party shall assign such of its rights to proceed against the Potential Contributor as are necessary to permit the Indemnifying Party to recover fromthe Potential Contributor the amount of such payment. 7.4 Exclusivity. After the Closing, Article VII will provide the sole and exclusive remedy for any misrepresentation, breach of warranty, covenant orother agreement or other claim arising out of the Transaction Documents or the transactions contemplated thereby, including any claim for gross negligence,intentional misrepresentation, willful misconduct or fraud. Notwithstanding the foregoing, it is understood that nothing herein shall prohibit any Party heretofrom exercising its rights to seek equitable relief with respect to a breach of covenant or agreement under any Transaction Document. ARTICLE VIII Miscellaneous 8.1 Notices. All notices, requests, or consents required or permitted to be given under this Agreement must be in writing and shall be deemed to havebeen given (a) three (3) days after the date mailed by registered or certified mail, addressed to the recipient, with return receipt requested, (b) upon delivery tothe recipient in person or by courier, or (c) upon receipt of a facsimile or e-mail transmission by the recipient. Such notices, requests and consents shall begiven, if to New Mountain or New Mountain Blocker, to: c/o New Mountain Capital, L.L.C.787 Seventh Avenue, 49 FloorNew York, NY 10019Attn: Adam Weinstein if to ARCH Ventures or IRDO, to: c/o ARCH Venture Partners8725 West Higgins RoadSuite 290Chicago, IL 60631Attn: Mark McDonnell if to Venrock or Venrock Blocker, to: c/o Venrock Associates3340 Hillview AvenuePalo Alto, CA 94304 Attn: Bryan E. Roberts 16th if to 5AM or 5AM-BT, to: c/o 5AM Ventures LLC2200 Sand Hill Road, Suite 1100Menlo Park, CA 94025Attn: Andrew Schwab If to the Company, to: c/o Bellerophon Therapeutics, Inc.53 Frontage Road, Suite 301Hampton, NJ 08827Attention: Chief Executive Officer with copies (which shall not constitute notice) to: Wilmer Cutler Pickering Hale and Dorr LLP60 State StreetBoston, MA 02109Attention: Lia Der Marderosian, Esq. or to such other address or facsimile number and with such other copies, as such Party may hereafter specify for the purpose by notice to the other Parties. Whenever any notice is required to be given by Law or this Agreement, a written waiver thereof, signed by the person entitled to notice, whetherbefore or after the time stated therein, shall be deemed equivalent to the giving of such notice. Without limiting the manner by which notice otherwise maybe given effectively to the Parties pursuant to this Agreement, any notice to the Parties given by the Company under any provision of this Agreement shall beeffective if given by a form of electronic transmission consented to by the Party to whom the notice is given. Any such consent shall be revocable by suchParty by written notice to the Company. 8.2 Amendments and Waivers. (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in thecase of an amendment, by each Party to this Agreement, or in the case of a waiver, by the Party against whom the waiver is to be effective. (b) No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any singleor partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereinprovided shall be cumulative and not exclusive of any rights or remedies provided by law. 17 8.3 Expenses. Except to the extent otherwise expressly provided for in any of the Transaction Documents, all costs and expenses incurred by any Partyin connection with the negotiation, preparation, execution and delivery of this Agreement and the Transaction Documents and the consummation of theClosing shall be paid by the Party incurring such costs or expenses. 8.4 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respectivesuccessors and assigns; provided that no Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without theconsent of each other Party hereto. 8.5 Governing Law. This Agreement is governed by and shall be construed in accordance with the law of the State of Delaware, without regard to theconflicts of law rules of such state. 8.6 Consent to Jurisdiction. Except as otherwise expressly provided in this Agreement, the Parties agree that any suit, action or proceeding seeking toenforce any provision of, or based on any matter arising out of or in connection with, any of the Transaction Documents or the transactions contemplatedthereby shall be brought in the United States District Court or any Delaware state court sitting in Wilmington, Delaware, so long as one of such courts shallhave subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of any of the Transaction Documents shall bedeemed to have arisen from a transaction of business in the State of Delaware, and each of the Parties hereby irrevocably consents to the jurisdiction of suchcourts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law,any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit,action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may beserved on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agreesthat service of process on such Party as provided in Section 8.1 shall be deemed effective service of process on such Party. 8.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURYIN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 8.8 Counterparts; Third Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with thesame effect as if the signatures thereto and hereto were upon the same instrument. Each Transaction Document shall become effective when each Party theretoshall have received a counterpart thereof signed by the other Party thereto. No Transaction Document is intended to confer upon any Person other than theParties thereto any rights or remedies hereunder. 8.9 Entire Agreement. The Transaction Documents constitute the entire agreement between the parties with respect to the subject matter of thisAgreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the 18 subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or reliedupon by any Party hereto. 8.10 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other governmentalauthority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full forceand effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is notaffected in any manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as toeffect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated asoriginally contemplated to the fullest extent possible. [Remainder of page intentionally left blank.] 19 IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be duly executed as of the day and year first above-written. COMPANY BELLEROPHON THERAPEUTICS, INC. By:/s/ Jonathan M. PeacockName: Jonathan M. PeacockTitle: President and Chief Executive Officer [Signature Page to Agreement and Plan of Merger] NEW MOUNTAIN NEW MOUNTAIN PARTNERS II (AIV-B), L.P. By: New Mountain Investments II, L.L.C.Its: General Partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member NEW MOUNTAIN BLOCKER NEW MOUNTAIN PARTNERS II SPECIAL (AIV-A), L.P. By: New Mountain Investments II, L.L.C.Its: General Partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member [Signature Page to Agreement and Plan of Merger] VENROCK VENROCK ASSOCIATES IV, L.P.By: Venrock Management IV, LLCIts: General Partner VENROCK PARTNERS, L.P.By: Venrock Partners Management, LLCIts: General Partner VENROCK ENTREPRENEURS FUND IV, L.P.By: VEF Management IV, LLCIts: General Partner By:/s/ Bryan RobertsAuthorized Signatory VENROCK BLOCKERVenrock IK Holdings BT, Inc. By:/s/ David SteppAuthorized Signatory [Signature Page to Agreement and Plan of Merger] ARCH ARCH VENTURE FUND VI, L.P. By:ARCH Venture Partners VI, L.P.,Its general partner By:ARCH Venture Partners VI, LLC,Its general partner By:/s/ Robert T. NelsenName: Robert T. NelsenTitle: Managing Director IRDO IRDO Holding Corp. By:/s/ Mark McDonnellName: Mark McDonnellTitle: Secretary [Signature Page to Agreement and Plan of Merger] 5AM 5AM VENTURES LLC By:5AM Partners LLC,Its manager By:/s/ Andrew J. SchwabName: Andrew J. SchwabTitle: Managing Director 5AM CO-INVESTORS LLC By:5AM Partners LLC,Its manager By:/s/ Andrew J. SchwabName: Andrew J. SchwabTitle: Managing Director 5AM-BT 5AM-BT, INC. By:/s/ Andrew J. SchwabName:Title: [Signature Page to Agreement and Plan of Merger] Exhibit 4.2 STOCKHOLDERS AGREEMENT This STOCKHOLDERS AGREEMENT, dated as of February 12, 2015, is made and entered into by and among Bellerophon Therapeutics, Inc., aDelaware corporation (formerly Bellerophon Therapeutics LLC, a Delaware limited liability company), and Linde North America, Inc. (“Linde”), a Delawarecorporation. Capitalized terms shall have the meanings assigned to them in Section 1. WHEREAS, in anticipation of its public offering, Bellerophon Therapeutics LLC has been converted on the date hereof from a limited liabilitycompany into a corporation known as Bellerophon Therapeutics, Inc. (the “Conversion”); and WHEREAS, in connection with the Conversion, the parties have agreed to enter into this Agreement to provide the parties with the rights andobligations set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. 1.1 Definitions. For purposes of this Agreement, the following terms have the following meanings: “Affiliate” means, (a) with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is undercommon control with such Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of suchPerson, whether through the ownership of voting securities, by contract or otherwise, and (b) with respect to any individual, also means the spouse or child ofsuch individual. “Agreement” means this Stockholders Agreement, as the same may be amended, restated, modified or supplemented from time to time. “Beneficially Own” means beneficially own as determined under Rule 13d-3 promulgated under the Securities Exchange Act of 1934, asamended from time to time. “Board” means the board of directors of the Company as it may be composed from time to time in accordance with the Certificate ofIncorporation, the Company’s bylaws (as in effect from time to time), this Agreement and the General Corporation Law of the State of Delaware (as in effectfrom time to time). “Certificate of Incorporation” means the Certificate of Incorporation of the Company, as in effect from time to time. “Common Stock” means any shares of common stock, par value $0.01 per share, of the Company, now or hereafter authorized to be issued,and any and all equity interests of any kind whatsoever of the Company which may be issued on or after the date hereof in respect of, in exchange for, or upon conversion of the Common Stock pursuant to a merger, consolidation, stock split, reverse split, stock dividend, recapitalization of theCompany or otherwise. “Company” means Bellerophon Therapeutics, Inc., a Delaware corporation, and shall, to the extent this Agreement survives, include anysuccessor thereto by merger, consolidation, acquisition of substantially all the assets thereof, or otherwise, including any parent or subsidiary thereof thatundertakes a Public Offering in lieu of the Company. “Convertible Securities” means (a) any options or warrants to purchase or other rights to acquire Common Stock, (b) any securities by theirterms convertible into, or exercisable or exchangeable for, Common Stock (directly or indirectly) and (c) any options or warrants to purchase or other rights toacquire any such convertible, exercisable or exchangeable securities. “Initial Public Offering” means the first Public Offering. “Linde Entities” means Linde, Linde Parent and any Affiliate of any of the foregoing. “Linde Holder” means any of the Linde Entities and any Person that acquires shares of Common Stock from any of the Linde Entities orother Linde Holders in a transaction other than a Public Offering or a sale pursuant to Rule 144. “Linde Parent” means Linde AG, a company incorporated under the laws of Germany. “Person” means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liabilitycompany, organization or other legal entity, or any nation, government, governmental agency or political subdivision thereof, or any person or bodyexercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government, including any court. “Public Offering” means a public offering of equity interests in the Company through a registration statement (other than a Form S-8 orsuccessor forms) filed with, and declared effective by, the United States Securities and Exchange Commission and pursuant to which such equity interests areauthorized and approved for listing on a national securities exchange. “Rule 144” means Rule 144 promulgated under the Securities Act of 1933, as amended from time to time. “Subsidiary” means any direct or indirect subsidiary of the Company. “Termination Date” means the first date after the consummation of an Initial Public Offering on which no Linde Holder, together with itsAffiliates, Beneficially Owns (a) at least fifty percent (50%) of the sum of (i) the aggregate number of shares of Common Stock Beneficially Owned by theLinde Entities as of immediately prior to the consummation of the Initial Public Offering plus (ii) the aggregate number of shares of Common Stock, if any,acquired by any of the Linde Entities from the Company in connection with or subsequent to the 2 consummation of the Initial Public Offering and (b) at least ten percent (10%) of the number of shares of Common Stock that were set forth as outstanding onthe cover of the Company’s then most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be; provided that theTermination Date shall be deemed to have occurred in the event that: (A) a Linde Holder other than any Linde Entity, or any of their respective Affiliates,Beneficially Owns the percentage of shares described in clause (a) of this definition; (B) the rights described in Section 2.2 hereof have not been assigned tosuch Linde Holder pursuant to Section 3.10 hereof; and (C) the aggregate number of shares of Common Stock then Beneficially Owned by the Linde Entitiesconstitutes less than fifteen percent (15%) of the sum of (x) the aggregate number of shares of Common Stock Beneficially Owned by the Linde Entities as ofimmediately prior to the consummation of the Initial Public Offering plus (y) the aggregate number of shares of Common Stock, if any, acquired by any of theLinde Entities from the Company in connection with or subsequent to the consummation of the Initial Public Offering. “Voting Agreement” means the Voting Agreement, dated as of February 12, 2014, by and among the Company and the stockholders partythereto from time to time, as the same may be amended, restated, modified or supplemented from time to time. 1.2 Other Defined Terms. The following is a list of the remaining defined terms used in this Agreement: Term Section Assignee3.10ConversionRecitalsLindePreambleLinde Director2.2(a)Linde Nominee2.2(a) 2. Board of Directors. 2.1 Effectiveness and Termination. This Section 2 shall, without further action of any of the parties, (a) become effective concurrentlywith the termination of the Voting Agreement and (b) terminate automatically and be of no further force and effect at the close of business on the TerminationDate. 2.2 Director Nomination Rights. (a) Linde shall have the right, at any time and from time to time, exercisable by written notice delivered to theCompany referencing this Section 2.2, to designate one (1) individual to be appointed to the Board or nominated for election to the Board in each casepursuant to the procedures set forth in this Section 2.2 (each such individual designated by Linde pursuant to this Section 2.2, a “Linde Nominee”, and anyLinde Nominee who is appointed or elected to the Board pursuant to this Section 2.2, a “Linde Director”), and the Company shall (as applicable) cause theBoard to promptly appoint such Linde Nominee to the Board or include such Linde Nominee in the Board’s slate of nominees to the stockholders of theCompany for election at the applicable meeting of stockholders. 3 (b) In the event that a Linde Director for any reason ceases to serve as a member of the Board, whether due to thedeath, disability, resignation, removal or disqualification of such Linde Director or for any other reason, Linde shall have the right, exercisable by writtennotice delivered to the Company referencing this Section 2.2, to designate a successor to fill such vacancy, and the Company shall cause the Board topromptly fill such vacancy with such successor designee, it being understood that any such designee shall serve the remainder of the term of the LindeDirector whom such designee replaces. (c) (i) If any Linde Nominee is not appointed to the Board within fifteen (15) days of receipt by the Companyof the written notice referred to in Section 2.2(a) or 2.2(b), as applicable (other than in the case of a notice delivered requesting the inclusion of the LindeNominee in the Board’s slate of nominees to the stockholders of the Company for election of directors at an annual or special meeting of stockholders), forany reason whatsoever, then in addition to all other remedies available to Linde hereunder, Linde shall have the right, exercisable by written notice deliveredto the Company, to designate another Linde Nominee (and the provisions of this Section 2.2(c)(i) shall likewise apply to each such other Linde Nominee). (ii) If any Linde Nominee designated by Linde for nomination to the Board pursuant to this Section 2.2becomes incapable of serving on the Board as a result of such individual’s death, withdrawal or disqualification prior to the applicable meeting ofstockholders, Linde has the right, exercisable by written notice delivered to the Company, to designate another Linde Nominee to be included in the Board’sslate of nominees to the stockholders of the Company for election at the applicable meeting of stockholders (and the provisions of this Section 2.2(c)(ii) shalllikewise apply to each such other Linde Nominee). (iii) In the event that the Linde Nominee included in the Board’s slate of nominees to the stockholders ofthe Company for election of directors at an annual or special meeting of stockholders fails to be elected by the stockholders at such meeting for any reasonwhatsoever, the Company shall cause the Board to, as promptly as reasonably practicable, increase the size of the Board by one member and appoint theLinde Nominee to the Board in such newly-created vacancy. Any Linde Nominee appointed to the Board pursuant to the immediately preceding sentenceshall be a director of the same class as the most recently elected class of directors. (d) The Company shall: (i) include the Linde Nominee in the Board’s slate of nominees to the stockholders of the Company foreach election of directors (or, if the Company then has a classified board of directors, for each election of directors of the class for which such Linde Nomineehas been designated) and in the proxy statement prepared by management of the Company in connection with soliciting proxies for the meeting of thestockholders of the Company called with respect to the election of members of the Board (or the members of such class, as applicable), and at eachadjournment or postponement thereof, and on each action or 4 approval by written consent of the Board or the stockholders of the Company with respect to the election or appointment of members of the Board (or themembers of such class, as applicable); (ii) recommend that the Company’s stockholders vote in favor of the election of the Linde Nominee (alongwith the other individuals in the Board’s slate of nominees) and solicit proxies in favor of such election and otherwise support the Linde Nominee forelection in a manner no less favorable than the manner in which the Company supports other individuals in the Board’s slate of nominees for election to theBoard; and (iii) not (x) make or recommend any amendment to the Certificate of Incorporation or the Company’sbylaws that could reasonably be expected to have an adverse effect on the rights of any Linde Entity under this Section 2.2 or (y) take any other action for thepurpose of adversely affecting the rights of the Linde Entities under this Section 2.2, in each case without the prior written approval of Linde. (e) As a condition to the Linde Nominee’s nomination for election as a director of the Company at any annual orspecial meeting of stockholders of the Company, Linde must provide to the Company, to the same extent as provided with respect to the Company’s othernominees to the Board, such information as is required to be disclosed in proxy statements under applicable law or which is otherwise necessary for theinclusion of the Linde Nominee on the Board’s slate of nominees for election as directors. (f) For the avoidance of doubt, the delivery of any notice by Linde to the Company pursuant to this Section 2.2shall not be subject to the provisions of Section 1.10 of the Company’s bylaws or any other similar provisions that may from time to time be set forth in theCompany’s bylaws. 2.3 Subsidiary Boards; Committees. Except to the extent prohibited by applicable law or any applicable listing agreement to whichthe Company shall be a party, at the reasonable request of Linde exercisable by written notice delivered to the Company referencing this Section 2.3, theLinde Director shall be entitled to serve on the board of directors (or equivalent governing body) of each Subsidiary and on each committee of the Board orof the board of directors (or equivalent governing body) of each Subsidiary. Neither the Board nor any board of directors (or equivalent governing body) ofany Subsidiary shall establish any committee without the prior written consent of Linde except to the extent required by law or any applicable listingagreement to which the Company shall be a party. 2.4 Compliance. The Linde Director shall, during the term of his or her service as a director of the Company, comply with theCompany’s code of conduct and all other company policies and guidelines applicable generally to directors serving on the Board which have been or areadopted by the Board. 2.5 Expense Reimbursement; Indemnification. The Company shall treat the Linde Director during the term of his or her service as adirector of the Company consistent with its treatment of all other non-employee directors on the Board with respect to expense reimbursement and directorsand officers liability insurance coverage. Promptly following the election or appointment of any Linde Nominee to the Board, the Company shall enter intoan 5 indemnification agreement with such Linde Director in form and substance consistent with the indemnification agreements then in effect between theCompany and the other members of the Board. 3. Miscellaneous. 3.1 Rules of Construction. (a) An accounting term not otherwise defined herein has the meaning assigned to it in accordance with U.S. GAAP; (b) References in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural orthe feminine or masculine or neutral reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or themasculine or feminine or neutral reference, as the case may be; (c) References to Sections shall refer to sections of this Agreement, unless otherwise specified; (d) The headings in this Agreement are for convenience and identification only and are not intended to describe,interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof; (e) This Agreement shall be construed without regard to any presumption or other rule requiring constructionagainst the party that drafted and caused this Agreement to be drafted; (f) All monetary figures shall be in United States dollars unless otherwise specified, and any monetary figure inUnited States dollars shall be deemed to refer to the equivalent amount of foreign currency when used in a context which refers to or includes operationsconducted principally outside of the United States; (g) References to “include,” “includes” and “including” in this Agreement shall be deemed to be followed by “,without limitation,” whether or not so specified; (h) The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other theory extends,and such phrase shall not mean “if;” and (i) References to “ordinary course of business” in this Agreement shall mean “ordinary course of business consistentwith past practice,” whether or not so specified. 3.2 Further Actions. Each party hereto shall cooperate with each other party, shall do and perform or cause to be done and performedall further acts and things, and shall execute and deliver all other agreements, certificates, instruments and documents as any other party hereto reasonablymay request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 6 3.3 Notices. (a) Unless otherwise expressly provided herein, all notices, requests, demands, claims and other communicationsprovided for under the provisions of this Agreement shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be sentby (i) personal delivery (including receipted courier service) or overnight delivery service to the intended recipient at the address set forth below,(ii) facsimile or electronic mail, with confirmation of receipt, to the number or email address of the intended recipient set forth below (provided that a copy isalso sent by another permitted method; and provided, further, that delivery to Linde may not be sent by facsimile), (iii) nationally recognized overnightdelivery courier service to the intended recipient at the address set forth below, or (iv) registered or certified mail, return receipt requested, postage prepaid, tothe intended recipient at the address set forth below: (i) If to the Company, at the address indicated below, or at such other address as the Company may hereafter designate bywritten notice to Linde: Bellerophon Therapeutics, Inc.53 Frontage Road, Suite 301Hampton, NJ 08827Attn: Chief Executive OfficerFax: 844-325-6587Email: jon.peacock@bellerophon.com with copies (which shall not constitute notice) to: Wilmer Cutler Pickering Hale and Dorr LLP60 State StreetBoston, MA 02109Attn: Lia Der Marderosian, Esq.Fax: 617-526-5000Email: lia.dermarderosian@wilmerhale.com and Cravath, Swaine & Moore LLP825 Eighth AvenueNew York, NY 10019Attn: Richard Hall, Esq.Fax: 212-474-3700Email: rhall@cravath.com (ii) If to Linde, at the address set forth below, or at such other address as Linde may hereafter designate by written notice tothe Company: Linde North America, Inc.575 Mountain Avenue 7 Murray Hill, NJ 07974Attn: Jens LuehringEmail: Jens.Luehring@linde.com with a copy (which shall not constitute notice) to: Cravath, Swaine & Moore LLP825 Eighth AvenueNew York, NY 10019Attn: Richard Hall, Esq.Fax: 212-474-3700Email: rhall@cravath.com (b) Notices shall be deemed to have been received: (i) If given by personal delivery or by facsimile or electronic transmission, on the day given, if given before 5:00 PM localtime on a business day in the jurisdiction of the intended recipient; otherwise on the next business day, provided that receipt of any facsimile or electronictransmission is confirmed by written evidence of delivery of facsimile, electronic confirmation of delivery or written acknowledgment of receipt thereof bythe recipient; (ii) If given by nationally recognized overnight delivery courier service, on the date of delivery indicated in the records ofsuch courier service; and (iii) If given by registered or certified mail, return receipt requested, postage prepaid, on the date of delivery indicated on thereturn receipt. 3.4 Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws (excludingconflict of laws rules and principles) of the State of Delaware applicable to agreements made and to be performed entirely within such State, including allmatters of construction, validity and performance. 3.5 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of thisAgreement were not performed in accordance with its specific terms or were otherwise breached and that money damages or other remedy at law would not bea sufficient or adequate remedy for any breach or violation of, or a default under, this Agreement. It is accordingly agreed that, notwithstanding anything tothe contrary contained in this Agreement, each of the parties shall be entitled, without any requirement for the securing or posting of any bond with respect tosuch remedy, to an injunction or injunctions to prevent or restrain any breach, violation or default, or threatened breach, violation or default, of thisAgreement and to enforce specifically the terms and provisions hereof exclusively in any state or federal court having jurisdiction, such remedy being inaddition to any other remedy to which any party may be entitled at law or in equity. 3.6 Entire Agreement. This Agreement, including, to the extent referred to herein, the Certificate of Incorporation and the VotingAgreement, constitutes the entire 8 agreement of the parties relating to the subject matter hereof and supersedes all prior agreements and undertakings, whether oral or written. There are norepresentations, agreements, arrangements or understandings, oral or written, between or among the parties relating to the subject matter of this Agreementwhich are not fully expressed in this Agreement. 3.7 Severability. Should any provision of this Agreement or the application thereof to any Person or circumstance be held invalid orunenforceable to any extent, (a) such provision shall be ineffective to the extent, and only to the extent, of such invalidity or unenforceability and shall beenforced to the greatest extent permitted by law; (b) such invalidity or unenforceability with respect to any Person or in any jurisdiction shall not invalidateor render unenforceable such provision as applied (i) to any other Persons or circumstances or (ii) in any other jurisdiction; and (c) such invalidity orunenforceability shall not affect or invalidate any other provision of this Agreement. 3.8 Amendments and Waivers. This Agreement and any of the provisions hereof may be amended, modified or supplemented, inwhole or in part, only by written agreement of the parties. The observance of any provision of this Agreement may be waived in writing by the party that willlose the benefit of such provision as a result of such waiver. The waiver by any party hereto of a breach by any party hereto of any provision of thisAgreement shall not operate or be construed as a waiver of such breach by any other party hereto, except as otherwise explicitly provided for in the writingevidencing such waiver. Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right,power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partialexercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. 3.9 No Third Party Beneficiaries. Nothing in this Agreement, whether express or implied, shall be construed to give any Person (otherthan the parties hereto and their respective successors and permitted assigns who comply with the terms hereof and agree in writing to be bound by theprovisions hereof) any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisions containedherein, as a third party beneficiary or otherwise. Notwithstanding the foregoing, each Linde Director shall be a third party beneficiary of the provisions ofSection 2.5 and shall be entitled to enforce such provisions directly. 3.10 Assignments. The provisions of this Agreement shall be binding upon and inure to the benefit of the Company and Linde andtheir respective successors and permitted assigns. This Agreement shall not be assignable by any of the parties hereto without the prior written consent of theother parties; provided, that Linde (i) may assign its rights and duties under this Agreement to any other Linde Entity at any time, (ii) at any time prior to theconsummation of an Initial Public Offering, may assign its rights and duties under this Agreement to any Person who acquires shares of Common Stock fromany of the Linde Entities and (iii) at any time following the consummation of an Initial Public Offering, may assign its rights and duties under this Agreementto a Person who acquires, in a transaction other than a Public Offering or a sale pursuant to Rule 144, at least fifty percent (50%) of the aggregate number ofshares of Common Stock owned, directly or indirectly, by the Linde Entities as of 9 immediately prior to the consummation of such transaction (any Person described in the foregoing clauses (i) through (iii), an “Assignee”); provided, further,that no such assignment shall be binding upon or obligate the Company to any such Assignee unless and until such Assignee delivers to the Company (a) awritten notice stating the name and address of such Assignee and identifying the shares of Common Stock owned by such Assignee and (b) a writteninstrument by which such Assignee agrees to be bound by the provisions of this Agreement applicable to the Linde Entities to the same extent as if suchAssignee were a party hereto. Upon any assignment in accordance with this Section 3.10, the Assignee shall succeed to, and be substituted for, and mayexercise every right and power of, the assigning Linde Entity under this Agreement. 3.11 Jurisdiction; Waiver of Jury Trial. (a) Jurisdiction. Subject to Section 3.5, any action, suit or proceeding against any party to this Agreement arisingout of or relating to this Agreement shall be brought in any federal or state court sitting in the Borough of Manhattan in the City of New York in the State ofNew York, and each of the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of any such action, suit or proceeding. A finaljudgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by law. To the extent that service of process by mail or by nationally recognized overnight delivery courier service is permitted byapplicable law, each party irrevocably consents to the service of process in any such action, suit or proceeding in such courts by the mailing of such processby registered or certified mail, postage prepaid, return receipt request or by nationally recognized overnight delivery courier service to such party at itsaddress for notices provided for in Section 3.3. Each party irrevocably waives and agrees not to assert (i) any objection which it may ever have to the layingof venue of any such action, suit or proceeding in any federal or state court located in New York County in the State of New York, and (ii) any claim that anysuch action, suit or proceeding brought in any such court has been brought in an inconvenient forum. (b) Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES, TO THE EXTENT LAWFUL, AND AGREESNOT TO ASSERT ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENTAND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING,VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANYACTION, SUIT OR PROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENT. 3.12 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties hadsigned the same document. All counterparts shall be construed together and shall constitute one and the same instrument. A signature delivered by facsimileor electronic transmission shall be deemed to be an original signature for all purposes under this Agreement. 3.13 Adjustments. Wherever in this Agreement there is a reference to a specific number or percentage of shares of Common Stock, thenupon the occurrence of any 10 subdivision, combination, stock split, reverse split, stock dividend or other recapitalization of the Company, the specific number or percentage of shares ofCommon Stock so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding Common Stock bysuch subdivision, combination, stock split, reverse split, stock dividend or other recapitalization. 3.14 Attorneys’ Fees. In the event that any action, suit or proceeding is brought for the purpose of determining or enforcing the right ofany party or parties hereunder, the party or parties prevailing in such action, suit or proceeding shall be entitled to recover from the other party or parties allreasonable costs and expenses incurred by the prevailing party or parties in connection with such action, suit or proceeding, including reasonable attorneys’fees. [Signature Page Follows] 11 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. COMPANY: BELLEROPHON THERAPEUTICS, INC. By:/s/ Jonathan M. PeacockName: Jonathan M. PeacockTitle: President and Chief Executive Officer LINDE: LINDE NORTH AMERICA, INC. By:/s/ Jens LuehringName: Jens LuehringTitle: Head of Finance, Americas [Signature Page to Linde Stockholders Agreement] Exhibit 4.3 STOCKHOLDERS AGREEMENT This STOCKHOLDERS AGREEMENT, dated as of February 12, 2015, is made and entered into by and among Bellerophon Therapeutics, Inc., aDelaware corporation (formerly Bellerophon Therapeutics LLC, a Delaware limited liability company), New Mountain Partners II (AIV-A), L.P., a Delawarelimited partnership (“NMP-A”), New Mountain Partners II (AIV-B), L.P., a Delaware limited partnership (“NMP-B”), New Mountain Affiliated Investors II,L.P., a Delaware limited partnership (“NMAI”), and Allegheny New Mountain Partners, L.P., a Delaware limited partnership (“ANMP”). Capitalized termsshall have the meanings assigned to them in Section 1. WHEREAS, in anticipation of its public offering, Bellerophon Therapeutics LLC has been converted on the date hereof from a limited liabilitycompany into a corporation known as Bellerophon Therapeutics, Inc. (the “Conversion”); and WHEREAS, in connection with the Conversion, the parties have agreed to enter into this Agreement to provide the parties with the rights andobligations set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. 1.1 Definitions. For purposes of this Agreement, the following terms have the following meanings: “Affiliate” means, (a) with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is undercommon control with such Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of suchPerson, whether through the ownership of voting securities, by contract or otherwise, and (b) with respect to any individual, also means the spouse or child ofsuch individual. “Agreement” means this Stockholders Agreement, as the same may be amended, restated, modified or supplemented from time to time. “Beneficially Own” means beneficially own as determined under Rule 13d-3 promulgated under the Securities Exchange Act of 1934, asamended from time to time. “Board” means the board of directors of the Company as it may be composed from time to time in accordance with the Certificate ofIncorporation, the Company’s bylaws (as in effect from time to time), this Agreement and the General Corporation Law of the State of Delaware (as in effectfrom time to time). “Certificate of Incorporation” means the Certificate of Incorporation of the Company, as in effect from time to time. “Common Stock” means any shares of common stock, par value $0.01 per share, of the Company, now or hereafter authorized to be issued,and any and all equity interests of any kind whatsoever of the Company which may be issued on or after the date hereof in respect of, in exchange for, orupon conversion of the Common Stock pursuant to a merger, consolidation, stock split, reverse split, stock dividend, recapitalization of the Company orotherwise. “Company” means Bellerophon Therapeutics, Inc., a Delaware corporation, and shall, to the extent this Agreement survives, include anysuccessor thereto by merger, consolidation, acquisition of substantially all the assets thereof, or otherwise, including any parent or subsidiary thereof thatundertakes a Public Offering in lieu of the Company. “Convertible Securities” means (a) any options or warrants to purchase or other rights to acquire Common Stock, (b) any securities by theirterms convertible into, or exercisable or exchangeable for, Common Stock (directly or indirectly) and (c) any options or warrants to purchase or other rights toacquire any such convertible, exercisable or exchangeable securities. “Indebtedness” means all liabilities, obligations and indebtedness of the Company and the Subsidiaries (a) for borrowed money (other thantrade debt, trade accounts payable and any other accrued current liabilities or obligations incurred or arising in the ordinary course of business);(b) evidenced by a note, bond, debenture or similar instrument; (c) created or arising under any capital lease, conditional sale, earn out or other arrangementfor the deferral of purchase price of any property; (d) under letters of credit, banker’s acceptances or similar credit transactions; (e) for any other Person’sobligation or indebtedness of the same type as any of the foregoing, whether as obligor, guarantor or otherwise; (f) for interest on any of the foregoing; and(g) for any premiums, prepayment or termination fees, expenses or breakage costs due upon prepayment of any of the foregoing. “Initial Public Offering” means the first Public Offering. “NMP Entities” means NMP-A, NMP-B, NMAI and ANMP and any Affiliate of any of the foregoing. “NMP Holder” means any of the NMP Entities and any Person that acquires shares of Common Stock from any of the NMP Entities or otherNMP Holders in a transaction other than a Public Offering or a sale pursuant to Rule 144. “Non-Voting Common Stock” means any Common Stock designated as non-voting Common Stock when issued by the Company. “Person” means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liabilitycompany, organization or other legal entity, or any nation, government, governmental agency or political subdivision thereof, or any person or bodyexercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government, including any court. “Public Offering” means a public offering of equity interests in the Company through a registration statement (other than a Form S-8 orsuccessor forms) filed with, and declared effective by, the United States Securities and Exchange Commission and pursuant to 2 which such equity interests are authorized and approved for listing on a national securities exchange. “Rule 144” means Rule 144 promulgated under the Securities Act of 1933, as amended from time to time. “Section 2 Termination Date” means the first date after the consummation of an Initial Public Offering on which no NMP Holder, togetherwith its Affiliates, Beneficially Owns (a) at least fifty percent (50%) of the sum of (i) the aggregate number of shares of Common Stock Beneficially Owned bythe NMP Entities as of immediately prior to the consummation of the Initial Public Offering plus (ii) the aggregate number of shares of Common Stock, if any,acquired by any of the NMP Entities from the Company in connection with or subsequent to the consummation of the Initial Public Offering and (b) at leastfifteen (15%) of the number of shares of Common Stock that were set forth as outstanding on the cover of the Company’s then most recently filed AnnualReport on Form 10-K or Quarterly Report on Form 10-Q, as the case may be; provided that the Section 2 Termination Date shall be deemed to have occurredin the event that: (A) an NMP Holder other than any NMP Entity, or any of their respective Affiliates, Beneficially Owns the percentage of shares described inclause (a) of this definition; (B) the rights described in Section 2.2 hereof have not been assigned to such NMP Holder pursuant to Section 4.10 hereof; and(C) the aggregate number of shares of Common Stock then Beneficially Owned by the NMP Entities constitutes less than fifteen percent (15%) of the sum of(x) the aggregate number of shares of Common Stock Beneficially Owned by the NMP Entities as of immediately prior to the consummation of the InitialPublic Offering plus (y) the aggregate number of shares of Common Stock, if any, acquired by any of the NMP Entities from the Company in connection withor subsequent to the consummation of the Initial Public Offering. “Section 3.2 Termination Date” means the first date after the consummation of an Initial Public Offering on which the aggregate number ofshares of Common Stock then Beneficially Owned by the NMP Entities constitutes either (a) less than fifty percent (50%) of the sum of (i) the aggregatenumber of shares of Common Stock Beneficially Owned by the NMP Entities as of immediately prior to the consummation of the Initial Public Offering plus(ii) the aggregate number of shares of Common Stock, if any, acquired by any of the NMP Entities from the Company in connection with or subsequent to theconsummation of the Initial Public Offering or (b) less than fifteen (15%) of the number of shares of Common Stock that were set forth as outstanding on thecover of the Company’s then most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be. “Subsidiary” means any direct or indirect subsidiary of the Company. “Voting Agreement” means the Voting Agreement, dated as of February 12, 2014, by and among the Company and the stockholders partythereto from time to time, as the same may be amended, restated, modified or supplemented from time to time. “Voting Agreement NMP Director” means any member of the Board who was designated by the NMP Entities pursuant to the VotingAgreement. 3 “Voting Common Stock” means any Common Stock designated as voting Common Stock when issued by the Company. 1.2 Other Defined Terms. The following is a list of the remaining defined terms used in this Agreement: TermSection ANMPPreambleAssignee4.10ConversionRecitalsNMAIPreambleNMP-APreambleNMP-BPreambleNMP Director2.2(a)NMP Nominee2.2(a) 2. Board of Directors. 2.1 Effectiveness and Termination. This Section 2 shall, without further action of any of the parties, (a) become effective concurrentlywith the termination of the Voting Agreement and (b) terminate automatically and be of no further force and effect at the close of business on the Section 2Termination Date. 2.2 Director Nomination Rights. (a) The NMP Entities shall have the right, at any time and from time to time, exercisable by written notice deliveredto the Company referencing this Section 2.2, to designate one (1) individual to be appointed to the Board or nominated for election to the Board in each casepursuant to the procedures set forth in this Section 2.2 (each such individual designated by the NMP Entities pursuant to this Section 2.2, an “NMPNominee”, and any NMP Nominee who is appointed or elected to the Board pursuant to this Section 2.2, an “NMP Director”), and the Company shall (asapplicable) cause the Board to promptly appoint such NMP Nominee to the Board or include such NMP Nominee in the Board’s slate of nominees to thestockholders of the Company for election at the applicable meeting of stockholders. (b) In the event that an NMP Director for any reason ceases to serve as a member of the Board, whether due to thedeath, disability, resignation, removal or disqualification of such NMP Director or for any other reason, the NMP Entities shall have the right, exercisable bywritten notice delivered to the Company referencing this Section 2.2, to designate a successor to fill such vacancy, and the Company shall cause the Board topromptly fill such vacancy with such successor designee, it being understood that any such designee shall serve the remainder of the term of the NMPDirector whom such designee replaces. 4 (c) (i) If any NMP Nominee is not appointed to the Board within fifteen (15) days of receipt by the Companyof the written notice referred to in Section 2.2(a) or 2.2(b), as applicable (other than in the case of a notice delivered requesting the inclusion of the NMPNominee in the Board’s slate of nominees to the stockholders of the Company for election of directors at an annual or special meeting of stockholders), forany reason whatsoever, then in addition to all other remedies available to the NMP Entities hereunder, the NMP Entities shall have the right, exercisable bywritten notice delivered to the Company, to designate another NMP Nominee (and the provisions of this Section 2.2(c)(i) shall likewise apply to each suchother NMP Nominee). (ii) If any NMP Nominee designated by the NMP Entities for nomination to the Board pursuant to thisSection 2.2 becomes incapable of serving on the Board as a result of such individual’s death, withdrawal or disqualification prior to the applicable meeting ofstockholders, the NMP Entities have the right, exercisable by written notice delivered to the Company, to designate another NMP Nominee to be included inthe Board’s slate of nominees to the stockholders of the Company for election at the applicable meeting of stockholders (and the provisions of thisSection 2.2(c)(ii) shall likewise apply to each such other NMP Nominee). (iii) In the event that the NMP Nominee included in the Board’s slate of nominees to the stockholders of theCompany for election of directors at an annual or special meeting of stockholders fails to be elected by the stockholders at such meeting for any reasonwhatsoever, the Company shall cause the Board to, as promptly as reasonably practicable, increase the size of the Board by one member and appoint the NMPNominee to the Board in such newly-created vacancy. Any NMP Nominee appointed to the Board pursuant to the immediately preceding sentence shall be adirector of the same class as the most recently elected class of directors. (d) The Company shall: (i) include the NMP Nominee in the Board’s slate of nominees to the stockholders of the Company foreach election of directors (or, if the Company then has a classified board of directors, for each election of directors of the class for which such NMP Nomineehas been designated) and in the proxy statement prepared by management of the Company in connection with soliciting proxies for the meeting of thestockholders of the Company called with respect to the election of members of the Board (or the members of such class, as applicable), and at eachadjournment or postponement thereof, and on each action or approval by written consent of the Board or the stockholders of the Company with respect to theelection or appointment of members of the Board (or the members of such class, as applicable); (ii) recommend that the Company’s stockholders vote in favor of the election of the NMP Nominee (alongwith the other individuals in the Board’s slate of nominees) and solicit proxies in favor of such election and otherwise support the NMP Nominee for electionin a manner no less favorable than the manner in which the Company supports other individuals in the Board’s slate of nominees for election to the Board;and 5 (iii) not (x) make or recommend any amendment to the Certificate of Incorporation or the Company’sbylaws that could reasonably be expected to have an adverse effect on the rights of the NMP Entities under this Section 2.2 or (y) take any other action forthe purpose of adversely affecting the rights of the NMP Entities under this Section 2.2, in each case without the prior written approval of the NMP Entities. (e) As a condition to the NMP Nominee’s nomination for election as a director of the Company at any annual orspecial meeting of stockholders of the Company, the NMP Entities must provide to the Company, to the same extent as provided with respect to theCompany’s other nominees to the Board, such information as is required to be disclosed in proxy statements under applicable law or which is otherwisenecessary for the inclusion of the NMP Nominee on the Board’s slate of nominees for election as directors. (f) For the avoidance of doubt, the delivery of any notice by any NMP Entity to the Company pursuant to thisSection 2.2 shall not be subject to the provisions of Section 1.10 of the Company’s bylaws or any other similar provisions that may from time to time be setforth in the Company’s bylaws. 2.3 Lead Director. The NMP Entities shall have the right, at any time and from time to time, exercisable by written notice delivered tothe Company referencing this Section 2.3, to designate the Lead Director from among the members of the Board and to remove such Lead Director (anddesignate his or her replacement) from such role at any time, with or without cause, such Lead Director having such rights and obligations as set forth in theCompany’s Certificate of Incorporation and/or bylaws, as applicable. 2.4 Subsidiary Boards; Committees. Except to the extent prohibited by applicable law or any applicable listing agreement to whichthe Company shall be a party, at the reasonable request of the NMP Entities exercisable by written notice delivered to the Company referencing thisSection 2.4, the NMP Director shall be entitled to serve on the board of directors (or equivalent governing body) of each Subsidiary and on each committee ofthe Board or of the board of directors (or equivalent governing body) of each Subsidiary. Neither the Board nor any board of directors (or equivalentgoverning body) of any Subsidiary shall establish any committee without the prior written consent of the NMP Entities except to the extent required by lawor any applicable listing agreement to which the Company shall be a party. 2.5 Compliance. The NMP Director shall, during the term of his or her service as a director of the Company, comply with theCompany’s code of conduct and all other company policies and guidelines applicable generally to directors serving on the Board which have been or areadopted by the Board. 2.6 Expense Reimbursement; Indemnification. The Company shall treat the NMP Director during the term of his or her service as adirector of the Company consistent with its treatment of all other non-employee directors on the Board with respect to expense reimbursement and directorsand officers liability insurance coverage. Promptly following the election or appointment of any NMP Nominee to the Board, the Company shall enter intoan indemnification agreement with such NMP Director in form and substance consistent with the 6 indemnification agreements then in effect between the Company and the other members of the Board. 3. Negative Covenants. 3.1 Prior to Initial Public Offering. In addition to any requirements imposed by the General Corporation Law of the State of Delawareand any agreement binding upon the Company, until the earlier of the consummation of an Initial Public Offering and the date on which the aggregatenumber of shares of Common Stock then Beneficially Owned by the NMP Holders constitutes less than fifteen (15%) of the number of shares of CommonStock Beneficially Owned by the NMP Holders as of the date hereof, the Company shall not, and shall cause each of the Subsidiaries not to, take any of thefollowing actions without the prior written approval of the NMP Entities: (a) consolidate or merge into or with any other Person, sell, lease or otherwise transfer all or a significant portion ofits assets or equity interests or any business division to another Person, enter into any other similar business combination transaction with another Person,transfer the rights (including by way of grant of any license or sub-license) to all or a significant portion of its assets to another Person, or effect a liquidation,dissolution or winding-up (other than any such transaction entered into solely between the Company and one or more of its wholly owned Subsidiaries orbetween one or more wholly owned Subsidiaries); (b) authorize, issue, sell, offer for sale or solicit offers to buy (by merger or otherwise) any shares of Common Stockor any Convertible Securities or any other equity or debt securities or rights to acquire any equity or debt securities of the Company or any of theSubsidiaries, other than (i) issuances of Non-Voting Common Stock upon the exercise of any options to purchase shares of Non-Voting Common Stockoutstanding as of the date hereof, (ii) the granting of any rights pursuant to any equity incentive plan, the adoption of which plan received the approval of theBoard (including the approval of at least one (1) Voting Agreement NMP Director) and the NMP Entities and which grants have received the approval of theBoard (including the approval of at least one (1) Voting Agreement NMP Director) and the NMP Entities, or (iii) the issuance of any equity or debt securitiesby a wholly owned Subsidiary to the Company or to another wholly owned Subsidiary or the issuance of any debt securities by the Company to a whollyowned Subsidiary; (c) incur, create, suffer to exist, issue, assume, guarantee or otherwise become directly or indirectly liable,contingently or otherwise, with respect to any Indebtedness, or refinance any Indebtedness, other than Indebtedness incurred by a wholly owned Subsidiaryto the Company or to another wholly owned Subsidiary or by the Company to a wholly owned Subsidiary; (d) effect any stock dividend, stock split or other subdivision or combination of Common Stock or other equityinterests of the Company or other recapitalization of the Company; (e) effect any redemption, retirement, purchase or other acquisition, directly or indirectly, of any Common Stock orother equity interests of the 7 Company, other than the repurchase of Common Stock from employees, officers, directors or consultants of or other persons performing services for theCompany or any Subsidiary pursuant to agreements under which the Company has the option to repurchase such Common Stock upon the occurrence ofcertain events, such as the termination of employment, or through the exercise of any right of first refusal, which repurchase does not exceed $100,000 in anyone instance or $250,000 in the aggregate in any fiscal year; (f) effect an Initial Public Offering or, subject to the rights of any stockholder of the Company under theRegistration Rights Agreement, dated as of February 12, 2015, by and among the Company and the stockholders party thereto from time to time, as the samemay be amended, restated, modified or supplemented from time to time, a public offering of any securities of the Company; (g) hire or replace any of the Company’s Chief Executive Officer, Chief Financial Officer or next two (2) most seniorexecutives (as determined by the Board), or materially amend the level or form of compensation or benefits payable to, or other compensation arrangementsof, any such officer; (h) acquire any assets other than in the ordinary course of business, including acquiring any ownership interest inany other Person, or acquire assets in the ordinary course of business in excess of $500,000 for the Company and the Subsidiaries in the aggregate in anyfiscal year; (i) adopt any annual budget or annual business plan or materially amend any such budget or business plan ifadopted; (j) declare or pay any dividend or distribution (other than dividends from a wholly owned Subsidiary to its parentcompany); (k) authorize or amend any employee option or incentive plan; (l) amend, repeal or change (whether by merger or otherwise) any of the provisions of the Certificate ofIncorporation or the bylaws of the Company; or (m) agree or otherwise commit to take any of the actions set forth in any of clauses (a) through (l) of this Section 3.1(unless such agreement or commitment is expressly conditioned on obtaining the prior approval set forth in this Section 3.1). 3.2 Following Initial Public Offering. In addition to any requirements imposed by the General Corporation Law of the State ofDelaware and any agreement binding upon the Company, from and after the consummation of an Initial Public Offering and until the close of business on theSection 3.2 Termination Date, the Company shall not, and shall cause each of the Subsidiaries not to, take any of the following actions without the priorwritten approval of the NMP Entities: (a) consolidate or merge into or with any other Person, sell, lease or otherwise transfer all or a significant portion ofits assets or equity interests or any business division to another Person, enter into any other similar business combination transaction 8 with another Person, transfer the rights (including by way of grant of any license or sub-license) to all or a significant portion of its assets to another Person, oreffect a liquidation, dissolution or winding-up (other than any such transaction entered into solely between the Company and one or more of its whollyowned Subsidiaries or between one or more wholly owned Subsidiaries); (b) authorize, issue, sell, offer for sale or solicit offers to buy (by merger or otherwise) any shares of Common Stockor any Convertible Securities or any other equity or debt securities or rights to acquire any equity or debt securities of the Company or any of theSubsidiaries, other than (i) issuances of Common Stock upon the exercise of any options to purchase shares of Common Stock outstanding immediatelyfollowing the Initial Public Offering, (ii) the granting of any rights pursuant to any equity incentive plan, the adoption of which plan received the approval ofthe Board and the NMP Entities and which grants have received the approval of the Board and the NMP Entities, or (iii) the issuance of any equity or debtsecurities by a wholly owned Subsidiary to the Company or to another wholly owned Subsidiary or the issuance of any debt securities by the Company to awholly owned Subsidiary; (c) incur, create, suffer to exist, issue, assume, guarantee or otherwise become directly or indirectly liable,contingently or otherwise, with respect to, or refinance, any Indebtedness (other than (i) Indebtedness described in clause (c) of the definition thereof,(ii) Indebtedness described in clauses (f) and (g) of the definition thereof to the extent such obligations are not capitalized to principal, and (iii) trade debt,trade accounts payable and any other accrued current liabilities or obligations incurred or arising in the ordinary course of business) in an aggregate principalamount in excess of $5,000,000, other than any such Indebtedness incurred by a wholly owned Subsidiary to the Company or to another wholly ownedSubsidiary or by the Company to a wholly owned Subsidiary; (d) hire or replace the Company’s Chief Executive Officer; or (e) agree or otherwise commit to take any of the actions set forth in any of clauses (a) through (d) of this Section 3.2(unless such agreement or commitment is expressly conditioned on obtaining the prior approval set forth in this Section 3.2). 3.3 Termination. The provisions of Section 3.2 shall, without further action of any of the parties, terminate automatically and shall beof no further force and effect at the close of business on the Section 3.2 Termination Date. 4. Miscellaneous. 4.1 Rules of Construction. (a) An accounting term not otherwise defined herein has the meaning assigned to it in accordance with U.S. GAAP; (b) References in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural orthe feminine or masculine or neutral reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or themasculine or feminine or neutral reference, as the case may be; 9 (c) References to Sections shall refer to sections of this Agreement, unless otherwise specified; (d) The headings in this Agreement are for convenience and identification only and are not intended to describe,interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof; (e) This Agreement shall be construed without regard to any presumption or other rule requiring constructionagainst the party that drafted and caused this Agreement to be drafted; (f) All monetary figures shall be in United States dollars unless otherwise specified, and any monetary figure inUnited States dollars shall be deemed to refer to the equivalent amount of foreign currency when used in a context which refers to or includes operationsconducted principally outside of the United States; (g) References to “include,” “includes” and “including” in this Agreement shall be deemed to be followed by “,without limitation,” whether or not so specified; (h) The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other theory extends,and such phrase shall not mean “if;” and (i) References to “ordinary course of business” in this Agreement shall mean “ordinary course of business consistentwith past practice,” whether or not so specified. 4.2 Further Actions. Each party hereto shall cooperate with each other party, shall do and perform or cause to be done and performedall further acts and things, and shall execute and deliver all other agreements, certificates, instruments and documents as any other party hereto reasonablymay request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 4.3 Notices. (a) Unless otherwise expressly provided herein, all notices, requests, demands, claims and other communicationsprovided for under the provisions of this Agreement shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be sentby (i) personal delivery (including receipted courier service) or overnight delivery service to the intended recipient at the address set forth below,(ii) facsimile or electronic mail, with confirmation of receipt, to the number or email address of the intended recipient set forth below (provided that a copy isalso sent by another permitted method; and provided, further, that delivery to the NMP Entities may not be sent by facsimile), (iii) nationally recognizedovernight delivery courier service to the intended recipient at the address set forth below, or (iv) registered or certified mail, return receipt requested, postageprepaid, to the intended recipient at the address set forth below: (i) If to the Company, at the address indicated below, or at such other address as the Company may hereafter designate bywritten notice to the NMP Entities: 10 Bellerophon Therapeutics, Inc.53 Frontage Road, Suite 301Hampton, NJ 08827Attn: Chief Executive OfficerFax: 844-325-6587Email: jon.peacock@bellerophon.com with copies (which shall not constitute notice) to: Wilmer Cutler Pickering Hale and Dorr LLP60 State StreetBoston, MA 02109Attn: Lia Der Marderosian, Esq.Fax: 617-526-5000Email: lia.dermarderosian@wilmerhale.com and Fried, Frank, Harris, Shriver & Jacobson LLPOne New York PlazaNew York, NY 10004Attn: Aviva F. Diamant, Esq. and Abigail P. Bomba, Esq.Fax: 212-859-4000Email: aviva.diamant@friedfrank.com and abigail.bomba@friedfrank.com (ii) If to the NMP Entities, at the address set forth below, or at such other address as the NMP Entities may hereafter designateby written notice to the Company: c/o New Mountain Capital, L.L.C.787 Seventh Avenue, 49th FloorNew York, NY 10019Attn: Matthew HoltEmail: mholt@newmountaincapital.com with a copy (which shall not constitute notice) to: Fried, Frank, Harris, Shriver & Jacobson LLPOne New York PlazaNew York, NY 10004Attn: Aviva F. Diamant, Esq. and Abigail P. Bomba, Esq.Fax: 212-859-4000Email: aviva.diamant@friedfrank.com and abigail.bomba@friedfrank.com 11 (b) Notices shall be deemed to have been received: (i) If given by personal delivery or by facsimile or electronic transmission, on the day given, if given before 5:00 PM localtime on a business day in the jurisdiction of the intended recipient; otherwise on the next business day, provided that receipt of any facsimile or electronictransmission is confirmed by written evidence of delivery of facsimile, electronic confirmation of delivery or written acknowledgment of receipt thereof bythe recipient; (ii) If given by nationally recognized overnight delivery courier service, on the date of delivery indicated in the records ofsuch courier service; and (iii) If given by registered or certified mail, return receipt requested, postage prepaid, on the date of delivery indicated on thereturn receipt. 4.4 Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws (excludingconflict of laws rules and principles) of the State of Delaware applicable to agreements made and to be performed entirely within such State, including allmatters of construction, validity and performance. 4.5 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of thisAgreement were not performed in accordance with its specific terms or were otherwise breached and that money damages or other remedy at law would not bea sufficient or adequate remedy for any breach or violation of, or a default under, this Agreement. It is accordingly agreed that, notwithstanding anything tothe contrary contained in this Agreement, each of the parties shall be entitled, without any requirement for the securing or posting of any bond with respect tosuch remedy, to an injunction or injunctions to prevent or restrain any breach, violation or default, or threatened breach, violation or default, of thisAgreement and to enforce specifically the terms and provisions hereof exclusively in any state or federal court having jurisdiction, such remedy being inaddition to any other remedy to which any party may be entitled at law or in equity. 4.6 Entire Agreement. This Agreement, including, to the extent referred to herein, the Certificate of Incorporation, the RegistrationRights Agreement and the Voting Agreement, constitutes the entire agreement of the parties relating to the subject matter hereof and supersedes all prioragreements and undertakings, whether oral or written. There are no representations, agreements, arrangements or understandings, oral or written, between oramong the parties relating to the subject matter of this Agreement which are not fully expressed in this Agreement. 4.7 Severability. Should any provision of this Agreement or the application thereof to any Person or circumstance be held invalid orunenforceable to any extent, (a) such provision shall be ineffective to the extent, and only to the extent, of such invalidity or unenforceability and shall beenforced to the greatest extent permitted by law; (b) such invalidity or unenforceability with respect to any Person or in any jurisdiction shall not invalidateor render unenforceable such provision as applied (i) to any other Persons or circumstances or (ii) in any 12 other jurisdiction; and (c) such invalidity or unenforceability shall not affect or invalidate any other provision of this Agreement. 4.8 Amendments and Waivers. This Agreement and any of the provisions hereof may be amended, modified or supplemented, inwhole or in part, only by written agreement of the parties. The observance of any provision of this Agreement may be waived in writing by the party that willlose the benefit of such provision as a result of such waiver. The waiver by any party hereto of a breach by any party hereto of any provision of thisAgreement shall not operate or be construed as a waiver of such breach by any other party hereto, except as otherwise explicitly provided for in the writingevidencing such waiver. Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right,power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partialexercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. 4.9 No Third Party Beneficiaries. Nothing in this Agreement, whether express or implied, shall be construed to give any Person (otherthan the parties hereto and their respective successors and permitted assigns who comply with the terms hereof and agree in writing to be bound by theprovisions hereof) any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisions containedherein, as a third party beneficiary or otherwise. Notwithstanding the foregoing, each NMP Director shall be a third party beneficiary of the provisions ofSection 2.6 and shall be entitled to enforce such provisions directly. 4.10 Assignments. The provisions of this Agreement shall be binding upon and inure to the benefit of the Company and the NMPEntities and their respective successors and permitted assigns. This Agreement shall not be assignable by any of the parties hereto without the prior writtenconsent of the other parties; provided, that any of the NMP Entities (i) may assign its rights and duties under this Agreement to any other NMP Entity at anytime, (ii) at any time prior to the consummation of an Initial Public Offering, may assign its rights and duties under this Agreement to any Person whoacquires shares of Common Stock from any of the NMP Entities and (iii) at any time following the consummation of an Initial Public Offering, may assign itsrights and duties under this Agreement (other than Section 3.2) to a Person who acquires, in a transaction other than a Public Offering or a sale pursuant toRule 144, at least fifty percent (50%) of the aggregate number of shares of Common Stock owned, directly or indirectly, by the NMP Entities as ofimmediately prior to the consummation of such transaction (any Person described in the foregoing clauses (i) through (iii), an “Assignee”); provided, further,that no such assignment shall be binding upon or obligate the Company to any such Assignee unless and until such Assignee delivers to the Company (a) awritten notice stating the name and address of such Assignee and identifying the shares of Common Stock owned by such Assignee and (b) a writteninstrument by which such Assignee agrees to be bound by the provisions of this Agreement applicable to the NMP Entities to the same extent as if suchAssignee were a party hereto. Upon any assignment in accordance with this Section 4.10, the Assignee shall succeed to, and be substituted for, and mayexercise every right and power of, the assigning NMP Entity under this Agreement; provided, that no rights or duties of the NMP Entities under Section 3.2 ofthis Agreement shall be assignable or delegable to any Person other than to an NMP Entity. 13 4.11 Jurisdiction; Waiver of Jury Trial. (a) Jurisdiction. Subject to Section 4.5, any action, suit or proceeding against any party to this Agreement arisingout of or relating to this Agreement shall be brought in any federal or state court sitting in the Borough of Manhattan in the City of New York in the State ofNew York, and each of the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of any such action, suit or proceeding. A finaljudgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by law. To the extent that service of process by mail or by nationally recognized overnight delivery courier service is permitted byapplicable law, each party irrevocably consents to the service of process in any such action, suit or proceeding in such courts by the mailing of such processby registered or certified mail, postage prepaid, return receipt request or by nationally recognized overnight delivery courier service to such party at itsaddress for notices provided for in Section 4.3. Each party irrevocably waives and agrees not to assert (i) any objection which it may ever have to the layingof venue of any such action, suit or proceeding in any federal or state court located in New York County in the State of New York, and (ii) any claim that anysuch action, suit or proceeding brought in any such court has been brought in an inconvenient forum. (b) Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES, TO THE EXTENT LAWFUL, AND AGREESNOT TO ASSERT ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENTAND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING,VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANYACTION, SUIT OR PROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENT. 4.12 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties hadsigned the same document. All counterparts shall be construed together and shall constitute one and the same instrument. A signature delivered by facsimileor electronic transmission shall be deemed to be an original signature for all purposes under this Agreement. 4.13 Adjustments. Wherever in this Agreement there is a reference to a specific number or percentage of shares of Common Stock, thenupon the occurrence of any subdivision, combination, stock split, reverse split, stock dividend or other recapitalization of the Company, the specific numberor percentage of shares of Common Stock so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on theoutstanding Common Stock by such subdivision, combination, stock split, reverse split, stock dividend or other recapitalization. 4.14 Attorneys’ Fees. In the event that any action, suit or proceeding is brought for the purpose of determining or enforcing the right ofany party or parties hereunder, the party or parties prevailing in such action, suit or proceeding shall be entitled to recover from the other party or parties allreasonable costs and expenses incurred by the prevailing party or parties in connection with such action, suit or proceeding, including reasonable attorneys’fees. 14 [Signature Page Follows] 15 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. COMPANY: BELLEROPHON THERAPEUTICS, INC. By:/s/ Jonathan M. PeacockName: Jonathan M. PeacockTitle: President and Chief Executive Officer [Signature Page to Stockholders Agreement (New Mountain)] NMP ENTITIES: NEW MOUNTAIN PARTNERS II (AIV-A), L.P. By:New Mountain Investments II, L.L.C.Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member NEW MOUNTAIN PARTNERS II (AIV-B), L.P. By:New Mountain Investments II, L.L.C.Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member NEW MOUNTAIN AFFILIATED INVESTORS II, L.P. By:New Mountain Investments II, L.L.C.,Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. By:New Mountain Investments II, L.L.C.,Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member [Signature Page to Stockholders Agreement (New Mountain)] Exhibit 10.8 EXECUTION VERSION Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omissions. AMENDED AND RESTATED LICENSE AND COMMERCIALIZATION AGREEMENT BY AND AMONG IKARIA DEVELOPMENT SUBSIDIARY ONE LLC AND BIOLINERX LTD. AND BIOLINE INNOVATIONS JERUSALEM L.P. AUGUST 26, 2009 Table of Contents Page Article I Definitions; Interpretation1Section 1.1“Affiliate”1Section 1.2“BGN License Agreement”2Section 1.3“BioLineRx Know-How”2Section 1.4“BioLineRx Patent Rights”2Section 1.6“Business Day”2Section 1.7“Commercialization” or “Commercialize”2Section 1.8“Commercially Reasonable Efforts”2Section 1.9“Confidential Information”2Section 1.10“Control”3Section 1.11“Cover” or “Covered”3Section 1.12“Development” or “Develop”3Section 1.13“Development Term”3Section 1.14“EU”3Section 1.15“EU Milestone Conditions”3Section 1.16“Executive Officers”4Section 1.17“FDA”4Section 1.18“Field”4Section 1.19“First Commercial Sale”4Section 1.20Intentionally Omitted4Section 1.21Intentionally Omitted4Section 1.22Intentionally Omitted4Section 1.23Intentionally Omitted4Section 1.24Intentionally Omitted4Section 1.25“Know-How”4Section 1.26“Knowledge”4Section 1.27“Licensee”4Section 1.28“Manufacturing” or “Manufacture”4Section 1.29“Net Sales”5Section 1.30“On-Going Phase I/II Trial”6Section 1.31“Other On-Going Trials”6Section 1.32“Party”; “Parties”6Section 1.33“Patent Rights”6Section 1.34“Person”6Section 1.35“Pivotal Clinical Trial”6Section 1.36“Primary Indication”6Section 1.37“Product”6Section 1.38“Regulatory Approval”6Section 1.39“Regulatory Authority”7Section 1.40“Royalty Term”7Section 1.41“Sublicensed IP”7Section 1.42“Successful Completion”7 i Table of Contents Page Section 1.43“Territory”7Section 1.44“Third Party”7Section 1.45“Valid Claim”8Section 1.46Additional Definitions8Section 1.47Interpretation9 Article II Grant of Rights9Section 2.1BioLineRx License Grant to Ikaria; Consent of OCS9Section 2.2Non-Competition10Section 2.3Existing Product Agreements10Section 2.4Intentionally Omitted10Section 2.5Section 365(n) of the Bankruptcy Code10Section 2.6Retained Rights11 Article III Development; Manufacturing; Commercialization11Section 3.1General11Section 3.2Joint Development Committee11Section 3.3On-Going Trials12Section 3.4Regulatory Matters12Section 3.5Technology Exchange13Section 3.6Manufacturing13Section 3.7Commercialization14Section 3.8Efforts15 Article IV Financial Provisions15Section 4.1Milestone Payments15Section 4.2Royalties on Net Sales of Products16Section 4.3Reports and Accounting17Section 4.4Currency Amounts18Section 4.5Currency Exchange18Section 4.6Tax Withholding18Section 4.7Upfront Payments Received Under Sublicenses18 Article V Intellectual Property Ownership, Protection and Related Matters18Section 5.1Ownership of Inventions18Section 5.2Prosecution and Maintenance of Patent Rights19Section 5.3Third Party Infringement20 Article VI Confidentiality; Non-Solicitation; Standstill23Section 6.1Confidential Information23Section 6.2Disclosures to Employees, Consultants, Advisors, Etc23Section 6.3Non-Solicitation24Section 6.4Standstill24 ii Table of Contents Page Section 6.5Term24Section 6.6Publicity24Section 6.7Publications25 Article VII Representations and Warranties25Section 7.1Representations of Authority25Section 7.2Consents25Section 7.3No Conflict26Section 7.4Enforceability26Section 7.5Additional BioLineRx Representations26Section 7.6BGN License Agreement27Section 7.7Employee, Consultant and Advisor Legal Obligations27Section 7.8Accuracy of Representations and Warranties on Effective Date28Section 7.9No Warranties28 Article VIII Term and Termination28Section 8.1Term28Section 8.2Termination for Material Breach28Section 8.3Development-Related Termination28Section 8.4Effect of Certain Terminations and Expiration28Section 8.5Survival29Section 8.6Termination Prior to Effective Date29 Article IX Dispute Resolution29Section 9.1Negotiation29Section 9.2Escalation30Section 9.3Mediation30Section 9.4Litigation30Section 9.5Equitable Relief30 Article X Miscellaneous Provisions30Section 10.1Indemnification30Section 10.2Governing Law31Section 10.3Submission to Jurisdiction32Section 10.4Assignment32Section 10.5Entire Agreement; Amendments32Section 10.6Notices.32Section 10.7Force Majeure33Section 10.8Independent Contractors34Section 10.9Limitations of Liability34Section 10.10No Implied Waivers; Rights Cumulative34Section 10.11Severability34Section 10.12Execution in Counterparts; Facsimile Signatures34 iii Table of Contents SchedulesSchedule 1.30Protocol for On-Going Phase I/II TrialSchedule 1.31Descriptions of Other On-Going TrialsSchedule 1.35Outline of Initial Pivotal Clinical TrialSchedule 1.42(a)Independent Safety Monitoring Board CharterSchedule 2.3Existing Product AgreementsSchedule 3.1Initial Development PlanSchedule 3.3Independent Safety Monitoring BoardSchedule 3.7Preliminary Commercialization PlanSchedule 4.3(a)Wire Transfer Information ExhibitsExhibit ATechnology Exchange PlanExhibit BBioLineRx Patent Rights iv AMENDED AND RESTATEDLICENSE AND COMMERCIALIZATION AGREEMENT This Amended and Restated License and Commercialization Agreement (the “Agreement”) is entered into this 26 day of August, 2009, by andamong Ikaria Development Subsidiary One LLC, a Delaware limited liability company having a principal place of business at 6 State Route 173, Clinton,NJ 08809, USA (“Ikaria”), BioLineRx Ltd., a corporation organized and existing under the laws of the State of Israel and having a principal place of businessat 19 Hartum Street, P.O. Box 45158, Jerusalem 91450, Israel (“BioLineRx Ltd.”), and BioLine Innovations Jerusalem L.P., a limited partnership organizedand existing under the laws of the State of Israel and having a principal place of business at 19 Hartum Street, P.O. Box 45158, Jerusalem 91450, Israel(“BioLine Innovations”; together with BioLineRx Ltd., “BioLineRx”). INTRODUCTION WHEREAS, BioLineRx owns or controls certain intellectual property rights covering a liquid polymer composed of Sodium Alginate and Ca-D-Gluconate (designated by BioLineRx as “BL-1040”); WHEREAS, BioLineRx is currently developing the Product (as defined below) as a medical device for the direct treatment of cardiac tissuefollowing acute myocardial infarction; WHEREAS, BioLineRx is concluding the safety and clinical trials of the Product that were initiated by BioLineRx prior to the Effective Date (asdefined below); WHEREAS, BioLineRx desires to grant to Ikaria the worldwide exclusive rights to Develop, Manufacture, and Commercialize Products (as suchcapitalized terms are defined below); and WHEREAS, Ikaria desires to obtain such exclusive rights in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, BioLineRx and Ikaria agree as follows: Article IDefinitions; Interpretation When used in this Agreement, each of the following capitalized terms has the meaning set forth in this Article I: Section 1.1 “Affiliate” shall mean, with respect to a Party, any Person that controls, is controlled by, or is under common control with such Party. For purposes of this Section 1.1, “control” shall refer to (a) in the case of a Person that is a corporate entity, direct or indirect ownership of more than fiftypercent (50%) of the stock, shares or membership units having the right to vote for the election of a majority of the directors of such Person, and (b) in thecase of a Person that is an entity, but is not a corporate entity, the possession, directly or indirectly, of the 1th power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract orotherwise. Section 1.2 “BGN License Agreement” shall mean that certain License Agreement, dated January 10, 2005, as amended, by and among BioLineJerusalem L.P. and B.G. Negev Technologies and Applications Ltd. (“BGN”) on behalf of Ben Gurion University. Section 1.3 “BioLineRx Know-How” shall mean all Know-How that is (a) necessary or useful for the Development, Manufacture, orCommercialization of any Product and (b) either (i) is Controlled by BioLineRx as of the Effective Date or (ii) BioLineRx comes to Control during the termof this Agreement. Section 1.4 “BioLineRx Patent Rights” shall mean Patent Rights that claim or disclose BioLineRx Know-How, including the Patent Rights listedin Exhibit B. Section 1.5 “BioLineRx Intellectual Property” shall mean BioLineRx Patent Rights (including Patent Rights in the Sublicensed IP), andBioLineRx Know-How (including Know-How in the Sublicensed IP). Section 1.6 “Business Day” shall mean a day that is not a Saturday, a Sunday or a day on which banking institutions in New York, New York, USAare authorized by law to remain closed. Section 1.7 “Commercialization” or “Commercialize” shall mean any activities directed to marketing, promoting, distributing, importing,exporting, or selling a product. Section 1.8 “Commercially Reasonable Efforts” shall mean the efforts, expertise and resources normally used by a Party to Develop, Manufactureand Commercialize a product owned by it or to which it has rights, which is of similar market potential at a similar stage in its development or product life,taking into account issues of safety and efficacy, product profile, difficulty in developing the product, competitiveness of the marketplace for the product, theproprietary position of the product, the regulatory structure involved, the availability and level of reimbursement for such treatment by Third Party payors orhealth insurance plans, the potential total profitability of the applicable product(s) marketed or to be marketed and other relevant factors affecting the cost,risk and timing of Development and the total potential reward to be obtained if a product is Commercialized. The Parties agree that CommerciallyReasonable Efforts shall require a Party to expend efforts, expertise and resources that such Party would normally expend to Develop, use, Manufacture andCommercialize a product owned by it or to which it has rights, taking into account the foregoing factors. Section 1.9 “Confidential Information” shall mean, with respect to a disclosing Party, all Know-How or other information (whether or notpatentable) regarding such Party’s technology, products, business information or objectives (whether disclosed before or after the Effective Date) that is of aconfidential and proprietary nature, including reports and audits under Section 4.3, the Development Plan, the Commercialization Plan, the terms of thisAgreement, and all proprietary tangible materials (and data and information associated therewith) of such Party. Notwithstanding the foregoing, ConfidentialInformation shall not include Know-How or other information that: 2 (a) was rightfully known or used by the receiving Party or its Affiliates without an obligation of confidentiality prior to its date of disclosure tothe receiving Party as demonstrated by contemporaneous written records; or (b) either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Affiliates by sourcesother than the disclosing Party rightfully in possession of such information and not bound by confidentiality obligations to the disclosing Party; or (c) either before or after the date of the disclosure to the receiving Party or its Affiliates is or becomes published or otherwise is or becomes partof the public domain through no breach hereof on the part of the receiving Party or its Affiliates; or (d) is independently developed by or for the receiving Party or its Affiliates without reference to or use of the Confidential Information of thedisclosing Party as demonstrated by contemporaneous written records. Section 1.10 “Control” shall mean the legal authority or right of a Party or its Affiliates to grant a license or sublicense of intellectual propertyrights to the other Party, or to provide tangible material to or otherwise disclose proprietary or trade secret information to such other Party, without breachingthe terms of any agreement with a Third Party. For the avoidance of doubt, BioLineRx Controls the Sublicensed IP. Section 1.11 “Cover” or “Covered” shall mean, with respect to a Patent Right and a product, that, in the absence of ownership of (with a retainedright to exploit), or a license granted under, a Valid Claim included in such Patent Right, the Manufacture, Development, Commercialization, use, sale,import, or offer for sale, as applicable, of such product would infringe such Valid Claim in the country where such activity occurs. Section 1.12 “Development” or “Develop” shall mean development activities, including test method development and stability testing, toxicology,formulation, optimization, quality assurance/quality control development, statistical analysis, clinical studies, regulatory affairs, product approval, andregistration. Section 1.13 “Development Term” shall mean the term of development of Products by Ikaria. Section 1.14 “EU” shall mean the European Union and all the member states thereof, as it may be comprised from time to time. Section 1.15 “EU Milestone Conditions” shall mean (a) satisfaction of all requirements for [**], (b) [**] set forth therein, and (c) [**]. 3 Section 1.16 “Executive Officers” shall mean the Chief Executive Officer of Ikaria (or a senior executive officer of Ikaria designated by Ikaria) andthe Chief Executive Officer of BioLineRx (or a senior executive officer of BioLineRx designated by BioLineRx). Section 1.17 “FDA” shall mean the United States Food and Drug Administration or any successor agency thereof. Section 1.18 “Field” shall mean any and all uses described or claimed in the BioLineRx Patent Rights. Section 1.19 “First Commercial Sale” shall mean, with respect to a Product in a country, the first commercial sale of such Product by Ikaria, itsAffiliates, distributors, agents or Licensees in such country. Sales for clinical trial purposes or compassionate or similar use shall not be considered toconstitute a First Commercial Sale. Section 1.20 Intentionally Omitted Section 1.21 Intentionally Omitted Section 1.22 Intentionally Omitted Section 1.23 Intentionally Omitted. Section 1.24 Intentionally Omitted.” Section 1.25 “Know-How” shall mean any tangible or intangible know-how, expertise, information, inventions, discoveries, documents and otherworks of authorship, copyrights, trade secrets, data, or materials, whether proprietary or not, including ideas, concepts, formulas, methods, procedures,designs, technologies, compositions, plans, applications, technical data, data generated in clinical trials, samples, chemical compounds and biologicalmaterials and all derivatives, modifications and improvements thereof. Section 1.26 “Knowledge” shall mean, with respect to a Party, the Party’s actual knowledge together with any knowledge of any of the Party’sofficers or director-level employees, that a Person in such party’s position would be expected to obtain given the exercise of reasonably prudent scientificand business diligence in accordance with the standards of companies of such Party’s size in such Party’s industry. Section 1.27 “Licensee” shall mean any Person to whom Ikaria licenses its rights under this Agreement in the manner provided in Section 2.1,including any Third Party contractors. Section 1.28 “Manufacturing” or “Manufacture” shall mean any activities associated with the production, manufacture, supply, processing, filling,packaging, labeling, shipping, or storage of a product or any components thereof, including process and formulation development, process validation,stability testing, manufacturing scale-up, development and commercial manufacture and analytical development, product characterization, quality assuranceand quality control development, testing, and release. 4 Section 1.29 “Net Sales” shall mean, with respect to a Product, the gross amounts billed by Ikaria, its Affiliates, or Licensees in respect of sales ofsuch Product by Ikaria and its Affiliates or Licensees to unrelated Third Parties, in each case less the following deductions: (a) Trade, cash, or quantity discounts (including amounts incurred in connection with government mandated rebate programs) actually allowedand taken with respect to such sales; (b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid with respect to the production, sale, delivery, or use of the Product(excluding national, state, or local taxes based on income); (c) Amounts repaid or credited by reason of billing corrections, rejections, defects, recalls, or returns (due to spoilage, damage, expiration ofuseful life or otherwise) or because of chargebacks, refunds or retroactive price reductions and allowances for wastage replacement and bad debts; (d) Portions of invoices sales amounts included in Net Sales in prior periods that are actually written off by Ikaria, its Affiliates, or licenses asuncollectible; and (e) Postage, freight, shipping, insurance, and other transportation related charges incurred in shipping a Product to Third Parties. Such amounts shall be determined from the books and records of Ikaria, its Affiliates, or Licensees, maintained in accordance with generally acceptedaccounting principles, consistently applied. For the avoidance of doubt, in no event will fines, penalties or other monetary damages assessed against Ikaria,its Affiliates or Licensees by any governmental authority for violation of any applicable law, result in an appropriate deduction to Net Sales. If one or more Products is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes ofdetermining royalty payments, shall be determined by multiplying the Net Sales (as determined above) of the Combination Product, during the applicableroyalty reporting period, by the fraction, A/(A+B), where A is the average sale price of the Product(s) when sold separately in finished form and B is theaverage sale price of the other components included in the Combination Product when sold separately in finished form, in each case in the applicable countryduring the applicable royalty reporting period or, if sales of both the Product(s) and the other components did not occur in such country in such period, thenin the most recent royalty reporting period in which sales of both occurred. If such average sale price cannot be determined for both the Product(s) and allother components included in such Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying theNet Sales of the Combination Product by the fraction of C/(C+D) where C is the fair market value of the Product(s) and D is the fair market value of all othercomponents included in the Combination Product. In such event, the Parties shall negotiate in good faith to arrive at a determination of the respective fairmarket values of the Product(s) and all other components included in the Combination Product. If the Parties are unable to agree on such determinationwithin sixty (60) days, then such matter shall be resolved as provided in Article IX. 5 As used above, the term “Combination Product” means any therapeutic medical product that includes both (i) one or more Product(s) and (ii) othercomponent(s). Section 1.30 “On-Going Phase I/II Trial” shall mean that certain clinical trial of a Product that was initiated by BioLineRx prior to and that isongoing as of the Effective Date, the protocol for which is attached hereto as Schedule 1.30. Section 1.31 “Other On-Going Trials” shall mean those pre-clinical and CMC trials (other than the On-Going Phase I/II Trial) that were initiated byBioLineRx prior to, and that are ongoing as of, the Effective Date, descriptions of which are attached hereto as Schedule 1.31. Section 1.32 “Party” shall mean BioLineRx or Ikaria; “Parties” shall mean BioLineRx and Ikaria. Section 1.33 “Patent Rights” shall mean United States and foreign patents and patent applications (including provisional applications) and allsubstitutions, divisionals, continuations, continuations-in-part, reissuances, reexaminations, registrations, renewals, confirmations, supplementary protectioncertificates and extensions thereof. Section 1.34 “Person” shall mean any natural person or any corporation, company, partnership, joint venture, firm, university, other entity,governmental authority, or subdivision thereof. Section 1.35 “Pivotal Clinical Trial” shall mean a randomized, controlled clinical trial of a Product designed to demonstrate statistically significantclinical efficacy and safety in human patients (in conjunction with performance of a therapeutic procedure) pursuant to a clinical study agreed with the FDA,which trial the FDA accepts as a pivotal clinical trial necessary for Regulatory Approval of such Product. An outline of the structure of the initial PivotalClinical Trial is attached as Schedule 1.35. Section 1.36 “Primary Indication” shall mean the diagnosis, prevention, mitigation, or treatment of injury to myocardial tissue via theadministration of a Product to a human patient. Section 1.37 “Product” shall mean a liquid polymer composed of Sodium Alginate and Ca-D-Gluconate (designated by BioLineRx as “BL-1040”),or any back-ups or second-generation polymers or polymer combinations thereof that is Developed under the Development Program. Section 1.38 “Regulatory Approval” shall mean, with respect to a jurisdiction, the approval of the applicable Regulatory Authority required tomarket and sell a Product in such jurisdiction. For clarity, Regulatory Approval for a Product shall occur: (a) in the United States, on the date when the FDA approves a Premarket Approval (PMA) application; (b) in Europe, on the date when such Product may first be placed on the market as a medical device (as such terms are defined in Art. 1Paragraphs 2(a) and (h) of Directive 93/42/EEC, as amended) bearing the CE marking according to Art. 17 of Directive 93/42/EEC, as amended, in anymember state of the EU; and 6 (c) in Japan, on the date when the Ministry of Health approves a marketing authorization. Section 1.39 “Regulatory Authority” shall mean any national (e.g., the FDA), supra-national or other regulatory agency or governmental entityinvolved in the granting of Regulatory Approval for, or in the regulation of human clinical studies of, therapeutic medical devices. Section 1.40 “Royalty Term” shall mean, with respect to a Product in a country of the Territory, the period of time commencing on the FirstCommercial Sale of such Product in such country and ending upon the earlier of (a) the expiration of the last-to-expire Valid Claim in the BioLineRx PatentRights that Covers the sale or use of such Product in the Field in such country, or (b) the date of a judicial determination from which no appeal can be takenof invalidity of a set of claims in the BioLineRx Patent Rights that Cover the sale or use of such Product in the Field in such country and that are assertedthrough litigation (whether in an infringement action, a declaratory judgment action, or otherwise) to exclude a Third Party from selling or using a product inthe Field in such country. Section 1.41 “Sublicensed IP” shall mean that portion of the BioLineRx Intellectual Property licensed to BioLineRx pursuant to the BGN LicenseAgreement. Section 1.42 “Successful Completion” shall mean: (a) with respect to the On-Going Phase I/II Trial, no treatment-related safety findings during the treatment period and the six (6) month followup period, that were considered by the Independent Safety Monitoring Board for the On-Going Phase I/II Trial (in accordance with and subject to theIndependent Safety Monitoring Board Charter attached hereto as Schedule 1.42(a)) to be of sufficient concern to discontinue the On-Going Phase I/II Trial; (b) with respect to the Interim Analysis of the Pivotal Clinical Trial/Phase IIb Proof of Concept, safety and efficacy data from completion of allpatients at the [**] follow up demonstrates more than a [**] probability of meeting pre-specified endpoints at [**] in the Pivotal Clinical Trial, and noapparent safety signal in the treatment group for the entire cohort at all times; (c) with respect to the Pivotal Clinical Trial for the Primary Indication, safety and efficacy data from completion of all patients at the [**]follow up meets the primary endpoint and demonstrates a positive benefit-to-risk ratio to enable FDA submission; and (d) with respect to all other clinical trials of a Product, that the JDC has determined that the final results of such clinical trial have achieved thesuccess criteria established by the JDC with respect to such clinical trial. Section 1.43 “Territory” shall mean the entire world. Section 1.44 “Third Party” shall mean any Person other than a Party or any of its Affiliates or Licensees. 7 Section 1.45 “Valid Claim” shall mean a claim of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by adecision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not takenwithin the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, reexamination, disclaimer, orotherwise. Section 1.46 Additional Definitions. Each of the following terms is defined in the section of this Agreement indicated below: TermSection “Agreement”Preamble“Bankruptcy Code”Section 2.5“BGN”Section 1.2“BioLineRx”Preamble “BL-1040”Section 1.37“Breaching Party”Section 8.2“Combination Product”Section 1.29“Commercialization Plan”Section 3.7“Competitive Infringement”Section 5.3(a)“Effective Date”Section 2.1“Existing Product Agreements”Section 2.3“Ikaria”Preamble “Development Plan”Section 3.1“Development Program”Section 3.1“Force Majeure Event”Section 10.7“Indemnified Party”Section 10.1(c)“Indemnifying Party”Section 10.1(c)“Invalidity Claim”Section 5.3(d)“Joint Development Committee” or “JDC”Section 3.2 “Joint Manufacturing Committee” or “JMC”Section 3.6(c)“Lead Party”Section 5.3(e)“Losses”Section 10.1(a)“New Indication”Section 2.4“New Indication Invention”Section 5.1(a)“Non-Breaching Party”Section 8.2“OCS”Section 2.1“SEC”Section 6.1“Severed Clause”Section 10.11 “Technology Exchange”Section 3.5“Technology Exchange Plan”Section 3.5“Third Party Payment”Section 4.2(b) 8 Section 1.47 Interpretation. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuterforms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall beconstrued to have the same meaning and effect as the word “shall”. The word “or” shall be construed to have the same meaning and effect as “and/or”. ThisAgreement has been prepared jointly with the assistance of counsel and shall not be strictly construed against either Party. The captions or headings of thesections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisionshereof. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument, or other document herein shall be construed asreferring to such agreement, instrument, or other document as from time to time amended, supplemented, or otherwise modified (subject to any restrictions onsuch amendments, supplements, or modifications set forth herein or therein), (b) any reference to any laws herein shall be construed as referring to any law,statute, rule, regulation, ordinance, or other pronouncement having the effect of law of any federal, national, multinational, state, provincial, county, city, orother political subdivision, domestic or foreign, as they from time to time may be enacted, repealed, or amended, (c) any reference herein to any Person shallbe construed to include the Person’s successors and assigns, (d) the words “herein”, “hereof”, and “hereunder”, and words of similar import, shall be construedto refer to this Agreement in its entirety and not to any particular provision hereof, (e) any reference herein to the words “mutually agree” or “mutual writtenagreement” shall not impose any obligation on either Party to agree to any terms relating thereto or to engage in discussions relating to such terms except assuch Party may determine in such Party’s sole discretion, and (f) all references herein to Articles, Sections, Exhibits, or Schedules shall be construed to refer toArticles, Sections, Exhibits, and Schedules of this Agreement. Article IIGrant of Rights Section 2.1 BioLineRx License Grant to Ikaria; Consent of OCS. Subject to the terms and conditions of this Agreement, including the consent ofthe Office of the Chief Scientist of the State of Israel (“OCS”), BioLineRx hereby grants to Ikaria the exclusive, royalty-bearing right and license in theTerritory under the BioLineRx Intellectual Property (including, for clarity, a sublicense under the Sublicensed IP) to Develop, Manufacture andCommercialize Products for use in the Field. Subject to the consent of BioLineRx, which consent shall not be unreasonably withheld, conditioned ordelayed, the foregoing license includes the right to grant sublicenses under the BioLineRx Intellectual Property, provided that, with respect to sublicensesgranted under the Sublicensed IP, Ikaria shall (a) grant such sublicenses only for consideration and at arm’s-length transactions, and (b) grant suchsublicenses only pursuant to written agreements that contain such terms and conditions as may be required for Ikaria to comply with this Agreement. BioLineRx shall use its best efforts to obtain the written consent of the OCS to this Agreement within [**] days after August 26, 2009, which consent mustbe in a form that is satisfactory to each Party. If the OCS has still not provided such consent during such [**] days, Ikaria shall have the right to requireBioLineRx to continue to use best efforts to obtain such consent within the subsequent [**] day period. In addition, (i) Ikaria shall have the right to have arepresentative present at all interactions between BioLineRx’s representatives and the OCS relating to such consent, (ii) BioLineRx shall (A) provide Ikariawith a reasonable opportunity to review and approve the request for consent submitted to the OCS and (B) keep Ikaria fully 9th informed as to the progress of such request for consent and shall consult with Ikaria in good faith with respect thereto, (iii) BioLineRx shall not engage in anyactivities or discussions with any Third Party relating to the subject matter of this Agreement, including pursuing any other transactions relating to theBioLineRx Intellectual Property, without Ikaria’s consent, and (iv) Ikaria shall have the right, prior to the Effective Date, to unilaterally modify thisAgreement to comply with the specific, formal, written requests of the OCS, provided that such modifications have no detrimental financial impact onBioLineRx under this Agreement. Notwithstanding BioLineRx’s obligation to exercise best efforts to obtain the consent from the OCS as described above,BioLineRx shall not be required to (y) agree to any request by the OCS that would require BioLineRx to pay to the OCS an aggregate amount of more than$[**] or (z) obtain a consent based on the characterization of this Agreement as a “transfer of know-how outside of Israel” under Section 19B of the IsraeliLaw for the Encouragement of Industrial Research & Development, 1984. Notwithstanding anything herein to the contrary, subject to Section 8.6, theprovisions of this Agreement other than this Section 2.1, Section 2.2, Article VII, Section 8.6 and Article X shall not be effective until such consent has beenobtained and each Party has delivered the certificate set forth in Section 7.8 (the “Effective Date”). Section 2.2 Non-Competition. During the term of this Agreement, BioLineRx shall not, within the Territory, directly or indirectly (includingthrough its Affiliates), conduct research or discovery activities, Develop, Manufacture (except as set forth in Section 3.6), Commercialize, or grant any rightsor options or provide assistance to any Third Party to conduct research or discovery activities, Develop, Manufacture (except as set forth in Section 3.6) orCommercialize, (a) the Product or (b) any compound, substance, polymer, or product (whether pharmaceutical or device in nature) the method of action oreffect of which is similar to any Product. Section 2.3 Existing Product Agreements. BioLineRx hereby agrees that, upon the written request of Ikaria, BioLineRx shall assign to Ikaria eachof the agreements listed in Schedule 2.3 attached hereto (the “Existing Product Agreements”), and all of its rights, title, and interest therein. BioLineRx shallcooperate with Ikaria, including by executing and recording documents, as may be necessary to effectuate such assignments and the exercise by Ikaria of itsrights under the Existing Product Agreements. Section 2.4 Intentionally Omitted. Section 2.5 Section 365(n) of the Bankruptcy Code. All rights and licenses granted under or pursuant to any Section of this Agreement, includingunder this Article II and with respect to any BioLineRx Intellectual Property subject to Technology Exchange under Section 3.5, are rights to “intellectualproperty” (as defined in Section 101(35A) of Title 11 of the United States Code (such Title, the “Bankruptcy Code”)). Each of Ikaria and BioLineRx herebyacknowledges “embodiments” of such intellectual property for purposes of Section 365(n) of the Bankruptcy Code shall include (a) copies of research data,(b) laboratory samples, (c) product samples, (d) formulas, (e) laboratory notes and notebooks, (f) data and results related to clinical studies, (g) regulatoryfilings and approvals, (h) rights of reference in respect of regulatory filings and approvals, (i) research data and results, and (j) marketing, advertising, andpromotional materials, in each case, that relate to such intellectual property. Each Party shall retain and may fully exercise all of its rights and electionsunder the Bankruptcy Code or analogous legislation in any other jurisdiction. Upon the institution by or against BioLineRx of any assignment for the 10 benefit of creditors, composition, or any bankruptcy, reorganization, arrangement, insolvency, or similar proceedings under the laws of any jurisdiction,Ikaria shall further be entitled to a complete duplicate of, or complete access to, as appropriate, any such intellectual property (including embodimentsthereof), and such intellectual property and embodiments, if not already in its possession, shall be promptly delivered to Ikaria, unless BioLineRx elects tocontinue, and continues, to perform all of its obligations under this Agreement. Section 2.6 Retained Rights. Except as otherwise specifically provided for in this Agreement, each Party retains all rights and licenses to exploitits own intellectual property. Article IIIDevelopment; Manufacturing; Commercialization Section 3.1 General. Ikaria shall be solely responsible for conducting and funding all Development activities pursuant to the Development Plan,and shall have the sole right to Develop, Manufacture, and Commercialize Products in the Field in the Territory. Subject to its obligations under Section 3.8,Ikaria shall prepare a non-binding plan (the “Development Plan”) for the Development of Product(s) (the “Development Program”). The Development Planshall include an estimated budget setting forth Ikaria’s anticipated development costs. Ikaria shall provide BioLineRx with a copy of its then-currentDevelopment Plan at least [**] per year, but no later than [**] days following the beginning of each year. The initial Development Plan is attached hereto asSchedule 3.1, which shall be non-binding, including any timelines or milestones that may be included therein. In addition, Ikaria shall, within [**] days afterthe Effective Date, provide BioLineRx with a revised draft protocol for the Interim Analysis of the Pivotal Clinical Trial/Phase IIb Proof of Concept and thePivotal Clinical Trial, after taking into account any comments BioLineRx may wish to provide based on the initial draft of the protocol attached hereto asSchedule 1.35, that would include modifications designed to maximize the likelihood of obtaining reasonable reimbursement for one or more Products inany one or more of the following countries [**]. Upon the Successful Completion of the Interim Analysis of the Pivotal Clinical Trial/Phase IIb Proof ofConcept, or, failing that, upon the Successful Completion of the Pivotal Clinical Trial, Ikaria shall, within [**] days thereafter, submit a formal written requestfor a reimbursement price for one or more Product(s) to the applicable governmental agency in one or more of the following countries: [**] Section 3.2 Joint Development Committee. (a) The Parties shall establish a Joint Development Committee (the “Joint Development Committee” or “JDC”), comprised of [**]representatives of Ikaria and [**] representatives of BioLineRx, to oversee the Development of Products. Each Party shall make its initial designation of itsrepresentatives not later than [**] days after the Effective Date. Each Party may change any one or more of its representatives to the Joint DevelopmentCommittee at any time upon notice to the other Party. (b) The JDC shall meet at least [**] during the Development Term or more or less frequently as the JDC may agree. The JDC may meet inperson or by means of a telephone or video conference call. One meeting of the JDC per year shall be held in person at Ikaria’s 11 headquarters in Clinton, NJ and one meeting of the JDC per year shall be held in person at BioLineRx’s headquarters in Israel, provided, that the Parties’representatives may participate in person, via telephone, or video conference in their discretion. Each Party shall use reasonable efforts to cause itsrepresentatives to attend the meetings of the JDC. If a representative of a Party is unable to attend a meeting, such Party may designate an alternate to attendsuch meeting in place of the absent representative. Each Party shall bear its own costs with respect to its participation on the JDC. Prior to every meeting ofthe JDC, Ikaria will provide to the JDC detailed reports describing Ikaria’s current clinical and development activities and plans. (c) The JDC shall be the vehicle by which BioLineRx may offer insight and guidance to Ikaria with respect to (i) establishing the DevelopmentPlan setting forth the Development Program’s objectives and the activities to be conducted, (ii) reviewing and updating the Development Plan from time totime, (iii) monitoring the progress and results of the Development Program, (iv) determining future Development Program activities, including Developmentactivities relating to Manufacturing, to be conducted during the Development Term, and (v) establishing success criteria for the clinical trials (other thanthose for which success criteria are set forth in this Agreement), and determining whether the results of such clinical trials have achieved the applicablesuccess criteria. (d) The JDC shall only act unanimously, with each Party given one (1) vote regardless of the number of representatives. If, however, the JDC isunable to reach agreement with respect to any matter within [**] days, the matter shall be referred to the Parties’ respective Executive Officers for resolution. If the Executive Officers are not able to resolve any such matter by consensus within [**] days following referral, Ikaria’s Executive Officer shall have theright to decide the matter taking into account Ikaria’s obligation to use Commercially Reasonable Efforts under Section 3.8. Notwithstanding anything in this Section 3.2, neither Party shall have a unilateral right to resolve any dispute involving the breach or allegedbreach of this Agreement, to amend or modify this Agreement or the Parties’ respective rights and obligations hereunder or, except as expressly provided inthis Section 3.2, any Development Plan or the Parties’ respective rights and obligations thereunder. Section 3.3 On-Going Trials. BioLineRx shall retain control of, bear all costs relating to the On-Going Phase I/II Trial and the Other On-GoingTrials, and shall exercise Commercially Reasonable Efforts to continue and complete the On-Going Phase I/II Trial and the Other On-Going Trials, whichshall be managed by BioLineRx. BioLineRx may modify the On-Going Phase I/II Trial and the Other On-Going Trials, including any changes to theprotocols therefor, only with the prior written consent of Ikaria, which consent shall not be unreasonably withheld, conditioned or delayed. Section 3.4 Regulatory Matters. Ikaria shall prepare and submit all filings with Regulatory Authorities relating to Products, which filings shall bein Ikaria’s name, provided that Ikaria shall provide BioLineRx [**] days prior notice to enable BioLineRx to review and provide any comments on suchsubmissions. With respect to regulatory matters concerning Products, BioLineRx shall cooperate with Ikaria in the preparation and support of eachapplication for Regulatory Approval and shall provide Ikaria with such reasonable assistance as Ikaria may 12 request. For example, upon Ikaria’s request, BioLineRx shall describe the materials in sufficient and reasonable detail as requested by Ikaria, theManufacturing techniques and other appropriate characteristics of Products (and the components thereof), and provide Ikaria with such other informationrelated to the Products, including materials, chemistry, Manufacturing, technical dossier and controls data, batch records, analytical and quality control,device master files (if applicable), data from the On-Going Phase I/II Trial or Other On-Going Trials, or other information as Ikaria may reasonably request. Section 3.5 Technology Exchange. (a) As soon as reasonably practicable after Ikaria’s written request, BioLineRx shall complete the activities assigned to BioLineRx as set forthon the technology exchange plan attached hereto as Exhibit A (the “Technology Exchange Plan”), to effect the transfer to Ikaria (or Ikaria’s designee(s)) ofall embodiments of and information relating to BioLineRx Intellectual Property reasonably necessary for the exercise of Ikaria’s rights under the licensegranted pursuant to Section 2.1, including the Manufacturing of Products (“Technology Exchange”). BioLineRx shall make available to Ikaria (or Ikaria’sdesignee(s)) such number of technical personnel as may be set forth in the Technology Exchange Plan to answer any questions or provide instruction asreasonably requested by Ikaria (or Ikaria’s designee(s)) concerning the items delivered pursuant to this Section 3.5, in connection with the Development, Manufacture and Commercialization of Products hereunder. Each Party shall bear its own costs with respect to the Technology Exchange. (b) The Joint Development Committee shall be responsible for coordinating the technology exchange activities under the Technology TransferPlan. Each Party shall cooperate with the other Party in such other Party’s conduct of technology exchange activities under the Technology Exchange Plan. (c) If Ikaria desires that BioLineRx provide technology exchange services beyond the scope of the Technology Exchange Plan, BioLineRxshall provide such services on terms to be agreed upon in good faith by the Parties. Notwithstanding the foregoing, BioLineRx shall provide Ikaria withreasonable access to BioLineRx’s employees and consultants involved prior to the Effective Date and during the term of this Agreement with theDevelopment of any Product. Section 3.6 Manufacturing. (a) Ikaria shall be solely responsible for the Manufacture of Products for Development or for Commercialization in the Field in the Territory,which Ikaria may conduct itself or through Affiliates or Licensees. (b) BioLineRx Ltd. shall have the option (either directly or through an Affiliate), exercisable in its sole discretion no later than six (6) monthsprior to the date on which Ikaria intends to file for Regulatory Approval in the U.S., to Manufacture Product pursuant to the terms of a supply agreement to benegotiated in good faith by the Parties, provided that (i) BioLineRx may exercise the foregoing option only to the extent that it has the demonstrated abilityto manufacture the Product, including compliance with cGMP and all applicable laws and 13 regulations, including those of the FDA and EMEA, (ii) BioLineRx shall bear all expenses required to establish and qualify the BioLineRx manufacturingsite, including the costs of scale-up batches, process validation batches and stability batches, (iii) BioLineRx shall not be entitled to assign such option or toutilize subcontract manufacturing, and (iv) neither Party shall have any obligation to enter into such agreement unless all of the terms and conditions thereofare acceptable to both Parties. If BioLineRx Ltd. exercises such option and the Parties enter into a supply agreement, (x) Ikaria shall be required to purchaseno less than twenty percent (20%) of its requirements for the Product from BioLineRx, and (y) the per unit price for the Product shall be the [**], providedthat the price shall not exceed [**] percent ([**]%) of the Net Sales price per unit of Product; provided, further, that if BioLineRx at any time shall fail tosupply Product on time or such supply is otherwise disrupted, the minimum purchase requirement set forth in the preceding clause (x) shall no longer apply. Any clinical supply provided to Ikaria by BioLineRx would be provided at cost. (c) The Parties will discuss the most efficient structure for the Manufacture and supply of Product for Development and Commercializationpurposes. If the Parties determine that coordination in Manufacturing is appropriate, the Parties will establish a Joint Manufacturing Committee (the “JointManufacturing Committee” or “JMC”) to coordinate Manufacturing efforts. If established, the JMC would be comprised of [**] representatives of Ikaria and[**] representatives of BioLineRx, to oversee the Manufacturing of Products. Each Party would make its initial designation of its representatives not laterthan [**] days after the Parties agreed to establish the JMC. Each Party shall designate as its representatives individuals who have the requisite experienceand knowledge to discuss the Manufacturing of Products. Each Party would be permitted to change any one or more of its representatives to the JMC at anytime upon notice to the other Party. (d) The JMC would meet at least [**] or more or less frequently as the JMC may agree. The location of such meetings shall be as mutuallyagreed by the Parties. The JMC may also meet by means of a telephone or video conference call. Each Party shall use reasonable efforts to cause itsrepresentatives to attend the meetings of the JMC. If a representative of a Party is unable to attend a meeting, such Party may designate an alternate to attendsuch meeting in place of the absent representative. Each Party would bear its own costs with respect to its participation on the JMC. (e) The JMC would only act unanimously. If, however, the JMC is unable to reach agreement with respect to any matter within [**] days, thematter shall be referred to the Parties’ respective Executive Officers for resolution. If the Executive Officers are not able to resolve any such matter byconsensus within [**] days following referral, Ikaria’s Executive Officer shall have the right to decide the matter taking into account Ikaria’s obligation touse Commercially Reasonable Efforts under Section 3.8. Section 3.7 Commercialization. Ikaria shall be solely responsible for conducting, itself or through Affiliates or Licensees, the Commercializationof Products in the Field in the Territory, including (a) contracting with customers and booking sales, (b) setting the price and terms and conditions underwhich a Product may be sold to customers, and (c) handling of managed care accounts, and, subject to Section 1.29, Section 4.2(b), Section 5.2(d),Section 5.3(e) and Section 10.1(b), as between the Parties, Ikaria shall bear all costs associated therewith. Ikaria shall 14 produce and update from time to time a comprehensive Commercialization plan (the “Commercialization Plan”), which shall include plans forCommercializing Product in each major market in which Ikaria does not then have a presence. The Commercialization Plan shall include a preliminarytimeline for the initial Commercialization of Products, which is intended as a planning and informational tool and shall not constitute a binding obligationon Ikaria, and shall be subject to adjustment by Ikaria from time to time, provided, that, Ikaria shall provide BioLineRx with prior written notice of anymaterial proposed change to a timeline. The most recent preliminary Commercialization Plan is attached hereto as Schedule 3.7. Section 3.8 Efforts. Ikaria shall use Commercially Reasonable Efforts, either itself or through Affiliates or Licensees, (a) to Develop at least oneProduct in the Territory and (b) to Commercialize at least one Product in the Territory. Article IVFinancial Provisions Section 4.1 Milestone Payments. (a) Development and Regulatory Milestones. With respect to each of the following milestones, Ikaria shall pay BioLineRx the correspondingpayment set forth below within [**] days after the achievement by Ikaria, its Affiliates or Licensees of such milestone: MILESTONEPAYMENT 1.Effective Date$7,000,000 2.Successful Completion of On-Going Phase I/II Trial$10,000,000 3.[**]$[**] [**]$12,500,000 [**]$[**] 4.[**]$[**] 5.[**]$[**] 6.[**]$[**] Total Development and Regulatory Milestone Payments132,500,000 15 (b) Commercialization Milestones. Ikaria shall pay each of the following milestone payments to BioLineRx within [**] days after theachievement of such milestone: MILESTONE PAYMENT 1. Annual Net Sales in Territory exceed $[**] in a Calendar Year$[**] 2. Annual Net Sales in Territory exceed $[**] in a Calendar Year$[**] 3. Annual Net Sales in Territory exceed $[**] in a Calendar Year$[**] Each of the milestones set forth in Section 4.1(a) and Section 4.1(b) shall be paid only once regardless of the number of Products that achieve such milestone. Section 4.2 Royalties on Net Sales of Products. During the Royalty Term applicable to each Product, and subject to adjustment as set forth inSection 4.2(b), Ikaria shall pay to BioLineRx royalties on a Product-by-Product basis, with the amount of such royalties calculated as a percentage of NetSales in a calendar year for such Product as set forth below: Net SalesRoyalty Up to $250 Million11%>$250 Million to $1 Billion13%>$1 Billion15% (a) Royalties Payable Only Once. The obligation to pay royalties is imposed only once with respect to Net Sales of the same unit of a Product. (b) Royalty Reductions for Third Party Payments. Ikaria shall use Commercially Reasonable Efforts to avoid any Third Party Payments. Ikariashall provide BioLineRx written notice within [**] days of its receipt of any request or demand that Ikaria, its Affiliates or any Licensee obtain a license orimmunity from suit from any Third Party in order for Ikaria, its Affiliates, or any Licensee to exercise or use the rights granted to Ikaria herein. If Ikaria isrequired to obtain a license or immunity from suit from any Third Party in order for Ikaria, its Affiliates, or any Licensee to exercise or use the rights grantedto Ikaria herein, and Ikaria, its Affiliates, or any Licensee pays any Third Party any up-front fee, milestone, royalty, or other payment (each, a “Third PartyPayment”) in connection with such license or immunity from suit, Ikaria shall have the right to set off against any amounts payable to BioLineRx under thisArticle IV [**] percent ([**]%) of any Third Party Payments provided that in no event will the royalty paid to BioLineRx on Net Sales in the applicablecountry fall below [**] percent ([**]%). If the amount of Third Party Payments that Ikaria is entitled to set off exceeds the amount otherwise payable toBioLineRx at any given time, or is limited by the foregoing [**] percent ([**]%), Ikaria shall be entitled to carry over the excess for set off against amountspayable to BioLineRx in subsequent periods until Ikaria has been credited for the full amount it is entitled to set off. Prior to paying any Third PartyPayment, the Parties shall obtain an analysis from their 16 respective counsel in respect of the validity of the claim of any Third Party seeking Third Party Payments. If the Parties are unable to agree on an assessmentof the claim, the Parties shall jointly engage mutually acceptable independent patent counsel not regularly employed by either Party to assess such claims. Ikaria shall substitute the decision of such independent patent counsel for that of its own counsel with respect to deciding whether to obtain a license orimmunity from suit from any Third Party in order for Ikaria, its Affiliates, or any Licensee to exercise or use the rights granted to Ikaria herein. (c) Duration of Payments. The amounts payable to BioLineRx under Section 4.2 shall be paid on a Product-by-Product and country-by-country basis until the expiration of the Royalty Term for such Product in such country. (d) Price Concessions. Ikaria shall not, and shall ensure that its Affiliates and Licensees do not, sell or distribute the Product at a discount(including in the form of government mandated rebates) (with or without consideration) in return substantially for (i) concessions or consideration received intransactions involving products or services other than the Product or (ii) concessions from any government or governmental authority relating to products orservices other than the Product. Section 4.3 Reports and Accounting. (a) Reports; Payments. Ikaria shall deliver to BioLineRx, within [**] days after the end of each calendar quarter, reasonably detailed writtenaccountings of Net Sales of Products that are subject to payment obligations to BioLineRx for such calendar quarter. Such quarterly reports shall indicate(i) gross sales and Net Sales on a country-by-country basis, (ii) the calculation of payment amounts owed to BioLineRx from such gross sales and Net Sales,and (iii) any amounts set off pursuant to Section 4.2(b) against payments owed to BioLineRx. When Ikaria delivers such accounting to BioLineRx, Ikariashall also deliver all amounts due under Section 4.2 to BioLineRx for the calendar quarter. All payments shall be made by wire transfer to the accountspecified in Schedule 4.3(a). (b) Audits by BioLineRx. Ikaria shall keep, and shall require its Affiliates and Licensees to keep, complete and accurate records of the mostrecent [**] years relating to gross sales and Net Sales and all information relevant under Section 4.1 and Section 4.2. For the sole purpose of verifyingamounts payable to BioLineRx, BioLineRx shall have the right no more than [**] per calendar year, at BioLineRx’s expense, to engage independentaccountants to review such records in the location(s) where such records are maintained by Ikaria, its Affiliates, and its Licensees upon reasonable notice andduring regular business hours. Prior to any review conducted pursuant to this Section 4.3(b), BioLineRx’s accountants shall have entered into a writtenagreement with Ikaria limiting the use of such records to verification of the accuracy of payments due under this Agreement and prohibiting the disclosure ofany information contained in such records to a Third Party and to BioLineRx for a purpose other than as set forth in this Section 4.3(b). The right to auditany royalty report or quarterly report or payment shall extend for [**] years from the end of the calendar year in which such royalty report or quarterly reportwas delivered or such payment made. Results of such review shall be made available to Ikaria. If the review reflects an underpayment to BioLineRx, suchunderpayment shall be promptly remitted to BioLineRx. Likewise, if the review reflects an overpayment, Ikaria shall be entitled 17 to reduce any subsequent payments by the amount of the overpayment. If the underpayment to BioLineRx is equal to or greater than [**] percent ([**]%) ofthe amount that was otherwise due, BioLineRx shall be entitled to have Ikaria reimburse BioLineRx’s reasonable out-of-pocket costs of such review. Section 4.4 Currency Amounts. All dollar ($) amounts specified in this Agreement are United States Dollar amounts. Section 4.5 Currency Exchange. With respect to sales of Products invoiced in U.S. Dollars and other amounts received or paid by Ikaria, itsAffiliates or Licensees in U.S. Dollars, such amounts and the amounts payable hereunder shall be expressed in U.S. Dollars. With respect to sales of Productsinvoiced in a currency other than U.S. Dollars and other amounts received or paid by Ikaria, its Affiliates or Licensees in a currency other than U.S. Dollars,such amounts and the amounts payable hereunder shall be expressed in their U.S. Dollar equivalent calculated using the applicable rate of exchange reportedby The Wall Street Journal (Eastern U.S. edition) on the last Business Day of the calendar quarter to which the report under Section 4.3(a) relates. Allpayments hereunder shall be made in U.S. Dollars. Section 4.6 Tax Withholding. The Parties shall use all reasonable and legal efforts to reduce tax withholding on payments made to BioLineRx. The Parties agree to cooperate in good faith to provide one another with such documents and certifications as are reasonably necessary to enable Ikaria tominimize any withholding tax obligations. Ikaria shall promptly provide to BioLineRx documentation of the payment of any withholding taxes that arepaid pursuant to this Section 4.6, including copies of receipts or other evidence reasonably required and sufficient to allow BioLineRx to document such taxwithholdings adequately for purposes of claiming foreign tax credits and similar benefits. Section 4.7 Upfront Payments Received Under Sublicenses. If Ikaria receives an upfront payment consideration under a sublicense granted to aThird Party under this Agreement, Ikaria shall pay to BioLineRx ten percent (10%) of any such payment within 30 days after actual receipt thereof from theThird Party. Article VIntellectual Property Ownership, Protection and Related Matters Section 5.1 Ownership of Inventions. (a) Intentionally Omitted. (b) Intentionally Omitted. (c) Inventorship. Questions of inventorship shall be resolved in accordance with United States patent laws. In the event of a dispute regardinginventorship, if the Parties are unable to resolve the dispute, the Parties shall jointly engage mutually acceptable independent patent counsel not regularlyemployed by either Party to resolve such dispute. The decision of such independent patent counsel shall be binding on the Parties with respect to the issue ofinventorship. 18 (d) Further Actions and Assignments. Each Party shall take all further actions and execute all assignments requested by the other Party andreasonably necessary or desirable to vest in the other Party the ownership rights set forth in this Section 5.1. Section 5.2 Prosecution and Maintenance of Patent Rights. (a) Intentionally Omitted. (b) BioLineRx Intellectual Property. Upon the Effective Date, Ikaria shall assume responsibility for the management of the preparation, filingprosecution and maintenance of any and all patent applications, including any interference proceedings related thereto, included in the BioLineRxIntellectual Property (including, for clarity, the Sublicensed IP, BioLineRx Patent Rights and patents and patent applications that claim or discloseBioLineRx Know-How). (c) BioLineRx Step-in Right. If Ikaria, on a country-by-country basis, declines to file and prosecute, or elects not to take actions necessary toavoid abandonment of, any patent applications or maintain any patent in any country, in each case for which it has responsibility under Section 5.2(a) orSection 5.2(b), it shall give BioLineRx reasonable notice to this effect sufficiently in advance to permit BioLineRx to undertake such filing and prosecutionwithout a loss of rights, and thereafter BioLineRx may, upon written notice to Ikaria, file and prosecute such patent applications and maintain such patents insuch country. If BioLineRx files, prosecutes or maintains any such patent application or patent in such country and any resulting Valid Claim of BioLineRxPatent Rights constitutes the only BioLineRx Patent Rights Covering the Product in such country (i.e., there are no other BioLineRx Patent Rights Coveringthe Product in such country), then [**]. If BioLineRx exercises the foregoing step-in right following the election by Ikaria to abandon all existing BioLineRx Patent Rights in a givencountry, Ikaria shall, within [**] days following BioLineRx’s written request, notify BioLineRx in writing whether Ikaria intends to Commercialize a Productin the Field in such country. If Ikaria notifies BioLineRx that Ikaria has no intent to Commercialize a Product in the Field in such country, BioLineRx may,upon written notice to Ikaria within [**] days of receipt of Ikaria’s notice of lack of intent, exercise a right to directly Commercialize a Product in the Field insuch country. If BioLineRx provides Ikaria with such notice: [**]. (d) Costs and Expenses. Ikaria shall pay the costs and expenses of preparing, filing, prosecuting, and maintaining the Patent Rights covered bySection 5.2(a) or Section 5.2(b), [**]. 19 (e) Cooperation Between Parties. Each Party agrees to cooperate with the other with respect to the preparation, filing, prosecution andmaintenance of Patent Rights pursuant to this Section 5.2, including the execution of all such documents and instruments and the performance of such acts asmay be reasonably necessary in order to permit the other Party to continue any preparation, filing, prosecution or maintenance of such Patent Rights,including Patent Rights that such Party has elected not to pursue, as provided for in subsections (a), (b) and (c) above. In addition, the filing, prosecuting andmaintaining Party in subsections (a), (b) and (c) above shall promptly forward to the other Party copies of any substantive correspondence and actionsprepared for or received from the U.S. Patent and Trademark Office or any foreign patent office that may materially affect the Patent Rights being prosecutedor maintained. The other Party’s patent counsel may provide comments to the filing, prosecuting and maintaining Party. If any comments by the otherParty’s patent counsel are provided in sufficient time for the filing, prosecuting and maintaining Party to reflect such comments in its correspondence orresponse, and such comments are reasonably directed to maximizing the coverage of the claims of the Patent Rights being prosecuted or maintained, thefiling, prosecuting and maintaining Party shall reflect such comments in its correspondence or response, if its patent counsel deems it prudent to do so. (f) Coordination with BioLineRx pursuant to the Sublicensed IP. With respect to any Sublicensed IP which Ikaria is responsible for filing,prosecuting, and maintaining, Ikaria shall: (i) consult with BioLineRx regarding the preparation, filing, and prosecution of all patent applications, and the maintenance of allpatents, included within such Sublicensed IP, including the content, timing, and jurisdiction of the filing of such patent applications and their prosecution,and other details and overall global strategy pertaining to the procurement and maintenance of Patent Rights in such Sublicensed IP, and shall file, prosecute,and maintain all such Patent Rights through a law or patent attorney firm selected by Ikaria and approved by BioLineRx (and BioLineRx shall exercise itsrights under the BGN License Agreement as may be necessary to obtain BGN’s approval); and (ii) provide BioLineRx with copies of all patent applications that claim or disclose such Sublicensed IP, and BioLineRx shall exerciseits rights under the BGN License Agreement to ensure that BGN cooperates in a timely manner with Ikaria’s efforts to register such Patent Rights, includingby causing BGN to execute any documents as may be required for such purpose. BioLineRx shall take all actions required to remain in compliance with the BGN License Agreement in connection with the foregoing. Section 5.3 Third Party Infringement. (a) Notice. Each Party shall promptly report in writing to the other Party during the term of this Agreement any (i) known or suspectedinfringement of any of the BioLineRx Patent 20 Rights or (ii) unauthorized use of any of the BioLineRx Know-How of which such Party becomes aware, including, in the case of either clause (i) or clause(ii) involving, or that may reasonably lead to, the Development, Manufacture, use or Commercialization of a product or product candidate that is or may becompetitive with a Product in the Field (“Competitive Infringement”), and shall provide the other Party with all available evidence supporting suchinfringement, suspected infringement, unauthorized use or suspected unauthorized use. (b) BioLineRx Intellectual Property; Step-in Rights. (i) Ikaria shall have the first right, but not the obligation, to initiate a suit or take other appropriate action that either Party reasonablybelieves is required to protect BioLineRx Intellectual Property from Competitive Infringement . Ikaria shall give BioLineRx sufficient advance notice of itsintent to file any such suit or take any such action, and the reasons therefor, and shall provide BioLineRx with an opportunity to make suggestions andcomments regarding such suit or action. Thereafter, Ikaria shall keep BioLineRx informed, and shall from time to time consult with BioLineRx regarding thestatus of any such suit or action and shall provide BioLineRx with copies of all material documents (i.e., complaints, answers, counterclaims, materialmotions, orders of the court, memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial filings, expert reports, affidavits filedin court, transcripts of hearings and trial testimony, trial exhibits and notices of appeal) filed in, or otherwise relating to, such suit or action. Any recoveryobtained as a result of any proceeding pursuant to this subsection (b)(i), by settlement or otherwise, shall be applied in the following order of priority:(A) first, each Party shall be reimbursed, on a pro rata basis, for all costs incurred by such Party in connection with such suit; and (B) second, [**]. (ii) If Ikaria chooses not to initiate a suit or take other appropriate action under subsection (b)(i) above to protect BioLineRxIntellectual Property from Competitive Infringement, Ikaria will so notify BioLineRx of its intention, in which case BioLineRx shall have the right to initiatesuch suit or take such other appropriate action. BioLineRx shall give Ikaria sufficient advance notice of its intent to file any such suit or take any suchaction, and the reasons therefor, and shall provide Ikaria with an opportunity to make suggestions and comments regarding such suit or action. Thereafter,BioLineRx shall keep Ikaria informed, and shall from time to time consult with Ikaria regarding the status of any such suit or action and shall provide Ikariawith copies of all material documents (i.e., complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and legal briefs,interrogatory responses, depositions, material pre-trial filings, expert reports, affidavits filed in court, transcripts of hearings and trial testimony, trial exhibitsand notices of appeal) filed in, or otherwise relating to, such suit or action. Any recovery obtained as a result of any proceeding pursuant to this subsection(b)(ii), by settlement or otherwise, shall be applied in the following order of priority: (A) first, each Party shall be reimbursed, on a pro rata basis, for all costsincurred by such Party in connection with such suit; and (B) second, any remainder shall be shared [**]% for BioLineRx and [**]% for Ikaria. (iii) If BioLineRx chooses not to initiate a suit or take other appropriate action under subsection (b)(ii) above to protect Sublicensed IPfrom Competitive Infringement and 21 BGN exercises its rights under the BGN License Agreement to prosecute, prevent, or terminate such Competitive Infringement, any amount received byBioLineRx in connection therewith, whether by settlement or otherwise, [**]. (c) Claimed Infringement. If a Party becomes aware of any claim that the Development, Manufacture, or Commercialization of Products for usein the Field in the Territory infringes Patent Rights or any other intellectual property rights of any Third Party, such Party shall promptly notify the otherParty. In any such instance, Ikaria shall have the exclusive right to settle such claim. (d) Patent Invalidity Claim. If a Third Party at any time asserts a claim that any BioLineRx Patent Rights is invalid or otherwise unenforceable(an “Invalidity Claim”), whether (i) as a defense in an infringement action brought by Ikaria or BioLineRx pursuant to subsection (b) above, or (ii) in anaction brought against Ikaria or BioLineRx referred to in subsection (c) above, or (iii) otherwise, the Parties shall cooperate with each other in preparing andformulating a response to such Invalidity Claim. Neither Party shall settle or compromise any Invalidity Claim without the consent of the other Party, whichconsent shall not be unreasonably withheld, conditioned or delayed. (e) Conduct of Certain Actions; Costs. Ikaria shall have the sole and exclusive right to select counsel for any suit initiated by it referenced insubsection (b)(i) above or against it referenced in subsection (c) above, and BioLineRx shall have the sole and exclusive right to select counsel for any suitinitiated by it referenced in subsection (b)(ii) above. If required under applicable law in order for a Party (the “Lead Party”) to initiate or maintain such suit,the other Party shall join as a party to the suit. Such other Party shall offer reasonable assistance to the Lead Party in connection therewith at no charge to theLead Party except for reimbursement of such other Party’s reasonable out-of-pocket expenses incurred in rendering such assistance. The Lead Party shallassume and pay all of its own out-of-pocket costs incurred in connection with any litigation or proceedings referenced in the first sentence of this subsection(e), including the fees and expenses of the counsel selected by it. Subject to applicable law, the other Party shall have the right to participate and berepresented in any such suit by its own counsel at its own expense. (f) Coordination with BGN. With respect to any suit to protect Sublicensed IP from infringement for which Ikaria is the Lead Party,notwithstanding anything to the contrary in this Section 5.3: (i) if required under applicable law in order for Ikaria to initiate or maintain such suit, BioLineRx shall (A) exercise its rights underthe BGN License Agreement to cause BGN to join as a party to such suit, (B) exercise its rights under the BGN License Agreement to obtain BGN’s approvalof counsel selected by Ikaria to represent Ikaria and BGN in such suit, and (C) [**]; (ii) Ikaria shall not compromise or settle such suit without the prior written consent of BGN, which consent BioLineRx shall exerciseits rights under the BGN License Agreement to obtain; and 22 (iii) any recovery obtained by Ikaria as a result of such suit, by settlement or otherwise, shall be applied in the following order ofpriority: (A) first, each Party shall be reimbursed, on a pro rata basis, for all costs incurred by such Party in connection with such suit (for clarity, BioLineRxshall be reimbursed for any costs of BGN paid by BioLineRx in accordance with clause (i)(C) above); (B) second, [**] percent ([**]%) of any remainder shallpaid to BioLineRx for remittance to BGN as provided in Section 10.1.2 of the BGN License Agreement ; and (C) third, the remaining [**] percent ([**]%)shall be retained by Ikaria; [**]. Article VIConfidentiality; Non-Solicitation; Standstill Section 6.1 Confidential Information. Each Party agrees that all Confidential Information disclosed to it or its Affiliates by the other Party (a) shallnot be used by the receiving Party or its Affiliates except to fulfill its obligations or exercise its rights under this Agreement, (b) shall be maintained inconfidence by the receiving Party and its Affiliates, and (c) shall not be disclosed by the receiving Party or its Affiliates to any Third Party who is not aconsultant of, or an advisor to, the receiving Party or its Affiliates without the prior written consent of the disclosing Party, which consent the disclosing Partymay withhold in its sole discretion. Notwithstanding the foregoing, either Party may disclose Confidential Information of the other Party if such Party isrequired to make such disclosure by applicable law, regulation or legal process, including by Israeli securities laws, the rules or regulations of the UnitedStates Securities and Exchange Commission (the “SEC”) or any similar regulatory agency in a country other than the United States or of any stock exchange,including the Tel Aviv Stock Exchange, in which event such Party shall provide prior notice of such intended disclosure to such other Party, if possibleunder the circumstances, and shall disclose only such Confidential Information of the other Party as is required to be disclosed. If this Agreement shall beincluded in any report, statement or other document filed by either Party or an Affiliate of either Party pursuant to the preceding sentence, such Party shalluse, or shall cause its Affiliate, as the case may be, to use, reasonable efforts to obtain confidential treatment from the SEC, similar regulatory agency or stockexchange of any financial information or other information of a competitive or confidential nature, and shall include in such confidentiality request suchprovisions of this Agreement as may be reasonably requested by the other Party. Section 6.2 Disclosures to Employees, Consultants, Advisors, Etc. Each Party agrees that it and its Affiliates shall provide ConfidentialInformation received from the other Party only to the receiving Party’s respective employees, consultants, advisors, Licensees and potential Licensees, and tothe employees, consultants and advisors of the receiving Party’s Affiliates, who have a need to know such Confidential Information to assist the receivingParty in fulfilling its obligations under this Agreement and only under conditions of confidentiality and non-use at least as stringent as the conditionsimposed by this Agreement, provided that BioLineRx and Ikaria shall each remain responsible for any failure by its and its Affiliates’ respective employees,consultants, advisors, Licensees and potential Licensees to treat such information and materials as required under Section 6.1. For clarity, (a) Ikaria ispermitted to disclose Confidential Information to actual or potential Licensees, acquirors or financing sources; and (b) BioLineRx is permitted to disclosethis Agreement and the Development Plan to BGN, solely to 23 the extent required under the BGN License Agreement; provided that any such disclosure subjects the receiving Third Party to conditions of confidentialityand non-use at least as stringent as the conditions imposed by this Agreement. Section 6.3 Non-Solicitation. During the term of this Agreement and continuing for [**] months after the termination of this Agreement, neitherParty shall directly or indirectly, for its own account or for the account of others, urge, induce, entice, or in any manner whatsoever solicit any employeedirectly involved in the activities conducted pursuant to this Agreement to leave the employment of the other Party or any of its Affiliates. For purposes ofthe foregoing, “urge”, “induce”, “entice” or “solicit” shall not be deemed to mean: (a) circumstances where an employee of a Party initiates contact with theother Party or any of its Affiliates with regard to possible employment; or (b) general solicitations of employment not specifically targeted at employees of aParty or any of its Affiliates, including responses to general advertisements. Section 6.4 Standstill. Neither Ikaria nor any of its Affiliates shall directly or indirectly, for its own account or for the account of others, acquiremore than [**] of the equity or debt securities of BioLineRx, or urge, induce, entice or solicit any Third Party to acquire the equity or debt securities ofBioLineRx, in either case without the consent of BioLineRx, which may be withheld in its sole discretion. The obligations of Ikaria under this Section 6.4shall terminate in the event that (a) any Third Party initiates a tender or exchange offer, or otherwise publicly proposes or agrees to acquire, a majority of theequity or debt securities of BioLineRx (provided that the restrictions set forth in this Section 6.4 shall be reinstated in the event that such tender or exchangeoffer, or proposal, is terminated or withdrawn), (b) it is publicly disclosed that voting securities representing at least [**] of the total voting power ofBioLineRx have been acquired by any one or more Third Parties, (c) BioLineRx publicly announces that it intends to seek a Third Party acquirer (providedthat the restrictions set forth in this Section 6.4 shall be reinstated in the event that BioLineRx publicly announces that it no longer is seeking a Third Partyacquirer and so notifies Ikaria in writing), (d) BioLineRx enters into any agreement to merge with, or sell or dispose of [**] or more of its assets or securities,or (e) this Agreement is terminated pursuant to Article VIII. BioLineRx shall provide Ikaria with prompt written notice of the occurrence of any of theforegoing events to the extent permitted under applicable law. For clarity, the acquisition by any employee benefit plan of Ikaria or its Affiliates in anydiversified index, mutual or pension fund, which fund in turn holds BioLineRx securities, shall not be deemed a breach of this Section 6.4. Section 6.5 Term. All obligations of confidentiality imposed under this Article VI shall survive until the date that is [**] years after the expirationor termination of this Agreement. Section 6.6 Publicity. During the term of this Agreement, the content of any press release or public announcement relating to this Agreement or aProduct shall be mutually approved by the Parties, except that (a) a Party may issue such press release or public announcement if the contents of such pressrelease or public announcement have previously been made public other than through a breach of this Agreement by the issuing Party, (b) a Party may issuesuch a press release or public announcement if it is advised by counsel that such press release or public announcement is required by applicable law,regulation or legal process, including by Israeli securities laws, the rules or regulations of the SEC or any similar regulatory agency in a country 24 other than the United States or of any stock exchange, including the Tel Aviv Stock Exchange, and (c) Ikaria shall remain free to issue press releases andpublic announcements regarding the Development, Manufacturing, Commercialization and use of Products in the Field, provided that Ikaria shall provideBioLineRx with advance notice of at least [**] days prior to public disclosure of such releases and announcements or such shorter period as required tocomply with any applicable law. In addition, BioLineRx shall reasonably implement any changes that Ikaria may recommend with respect to any filing to bemade in accordance with the rules or regulations of the SEC or any similar regulatory agency in a country other than the United States or of any stockexchange, including the Tel Aviv Stock Exchange; provided that such Ikaria shall only have the right to comment upon portions of such filings that directlyrelated to Ikaria or this Agreement. Nothing in the foregoing shall require BioLineRx to implement any change that Ikaria may recommend that is notconsistent with the rules or regulations of the Israel Securities Authority, Tel Aviv Stock Exchange, the rules or regulations of the SEC, or any similarregulatory agency in a country other than the United States or Israel, as advised in writing by BioLineRx’s legal counsel. BioLineRx’s legal counsel willprovide Ikaria confirmation of such advise. Section 6.7 Publications. The results of the Development Program may be published by a Party as part of a scientific presentation or publicationonly after scientific review by and approval of the Joint Development Committee unless the other Party, acting reasonably, disapproves of the presentation orpublication in writing within [**] days after receipt of the presentation or publication. Either Party may require that such Party’s Confidential Information beredacted from such presentation or publication and may reasonably require that other information also be redacted. In addition, at the request of either Party,the date of submission for presentation or publication shall be delayed for a period of time sufficiently long to permit a Party to seek appropriate patentprotection. Other than as provided for herein, BioLineRx shall not make any publication regarding any Product or containing any Confidential Informationof Ikaria without the prior written consent of Ikaria. Notwithstanding the foregoing, to the extent necessary or appropriate as determined in Ikaria’sdiscretion, Ikaria may disclose information otherwise covered by this Section 6.7 in documents filed with the SEC. Article VIIRepresentations and Warranties Section 7.1 Representations of Authority. BioLineRx and Ikaria each represents and warrants to the other Party that, except for the consent of theOCS, it has full corporate right, power and authority to enter into this Agreement and to perform its respective obligations under this Agreement and that ithas the right to grant to the other Party the rights and licenses granted pursuant to this Agreement. Section 7.2 Consents. BioLineRx and Ikaria each represents and warrants to the other Party that, except for the consent of the OCS, all necessaryconsents, approvals and authorizations of all government authorities and other Persons required to be obtained by it as of the date hereof in connection withthe execution, delivery and performance of this Agreement have been obtained. 25 Section 7.3 No Conflict. BioLineRx and Ikaria each represents and warrants to the other Party that, notwithstanding anything to the contrary inthis Agreement, except for the consent of the OCS, the execution and delivery of this Agreement, the performance of such Party’s obligations in the conductof the collaboration and the licenses and rights to be granted pursuant to this Agreement (a) do not conflict with or violate any requirement of applicable lawsor regulations existing as of the date hereof and (b) do not conflict with, violate, breach or constitute a default under any contractual obligations of such Partyor any of its Affiliates existing as of the date hereof. Section 7.4 Enforceability. BioLineRx and Ikaria each represents and warrants to the other Party that this Agreement is a legal and validobligation binding upon it and is enforceable against it in accordance with its terms. Section 7.5 Additional BioLineRx Representations. BioLineRx represents and warrants to Ikaria that: (a) BioLineRx has the right to grant the licenses granted to Ikaria on the terms set forth in this Agreement; (b) BioLineRx is not engaged with any Third Party in any Development efforts directed to Products in the Field in the Territory other than withrespect to the On-Going Phase I/II Trial, the Other On-Going Trials or the Existing Product Agreements; (c) BioLineRx has provided Ikaria with true and complete copies of each of the Existing Product Agreements, each of which is in full force andeffect in accordance with its terms as of the date hereof, and has obtained all consents necessary for the assignment to Ikaria of each of the Existing ProductAgreements hereunder, and, following such assignment, Ikaria shall have the legal right to exercise all rights of BioLineRx that existed thereunderimmediately prior to such assignment; (d) to BioLineRx’s Knowledge, the BioLineRx Patent Rights listed in Exhibit B are valid and enforceable and constitute all of the PatentRights necessary or useful for Ikaria to fully exercise and enforce its rights hereunder; (e) to BioLineRx’s Knowledge, the BioLineRx Patent Rights are not being infringed and the BioLineRx Know-How is not beingmisappropriated by any Third Party; (f) BioLineRx owns the entire right, title and interest in and to the BioLineRx Intellectual Property (other than the Sublicensed IP) free andclear of any liens, charges, claims and encumbrances, and no other Person has any claim of ownership or right to obtain compensation with respect to suchBioLineRx Intellectual Property; (g) to BioLineRx’s Knowledge, the Products developed in the Development Program and the Development, Manufacture andCommercialization of such Products will not infringe or misappropriate any intellectual property rights not licensed to Ikaria hereunder; and (h) BioLineRx has not received and has no Knowledge of any claim or demand of any Person pertaining to, or any proceeding which ispending or threatened that asserts, the 26 invalidity, misuse or unenforceability of the BioLineRx Patent Rights or that challenges BioLineRx’s ownership of the BioLineRx Intellectual Property orthat makes any adverse claim with respect thereto, and, to the Knowledge of BioLineRx, there is no basis for any such claim, demand or proceeding. Section 7.6 BGN License Agreement. BioLineRx represents, warrants and covenants to Ikaria that: (a) BioLineRx has provided Ikaria with a true and complete copy of the BGN License Agreement, which is in full force and effect inaccordance with its terms as of the date hereof; (b) BioLineRx shall obtain and provide to Ikaria within ten (10) days of execution of this Agreement a written statement from BGN certifyingthat the terms of this Agreement are consistent with those of the BGN License Agreement, including in the context of Section 13.4.1(c) thereof; (c) BioLineRx has (i) achieved by its designated performance date each Milestone (as that term is defined in the BGN License Agreement)having a designated performance date on or before the date hereof, or obtained a waiver in respect thereof, and (ii) neither (A) committed any material breachof the its obligations under the BGN License Agreement nor (B) received any notice from BGN of any alleged material breach thereof by BioLineRx or of anyFailure (as that term is defined therein); (d) BioLineRx shall upon receipt by BioLineRx promptly provide Ikaria with a copy of any notice from BGN described in the foregoing clause(c)(ii)(B); (e) BioLineRx shall not terminate, amend, supplement or otherwise modify the BGN License Agreement without Ikaria’s prior written consent; (f) the rights and obligations of BioLine Jerusalem L.P. under the BGN License Agreement have been assigned and delegated, or otherwisetransferred, to BioLineRx; (g) as between BioLineRx and Ikaria, BioLineRx shall be responsible for any and all payments to be made under the BGN License Agreement; (h) in the event of any termination of the BGN License Agreement, BioLineRx shall, at Ikaria’s request, provide all reasonable assistance toIkaria in Ikaria’s efforts to obtain from BGN an exclusive license to the Sublicensed IP, including through enforcement of the provisions of Sections 5.2.3 and13.4.1(c) of the BGN License Agreement. Section 7.7 Employee, Consultant and Advisor Legal Obligations. BioLineRx and Ikaria each represents and warrants that each of its and itsAffiliates’ employees, consultants and advisors who is or will be involved in performing any obligations hereunder has executed or will have executed anagreement or have an existing obligation under law requiring assignment to such Party of all intellectual property made during the course of and as the resultof his, her or its association with such Party or such Affiliate, and obligating such employee, consultant or advisor to maintain the confidentiality ofConfidential Information to the extent required under 27 Article VI. BioLineRx and Ikaria each represents and warrants that, to its Knowledge, none of its or its Affiliates’ employees, consultants or advisors who isor will be involved in performing any obligations hereunder is, as a result of the nature of such obligations to be performed by the Parties, in violation of anycovenant in any contract relating to non-disclosure of proprietary information, non-competition or non-solicitation. Section 7.8 Accuracy of Representations and Warranties on Effective Date. The representations and warranties of each of the Parties set forth in thepreceding sections of this Article VII remain true and accurate on and as of the Effective Date. Each Party shall promptly following receipt of acceptableconsent from the OCS deliver to the other Party a certificate to such effect executed by its Chief Executive Officer. Section 7.9 No Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE NOREPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING THAT ANY PRODUCTS WILL BEECONOMICALLY OR TECHNICALLY UTILIZABLE, THAT ANY SALES OF ANY PRODUCTS WILL OCCUR, THAT THE DEVELOPMENT PROGRAMACTIVITIES WILL BE COMPLETED IN THE EXPECTED TIMEFRAME, OR THAT ANY PRODUCT WILL BE FREE OF ANY THIRD PARTY RIGHTS. Article VIIITerm and Termination Section 8.1 Term. The term of this Agreement shall begin on the Effective Date, may be terminated as set forth in this Article VIII, and shall expireon a Product-by-Product and country-by-country basis upon the date of expiration of the Royalty Term for such Product in such country, and shall expire inits entirety upon the last-to-expire Royalty Term, unless earlier terminated as set forth in this Article VIII. Section 8.2 Termination for Material Breach. Upon any breach of a material provision of this Agreement by a Party (the “Breaching Party”), theother Party (the “Non-Breaching Party”) may terminate this Agreement by providing ninety (90) days written notice to the Breaching Party specifying thematerial breach. The termination shall become effective at the end of the notice period unless the Breaching Party cures such breach during such noticeperiod. Ikaria may terminate this Agreement pursuant to this Section 8.2 immediately upon any termination of the BGN License Agreement. Section 8.3 Development-Related Termination. Ikaria shall have the right to terminate this Agreement upon sixty (60) days prior written notice, ifIkaria at any time determines, in its sole judgment, that the results of the Development Program do not warrant further Development of Products. Section 8.4 Effect of Certain Terminations and Expiration. (a) If this Agreement is terminated by Ikaria under Section 8.2: 28 (i) The licenses granted by BioLineRx to Ikaria under Section 2.1 and, notwithstanding any other provision in this Agreement to thecontrary, Ikaria’s obligations under Section 4.2, shall survive; (ii) Section 2.2 shall survive until Ikaria is no longer obligated to pay royalties to BioLineRx under Section 4.2; and (iii) Section 5.1 and Section 5.3 shall survive. (b) If this Agreement is terminated by either BioLineRx under Section 8.2, or by Ikaria under Section 8.3, the licenses granted underSection 2.1 shall terminate as of the effective date of such termination; provided, however, that Ikaria, its Affiliates, and its Licensees shall be afforded acommercially reasonable period of time (but no less than [**] months) to sell off any then existing or in process stocks of the Products, subject to the termsand conditions of this Agreement, including the payment of royalties thereon. (c) Upon any termination or expiration of this Agreement, each Party shall return to the other Party any tangible property owned by the otherParty, including any books and records and Confidential Information, in accordance with the reasonable instructions given by the other Party, with anyshipping costs to be borne by the other Party, provided, however, that a Party may retain a copy of any regulatory records it is required to maintain inaccordance with applicable law. Section 8.5 Survival. In the event of any expiration or termination of this Agreement, (a) all financial obligations under Article IV and Article Vowed as of the effective date of such expiration or termination shall remain in effect, including such obligations that have accrued, but have not beeninvoiced, as of such effective date, and (b) the obligations set forth in Section 5.1, Article VI, Article IX and Article X, and all other terms, provisions,representations, rights and obligations contained in this Agreement that by their express terms survive expiration or termination of this Agreement (includingSection 8.4 and this Section 8.5), shall survive and all other terms, provisions, representations, rights and obligations contained in this Agreement shallterminate. Section 8.6 Termination Prior to Effective Date. Notwithstanding anything to the contrary in this Article VIII, Ikaria may terminate this Agreementprior to the Effective Date, with no liability to BioLineRx, if the OCS does not consent to the Agreement in a form reasonably satisfactory to both Partieswithin forty-five (45) days after the execution of this Agreement. The provisions of Article X (except for Section 10.1(a)) and this Section 8.6 shall survivesuch termination, and all other terms, provisions, representations, rights and obligations contained in this Agreement shall terminate. Article IXDispute Resolution Section 9.1 Negotiation. Any controversy, claim or dispute arising out of or relating to this Agreement shall be settled, if possible, through goodfaith negotiations between the Parties. 29 Section 9.2 Escalation. If the Parties are unable to settle any dispute after good faith negotiations pursuant to Section 9.1 after [**] days, suchdispute (except for any matter that by its express terms shall be resolved as provided in this Agreement, including any matter arising under Section 3.2 orSection 3.6) shall be referred to the Executive Officers to be resolved by negotiation in good faith as soon as is practicable but in no event later than [**] daysafter referral. Section 9.3 Mediation. Solely with respect to a dispute as to whether Ikaria has breached its obligations to use Commercially Reasonable Effortsas set forth in Section 3.8, if the Executive Officers are unable to settle such dispute after good faith negotiations pursuant to Section 9.2 within [**] daysafter referral to the Executive Officers, the Parties shall, within [**] days thereof, engage a mutually agreeable Third Party mediator on a non-binding basis toassist the Parties in determining whether such a breach has occurred. The Parties agree that they will participate in good faith in an effort to resolve thedispute in an informal, inexpensive and expeditious manner and that any mediator selected shall agree to render any judgments in a timely manner, but nolater than [**] days after the mediator is selected. All expenses of the mediator will be shared equally by the Parties. Section 9.4 Litigation. If the Executive Officers are unable to settle any dispute after good faith negotiations pursuant to Section 9.2 (other than adispute as to whether Ikaria has breached its obligations to use Commercially Reasonable Efforts as set forth in Section 3.8) within [**] days after referral, orif the Parties continue to dispute whether Ikaria has breached its obligations to use Commercially Reasonable Efforts as set forth in Section 3.8 followingmediation pursuant to Section 9.3, then either Party may seek resolution of the dispute (except for any matter that by its express terms shall be resolved asprovided in this Agreement, including any matter arising under Section 3.2 or Section 3.6) through remedies available at law or in equity from any court ofcompetent jurisdiction as set forth in Section 10.3. Section 9.5 Equitable Relief. Each Party acknowledges and agrees that the other Party would be damaged irreparably if any of the provisions ofArticle II, Article V and Article VI are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each Party agrees that theother Party shall be entitled to an injunction or other equitable relief to prevent breaches of such provisions, to preserve status quo, and to enforcespecifically such provisions in any action instituted in any court having jurisdiction over the Parties and the matter, in addition to any other remedy to whichit may be entitled, at law or in equity. Article XMiscellaneous Provisions Section 10.1 Indemnification. (a) By Ikaria. Ikaria agrees to defend BioLineRx, its Affiliates and their respective directors, officers, employees and agents at Ikaria’s cost andexpense, and shall indemnify and hold harmless BioLineRx and its Affiliates and their respective directors, officers, employees and agents from and againstany liabilities, losses, costs, damages, fees or expenses (collectively, “Losses”) arising out of any Third Party claim to the extent relating to (i) any breach byIkaria of any of its representations, warranties or obligations pursuant to this Agreement, or (ii) personal 30 injury, property damage, product liability or other damage resulting from the Development, Manufacture, use or Commercialization of a Product by Ikaria orits Affiliates or Licensees, excluding any claim for which BioLineRx indemnifies Ikaria under subsection (b) below. (b) By BioLineRx. BioLineRx agrees to defend Ikaria, its Affiliates and their respective directors, officers, employees and agents atBioLineRx’s cost and expense, and shall indemnify and hold harmless Ikaria and its Affiliates and their respective directors, officers, employees and agentsfrom and against any Losses arising out of any Third Party claim to the extent relating to (i) any breach by BioLineRx of any of its representations, warrantiesor obligations pursuant to this Agreement, (ii) personal injury, property damage or other damage resulting from the conduct of the On-Going Phase I/II Trialor the Other On-Going Trials by or on behalf of BioLineRx or its Affiliates, (iii) the BGN Agreement, or (iv) any allegation that the practice of the BioLineRxIntellectual Property rights in the Development Program infringes or misappropriates any Third Party intellectual property rights, to the extent BioLineRxhad Knowledge that such practice would infringe or misappropriate such Third Party intellectual property rights on or before the Effective Date. (c) Claims for Indemnification. A Person entitled to indemnification under this Section 10.1 (an “Indemnified Party”) shall give prompt writtennotification to the Party from whom indemnification is sought (the “Indemnifying Party”) of the commencement of any action, suit or proceeding relating toa Third Party claim for which indemnification may be sought or, if earlier, upon the assertion of any such claim by a Third Party (it being understood andagreed, however, that the failure by an Indemnified Party to give notice of a Third Party claim as provided in this Section 10.1(c) shall not relieve theIndemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually damaged asa result of such failure to give notice). Within [**] days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to theIndemnified Party, assume control of the defense of such action, suit, proceeding or claim with counsel reasonably satisfactory to the Indemnified Party. Ifthe Indemnifying Party does not assume control of such defense, the Indemnified Party shall control such defense. The Party not controlling such defensemay participate therein at its own expense. The Party controlling such defense shall keep the other Party advised of the status of such action, suit, proceedingor claim and the defense thereof and shall consider recommendations made by the other Party with respect thereto. The Indemnified Party shall not agree toany settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which consent the Indemnifying Partyshall not unreasonably withhold, condition or delay. The Indemnifying Party shall not agree, without the prior written consent of the Indemnified Party,which consent the Indemnified Party shall not unreasonably withhold, condition or delay, to any settlement of such action, suit, proceeding or claim orconsent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respectthereto or that imposes any liability or obligation on the Indemnified Party. Section 10.2 Governing Law. This Agreement shall be construed and the respective rights of the Parties determined in accordance with the laws ofthe State of New York, USA (other than any principle of conflict or choice of laws that would cause the application of the laws of any other jurisdiction). 31 Section 10.3 Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of any state or federal court sitting in the State of New York, USAin any action or proceeding arising out of or relating to this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard anddetermined in any such court, (c) waives any claim of inconvenient forum or other challenge to venue in such court, and (d) agrees not to bring any action orproceeding arising out of or relating to this Agreement in any other court, unless the state or federal courts sitting in the State of New York decline to exercisejurisdiction over any such action or proceeding or if those courts lack proper jurisdiction, then any action or proceeding arising out of or relating to thisAgreement may be brought in any other U.S. court of competent jurisdiction. Each Party agrees to accept service of any summons, complaint or other initialpleading made in the manner provided for the giving of notices in Section 10.6, provided that nothing in this Section 10.3 shall affect the right of either Partyto serve such summons, complaint or other initial pleading in any other manner permitted by law. Section 10.4 Assignment. Ikaria may assign this Agreement or any right hereunder, or delegate any obligation hereunder, in its sole discretion, to(a) any Affiliate of Ikaria or (b) any entity acquiring all or substantially all of the assets of Ikaria Holdings, Inc. and its Affiliates. All other assignments byIkaria, including (i) to any entity acquiring all or substantially all of the assets of Ikaria to which this Agreement relates or (ii) to any entity with which or intowhich Ikaria may consolidate or merge, are subject to BioLineRx’s prior approval, which approval shall not be unreasonably withheld, conditioned ordelayed. BioLineRx may assign its right to receive payments hereunder to a Third Party, in its sole discretion, but BioLineRx shall not otherwise bepermitted to assign this Agreement, in whole or in part, without the prior written consent of Ikaria, which approval shall not be unreasonably withheld,conditioned or delayed. Any assignments in contravention of this Section 10.4 shall be null and void. Section 10.5 Entire Agreement; Amendments. This Agreement constitutes the entire agreement between the Parties with respect to the subjectmatter hereof, and supersedes all previous arrangements between the Parties with respect to the subject matter hereof, whether written or oral, except for thatcertain Mutual Non Disclosure Agreement between the Parties dated February 25, 2009. Without limiting the generality of the foregoing, this Agreementhereby supersedes and replaces in its entirety the License and Commercialization Agreement by and among the parties dated as of July 5, 2009. To theextent that any provision of this Agreement conflicts with any provisions of such Mutual Non Disclosure Agreement, the provision of this Agreement shallcontrol. Except as set forth in Section 2.1(iv), any amendment or modification to this Agreement shall be made in writing signed by both Parties. Section 10.6 Notices. Notices to Ikaria shall be addressed to: Ikaria Development Subsidiary One LLC6 State Route 173Clinton, NJ 08809, USAAttention: Chief Executive Officer with copy to: 32th Ikaria Holdings, Inc.6 State Route 173Clinton, NJ 08809, USAAttention: General Counsel Notices to BioLineRx Ltd. shall be addressed to: BioLineRx Ltd.19 Hartum StreetP.O. Box 45158Jerusalem 91450, IsraelAttention: Chief Executive Officer with copy to: Arent Fox LLP1050 Connecticut AvenueWashington, DC 20036, USAAttention: John Dwyer, Esq. Notices to BioLine Innovations Jerusalem L.P. shall be addressed to: BioLine Innovations Jerusalem L.P.19 Hartum StreetP.O. Box 45158Jerusalem 91450, IsraelAttention: Chief Executive Officer with copy to: Arent Fox LLP1050 Connecticut AvenueWashington, DC 20036, USAAttention: John Dwyer, Esq. Any Party may change its address by giving notice to the other Party in the manner herein provided. Any notice required or provided for by the terms of thisAgreement shall be in writing and shall be (a) sent by registered or certified mail, return receipt requested, postage prepaid, (b) sent via a reputableinternational courier service, (c) sent by facsimile transmission, or (d) personally delivered, in each case properly addressed in accordance with the paragraphabove. The effective date of notice shall be the actual date of receipt by the Party receiving the same. Section 10.7 Force Majeure. No failure or omission by a Party in the performance of any obligation of this Agreement shall be deemed a breach ofthis Agreement or create any liability if the same shall arise from any cause or causes beyond the control of such Party, including the following: acts of God;fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; and invasion (each such event, a “Force Majeure Event”) and provided that suchParty cures such 33 failure or omission resulting from one of the above causes as soon as is practicable after the occurrence of one or more of the above-mentioned causes. Section 10.8 Independent Contractors. It is understood and agreed that the relationship between the Parties hereunder is that of independentcontractors and that nothing in this Agreement shall be construed as authorization for either BioLineRx or Ikaria to act as agent for the other. Section 10.9 Limitations of Liability. NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL,EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOSTPROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHINGIN THIS SECTION 10.9 IS INTENDED TO LIMIT OR RESTRICT (A) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY WITHRESPECT TO THIRD PARTY CLAIMS; (B) ANY LOSSES, INCLUDING LOST PROFITS, ARISING FROM ANY (I) BREACH OF A PARTY’SOBLIGATIONS WITH RESPECT TO THE OTHER PARTY’S CONFIDENTIAL INFORMATION, (II) BREACH BY BIOLINERX OF THE EXCLUSIVERIGHTS GRANTED IN SECTION 2.1 OR THE COVENANT CONTAINED IN SECTION 2.2, OR (III) USE OF ANY PATENT RIGHTS OR KNOW-HOWLICENSED HEREUNDER BEYOND THE SCOPE OF SUCH LICENSE; OR (C) ANY LOSSES ARISING AS A RESULT OF A PARTY’S FRAUD, GROSSNEGLIGENCE OR WILLFUL MISCONDUCT. Section 10.10 No Implied Waivers; Rights Cumulative. No failure on the part of BioLineRx or Ikaria to exercise, and no delay in exercising, anyright, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute awaiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence thereto, nor shall anysingle or partial exercise of any such right, power, remedy or privilege preclude any further or other exercise thereof or the exercise of any other right, power,remedy or privilege. Section 10.11 Severability. If, under applicable law or regulation, any provision of this Agreement is invalid, incomplete or unenforceable, orotherwise directly or indirectly affects the validity of any other material provision(s) of this Agreement (such invalid, incomplete or unenforceable provision,a “Severed Clause”), this Agreement shall endure except for the Severed Clause. The Parties shall consult one another and use reasonable efforts to agreeupon a valid, complete and enforceable provision that is a reasonable substitute for the Severed Clause in view of the intent of this Agreement. Section 10.12 Execution in Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts, each of which, when so executedand delivered, shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument even if both Parties have notexecuted the same counterpart. Signatures provided by facsimile transmission shall be deemed to be original signatures. REMAINDER OF PAGE LEFT EMPTY; NEXT PAGE IS THE SIGNATURE PAGE 34 IN WITNESS WHEREOF, the Parties have executed this License and Commercialization Agreement as of the Effective Date. IKARIA DEVELOPMENT SUBSIDIARY ONE LLC By:/s/ Matthew M. Bennett Name:Matthew M. Bennett Title:Senior Vice President BIOLINERX LTD. By:/s/ Morris Laster M.D. Name:Morris Laster M.D. Title:CEO BIOLINE INNOVATIONS JERUSALEM L.P.by its General Partner, BioLine Innovations Jerusalem, Ltd. By:/s/ Morris Laster M.D. Name:Morris Laster M.D. Title:Director 35 SCHEDULE 1.30 PROTOCOL FOR ON-GOING PHASE I/II TRIAL [PROTOCOL IMMEDIATELY FOLLOWS] CLINICAL STUDY Protocol No. BL-1040.01Version 5.00 Incorporating Amendments 1, 2, 3 and 4Safety and FeasibilityFinal A Phase I, multi-center, open label study designed to assessthe safety and feasibility of the injectable BL-1040 implant toprovide scaffolding to infarcted myocardial tissue BioLine Innovations Jerusalem Confidentiality Statement This document contains information that is the property of BioLine Innovations Jerusalem and therefore is provided to you in confidence for review by you,your staff, an applicable ethics committee/institutional review board and regulatory authorities. It is understood that this information will not be disclosed toothers without written approval from BioLine innovations Jerusalem, except to the extent necessary to obtain informed consent from those persons to whomBL-1040 may be administered. Annotated Protocol incorporating Amendment 1, Amendment 2, Amendment 3, and Amendment 401 December 2008 Protocol BL-1040.01, Version 5.00Safety and Feasibility study of BL-1040FinalCONFIDENTIAL PROTOCOL NUMBER:BL-1040.01 Safety and Feasibility DATE OF PROTOCOL:Final, 01 December 2008Version 2 incorporating Amendment 1, 07 August 2007Version 3 incorporating Amendment 2, 03 December 2007Version 4 incorporating Amendment 3, 17 April 2008Version 5 incorporating Amendment 4, 27 November 2008 PROTOCOL TITLE:A Phase I, multi-center, open label study designed to assess the safety and feasibility of the injectable BL-1040implant to provide scaffolding to infarcted myocardial tissue SPONSOR:BioLine Innovations Jerusalem Responsible study personnel: Name:Prof. Moshe Phillip, MD, Vice-President of Medical Affairs, Sr. Clinical AdvisorAddress:BioLine Innovations Jerusalem, 19 Hartum St., POB 45158Jerusalem, Israel 91450Phone:+972-2-548-9100Fax:+972-2-548-9101e-mail:moshep@biolinerx.com Name:Shmuel Tuvia, PhDAddress:BioLine Innovations Jerusalem, 19 Hartum St., POB 45158Jerusalem, Israel 91450Phone:+972-2-548-9100, ext. 124Fax:+972-2-548-9101e-mail:shmuelt@biolinerx.com Name:Moti Gal, Clinical Operations ManagerAddress:BioLine Innovations Jerusalem, 19 Hartum St., POB 45158Jerusalem, Israel 91450Phone:+972-2-548-9100, ext. 147Fax:+972-2-548-9101e-mail:motig@biolinerx.com Name:Jonathan Leor, MD, Medical AdvisorAddress:Head, Neufeld Cardiac Research Institute.Tel-Aviv UniversitySheba Medical CenterTel-Hashomer, Israel 52621Phone:+972-3-534-8685, 972-3-530-2614Fax:+972-3-535-1139e-mail:leorj@post.tau.ac.il CRO:Venn Life Sciences AGAddress:Elisabethenstrasse 23/3, CH- 4051 BaselPhone:+41 61 201 11 00Fax: +41 61 273 42 50 Authorized representative:Voisin ConsultingAddress:3, rue des Longs Prés, 92100 Boulogne, FrancePhone:+33-1-41-31-8300Fax:+33-1 41-31-8309e-mail:voisin@voisinconsulting.com Page 2 of 52 Medical Monitor, US (ISMB support only)Name:Sanjay Machado, MDAddress:Venn Life Sciences Group7355 TransCanada HwySuite 200Saint-Laurent, Quebec, Canada H4T 1T3 Phone:+1 514.315.2992 ext 117Fax:+1 514.315.0995e-mail:sanjay.machado@vlsworldwide.com Medical Monitor, EuropeName:Andrea Kempf-Mueller, MDAddress:Venn Life Sciences AGElisabethenstrasse 23/3, 4051 Basel, SwitzerlandPhone:+41 61 201 11 83Fax:+41 61 273 42 50e-mail:andrea.kempf-mueller@vlsworldwide.com Page 3 of 52 Investigator’s Signature Page INVESTIGATOR: Name: Address: Phone:Fax:e-mail: I, the undersigned, have reviewed this Protocol, including Appendices, and I will conduct the clinical study as described and will adhere to GCP/ICH and allthe ethical and regulatory considerations stated. I have read and understood the contents of the Investigator Brochure. Date/PlaceSignature(Name of Investigator) Page 4 of 52 Sponsor Signature Page Sponsor:Address:BioLine Innovations Jerusalem19 Hartum St., POB 45158Jerusalem, Israel 91450Phone:Fax:e-mail:+972-2-548-9100+972-2-548-9101Info@biolineRx.com I have read the protocol and confirm that the protocol follows the current GCP guidelines. Date/Place27 Jan 2009Signature/s/ Moshe Phillip(Prof Moshe Phillip, VP of Medical Affairs, Sr. Clinical Advisor) Date/Place27 Jan 2009Signature/s/ Shmuel Tuvia(Shmuel Tuvia, PhD, Project Manager) Date/Place27 Jan 2009Signature/s/ Moti Gal(Moti Gal, Clinical Operations Manager) Page 5 of 52 Medical Advisor Signature Page Name:Prof Jonathan Leor, MDAddress:Head, Neufeld Cardiac Research Institute.Tel-Aviv UniversitySheba Medical CenterTel-Hashomer 52621IsraelPhone:+972-3-534-8685Fax:+972-3-5351139 I have read the protocol and confirm that the protocol follows the current GCP guidelines. Date/Place28/1/09Signature/s/ Jonathan Leor(Jonathan Leor, MD, Medical Advisor) Page 6 of 52 Synopsis STUDY NUMBERBL-1040.01 TITLE OF THE STUDYA Phase I, multi-center, open label study designed to assess the safety and feasibility of the injectable BL-1040 implant toprovide scaffolding to infarcted myocardial tissue STUDY CENTER/COUNTRYApproximately 10 centers in 3 countries: Netherlands, Belgium, Germany, Israel, possibly Switzerland PLANNED STUDY PERIOD +CLINICAL PHASEQ1 2008 to Q1 2010 Phase I INDICATION ANDRATIONALEHeart failure after myocardial infarction (MI) is often precipitated by early and progressive extracellular matrixdegradation and pathological remodeling of the left ventricle (LV). In response to MI, a series of molecular, cellular andphysiological responses are triggered, which can lead to early infarct expansion (infarct thinning), which may result inearly ventricular rupture or aneurysm formation and the transition to heart failure. Late remodeling involves the leftventricle globally and is associated with time-dependent dilatation, and the distortion of ventricular shape. The failure tonormalize increased wall stresses results in progressive dilatation, recruitment of border zone myocardium into the infarct,and deterioration in contractile function. Current anti-remodeling therapies are clearly limited, as many ventriclescontinue to enlarge and mortality and morbidity remain significantly high.Based on the mechanism of LV remodeling, it has been hypothesized that injection of biomaterials into the infarct couldthicken the infarct, arrest infarct expansion, prevent LV dilatation and reduce wall stress that initiates progressive adverseLV remodeling. BL-1040 Myocardial Implant is a non-pharmacologic cross-linked alginate solution administered viaintracoronary (IC) injection to infarcted tissue, forming a flexible, three-dimensional mechanical scaffold.BL-1040 Myocardial Implant presents a novel, safe and non-surgical therapy that directly addresses the stability andstructural integrity of myocardial tissue while potentially preventing post infarction remodeling, primarily via limitingleft ventricle dilation. OBJECTIVES· To evaluate the safety of the BL-1040 myocardial implant in patients after MI at high risk for LV remodeling andCHF.· To provide feasibility data in order to initiate and conduct a pivotal clinical study evaluating the safety and efficacyof the BL-1040 implant in patients following myocardial infarction. ENDPOINTSPrimary safety endpointsOccurrence of all adverse events including but not limited to· All MIs· Cardiovascular hospitalization· Serious ventricular arrhythmias sustained:· VT (symptomatic or sustained VT [duration longer than 30 seconds or 100 beats, or associated withhemodynamic collapse])· VF· symptomatic bradycardia, pauses of longer than 3.0 seconds, complete atrioventricular block, Mobitz IIatrioventricular block· Symptomatic heart failure (NYHA criteria + physical examination OR hospitalization due to heart failure)· Renal failure· Stroke· Death Page 7 of 52 Secondary safety endpoints· Change from baseline in LV dimensions (end-systolic volume index, end-diastolic volume index, left ventricularmass)· Change from baseline in regional (infarct related) and global wall motion score· Change from baseline in ejection fraction· Cardiac rupture· NT-proBNP DESIGNMulti-center, open label PATIENTSNUMBERMaximum 30 MAIN INCLUSION CRITERIA· Signed informed consent· 18 to 75 years of age, inclusive· Male or female· Negative pregnancy test for women of child-bearing potential, or surgicallysterile, or post menopausal· Acute MI defined as:1. Typical rise and gradual fall (troponin) or more rapid rise and fall (CK-MB)of biochemical markers of myocardial necrosis with at least one of thefollowing: a) ischemic symptoms: b) development of pathologic Qwaves onthe ECG: c) ECG changes indicative of ischemia (ST segment elevation ordepression)2. First anterior or inferolateral STEMI or Qwave MI (QMI Anterior: V1-V3 orV1-V4 or V1-V5 or V1-V6.QMI Inferior: L2, L3, AVF, or L2, L3, AVF+ V5,V6 or L2, L3, AVF+ V6-V9 [posterior leads])3. Regional wall motion score index (at least 4 out of 16 akinetic segments)· One or more of the following:· LVEF >20% and <45% measured and calculated by 2-dimensionalmeasurement· Biomarkers: peak CK > 2000 IU· Infarct size > 25% as measured by MRI· Successful revascularization with PCI with 1 stent only, within 7 days of theindex MI (only safe and MRI compatible stents)· At time of application of study device, patient must have patent infarct relatedartery (IRA) and TIMI flow grade = 3 MAIN EXCLUSION CRITERIA· History of CHF, Class I to Class IV, as per NYHA criteria· History of prior LV dysfunction· At time of application of study device - Killip III-IV (pulmonary edema,cardiogenic shock - hypotension [systolic < 90 mmHg] and evidence ofperipheral hypoperfusion [oliguria, cyanosis, sweating]) or HR > 100 bpm· Patient with pacemaker· Prior CABG· Prior MI· History of stroke· Significant valvular disease (moderate or severe)· Patient is a candidate for CABG or PCI on non-IRA· Patient is being considered for CRT within the next Page 8 of 52 30 days· Renal insufficiency (eGFR < 60)· Chronic liver disease (> 3 times upper limit of normal)· Life expectancy < 12 months· Current participant in another clinical trial, or participation in another trialwithin the last 6 months· Any contraindication to coronary angiography, MRI or PCI procedures· Patient taking anti-coagulation medication prior to MI· Pregnant or lactating women; pregnancy confirmed by urine pregnancy test STUDY DEVICEROUTE OF APPLICATIONAdministered via intracoronary (IC) injection, using multiple commercially availabledevices DURATION AND FREQUENCY2 mL of BL-1040 administered for no longer than 30 seconds FORMULATIONCalcium D-Gluconate (Gluconic acid hemicalcium salt) PRONOVA UP VLVG(Generic name: Sodium Alginate)Water for Injection USP/EP SAFETY EVALUATIONS TIMING ANDASSESSMENTSPERFORMEDScreening· l Coronary angiography, PCI and stent (as part of treatment of MI)· Physical examination· Vital signs· 12-lead ECG· Blood and urine sampling for laboratory safety parameters (biochemistry, hematology and urinalysis)· Total CK/CK MB· NT-proBNP· Mandatory echocardiography; MRI as an additional measurement is encouraged Telephone contact, 1 week post-procedure· Phone call to confirm status of patient discharged from the hospital Day 1 and during hospitalization· Physical examination daily during hospitalization· Vital signs daily during hospitalization· 12-lead ECG prior to and after administration of BL-1040; daily during hospitalization· 24 hour Holter monitor (after completion of 12-lead ECG)· Blood and urine sampling for laboratory safety parameters (biochemistry, hematology and urinalysis), on Day 1 (onlyif not done within the previous 48 hours) and on day of discharge (only if not done within the previous 48 hours)· Total CK/CK MB measured prior to, and 8, 16, 24 and 48 hours after administration of BL-1040· NT-proBNP on Day 1 (only if not done within the previous 48 hours) and on day of discharge (only if not done withinthe previous 48 hours)· continuous ECG during the procedure· 2nd cardiac catheterization (for implantation of BL-1040)· PTT or ACT measurements, during procedure only (prior to implantation of BL-1040 and prior to removal of sheath) Page 9 of 52st Follow-up visits (Days 30, 90 180 [End of Study]; Months 12, 24, 36, 48 and 60)· Physical examination· Vital signs· 12-lead ECG· 24 hour ambulatory Holter monitoring· Blood and urine sampling for laboratory safety parameters (biochemistry, hematology and urinalysis)· NT-proBNP (through Day 180 only)· Mandatory echocardiography: MRI as an additional measurement is encouraged (MRI through Day 180 only)· Minnesota Living with Heart Failure® questionnaire AEs and SAEs will be collected throughout the study PROCEDUREPatient is admitted to the hospital as a result of an AMI. As part of the inclusion criteria for this study, the patient willundergo revascularization with PCI stent implantation. Within 7 days of the index MI, the patient will undergo anechocardiogram to determine LVEF. Although not mandatory, the patient will be encouraged to undergo an MRI as anadditional assessment. If the patient satisfies inclusion/exclusion criteria, a 2 cardiac catheterization will be performedto administer BL-1040 after revascularization but within 7 days of the index AMI. BL-1040 is applied via intracoronaryinjection through the infarct related artery. Patients discharged from the hospital will be contacted by phone on Day 8for a safety follow-up. Follow-up examinations are scheduled for Day 30, Day 90 and Day 180 (End of Study) post-procedure. In addition, the patient will return to the hospital at Months 12, 24, 36, 48 and 60 for yearly follow-upassessments, as part of a long-term safety follow-up. STATISTICAL METHODSAll data recorded will be presented in data listings and summary tables, as appropriate. Missing values will not bereplaced. No formal hypothesis testing will be performed.All participants who received BL-1040 will be included in the safety analysis.Any excluded cases will be documented together with the reason for exclusion.All decisions on exclusions from the analysis will be finalized prior to database lock.Continuous variables (age, height, weight) will be summarized using mean, median, standard deviation, minimum,maximum, and number of available observations. Qualitative variables will be summarized by counts and percentages.An interim safety analysis will be performed after 5 patients have completed the Day 30 visit, on all data collected up tothis timepoint. Page 10 of 52nd Schedule of EventsVisits/WeekHospitalizationPost discharge follow-upStudy daysScreening(Day) (-7) toDay (-1)Day 1Day of application(1)Daily duringhospitalization(2) Day of dischargeTelephoneContactDay 8(± 1 day) Day 30(± 5 days) Day 90(± 5 days) Day 180(± 7 days)End of Study Visit Follow-up SafetyVisits(Months 12, 24,36, 48 60,± 30 days)AMIXHospitalizationXXXXXCoronary angiography,PCI, stent(1)XInformed consentXInclusion/exclusioncriteriaXPregnancy testXDemography; medicalhistory; concurrentillnessesXPhysical examinationXXXXXXXXVital signs (temperature,arterial BP, weight)XXXXXXXX12-lead ECGXX(4)XXXXXXLaboratory safetyparametersX(5)X(6)X(6)XXXXTotal CK/CK MBXX(7)NT-proBNPXX(6)X(6)XXXEchocardiography/MRIXXXXXContinuous ECGmonitoringX(9)Cardiac catheterization;application of BL-1040; coronaryangiographyXPTT or ACTmeasurementsX(10)24-hour ambulatoryHolter monitoringXXXXXSafety contact fordischarged patientsXMinnesota Living withHeart FailureXXXXSerious/Adverse eventsand concomitantmedicationXXXXXXXXX (1) Device to be administered within 7 days of AMI(2) Patient must remain hospitalized for at least 48 hours after procedure.(3) Done as treatment of AMI(4) Prior to and after administration of BL-1040(5) Troponin I or T to be measured at Screening only(6) If not done within previous 48 hours(7) Parameters to be assessed prior to, and 8, 16, 24 and 48 hours after administration of BL-1040(8) Echocardiography to be done at each visit. MRIs are to be encouraged as an additional assessment through Day 180, but are contingent upon patientagreement. MRIs are not to be requested as part of the Follow-up Safety visits.(9) Patient to be connected prior to implantation of BL-1040, and for the duration of the procedure(10) Measured prior to implantation of BL-1040, and prior to removal of sheath Page 11 of 52 Table of Contents List of Abbreviations141Introduction151.1Background151.1.1Acute Myocardial Infarction- Definition151.1.2Infarction types and pathogenesis151.1.3Mechanisms of myocardial damage151.1.4Treatment of AMI151.2Rationale and justification162Study Objectives173Safety Endpoints183.1Primary endpoints183.2Secondary endpoints184Investigational Plan194.1Summary of study design194.1.1Estimated study duration194.1.2Number of Patients194.2Sequential enrollment194.3Responsibilities of the Independent Safety Monitoring Board194.3.1Stopping Criteria194.4Inclusion criteria204.5Exclusion criteria214.6Withdrawal criteria during the study224.7Treatment allocation224.8Method of blinding and unblinding225Product Overview235.1BL-1040235.2Formulation235.3Dosage and application235.4Labelling/Packaging245.5Storage245.6Compliance245.7BL-1040 accountability245.8Concomitant medication246Study Procedures266.1General study aspects266.2Outline of study procedures266.2.1Detailed description of study stages/visits286.2.1.1Screening, Day -7 to Day -1286.2.1.2Day 1286.2.1.3Daily during hospitalization296.2.1.4Telephone Contact, Day 8, =1296.2.1.5Day 30, Day 90 and Day 180 (End of Study)296.2.1.6Extended safety follow-up (Months 12, 24, 36, 48, 60 = 30 days)306.3Study evaluations and procedures306.3.1Safety306.3.1.1Physical examinations306.3.1.2Vital signs306.3.1.3ECGs316.3.1.4Echocardiograms316.3.1.5MRIs31 Page 12 of 52 6.3.1.6Clinical safety evaluations326.3.2Core laboratories336.4Minnesota Living with Heart Failure questionnaire337Adverse and Serious Adverse Events357.1Adverse event definition357.2Recording adverse events357.3Pre-device events357.4General adverse events367.4.1Assessment of severity of general adverse events367.4.2Assessment of causality of adverse events367.4.3Follow-up of adverse events and assessment of outcome367.5Serious Adverse Events377.5.1Definition of Serious Adverse Event (SAE)377.5.2Pre-defined SAEs387.5.3Reporting serious adverse events387.5.4Follow-up of serious adverse events387.6Treatment of adverse events397.7Pregnancy398Data Evaluation and Statistics408.1Endpoints408.2Estimated sample size408.3Planned methods of analysis408.3.1Analysis population408.3.2Analysis of demographics408.3.3Analysis of safety418.4Interim analysis418.5Final and follow-up reporting418.6Quality assurance419Ethics and regulatory considerations429.1Informed Consent429.2Authorities429.3Protocol Amendments429.4Patient confidentiality429.5Insurance439.6Duration of the study4310Data Handling and Record Keeping4410.1Documentation4410.2Case Report Forms4410.3Monitoring and quality control4410.4Publication policy4411References45 Appendix A: Declaration of Helsinki Appendix B: Minnesota Living with Heart Failure questionnaire Page 13 of 52®® List of Abbreviations AE(s)Adverse event(s)ALTAlanine transminaseAMIAcute myocardial infarctionASTAspartate transaminaseBPBlood pressurebpmBeats per minutesBUNBlood urea nitrogenCABGCoronary artery bypass graftCHFChronic heart failureCRFCase Report FormCRTCardiac Resynchronization TherapyCVCardiovascularECGElectrocardiogramEFEjection fractioneGFREstimated glomerular filtration rateEOSEnd of studyGCPGood Clinical PracticeGGTGamma glutamyl transferaseGLPGood Laboratory PracticeGMPGood Manufacturing PracticesHPFHigh power fieldHRHeart rateICIntracoronaryICHInternational Conference on HarmonizationIRAInfarct related arteryISMBIndependent Safety Monitoring BoardLDHLactate dehydrogenaseLVLeft ventricleLVEFLeft ventricular ejection fractionMedDRAMedical Dictionary for Regulatory ActivitiesmgMilligramMIMyocardial infarctionminMinutemLMilliliterMRIMagnetic resonance imagingNCENew chemical entityNT-proBNPN-terminal prohormone brain natnuretic peptideNYHANew York Heart Association°CDegrees centigradeOTCOver the CounterPCIPrimary coronary interventionQMIQwave myocardial infarctionSAE(s)Serious Adverse Event(s)SASStatistical Analysis SystemSTEMIST-segment elevation myocardial infarctionTIMIThrombolysis in Myocardial InfarctionVFVentricular fibrillationVTVentricular tachycardia Page 14 of 52 1 Introduction 1.1 Background 1.1.1 Acute Myocardial Infarction- Definition Acute myocardial infarction (AMI) is defined as death or necrosis of myocardial cells. It is a diagnosis at the end of the spectrum of myocardial ischemia oracute coronary syndromes. AMI occurs when myocardial ischemia exceeds a critical threshold and overwhelms myocardial cellular repair mechanisms thatare designed to maintain normal cardiac function. Ischemia at this critical threshold level, when present for an extended time period, results in irreversiblemyocardial cell damage and cell death. 1.1.2 Infarction types and pathogenesis Critical myocardial ischemia may arise as a result of increased myocardial metabolic requirement and/or reduction in the delivery of oxygen and nutrients tothe myocardium through the coronary circulation, or both. An interruption in the supply of myocardial oxygen and nutrients occurs when blood flow to themyocardium is interrupted by occlusion of a coronary artery. Often, this event is caused by a thrombus superimposed on an ulcerated or unstableatherosclerotic plaque that left untreated for as little as a 20-40 minutes, can lead to irreversible cell damage and cell death. A high-grade (> 75%) permanentcoronary artery stenosis due to atherosclerosis or a dynamic stenosis coupled with coronary vasospasm can also reduce the supply of oxygen and nutrientsand be a factor involved in AMI. Additional cardiac valvular pathologies and low cardiac output states associated with a decreased aortic diastolic pressure,which is the prime component of coronary perfusion pressure, can also precipitate AMI. 1.1.3 Mechanisms of myocardial damage The severity of an AMI is dependent on three factors: the level of the occlusion in the coronary artery, the length of time of the occlusion, and the presence orabsence of collateral circulation. In general, the more proximal the coronary occlusion, there is a greater risk of an increased area of necrosis. The larger theAMI, the chance of death due to a mechanical complication or pump failure increases. In addition, the longer the time period of vessel occlusion, there is agreater chance of irreversible myocardial damage distal to the occlusion. The death of myocardial cells first occurs in the area of myocardium that is most distal to the arterial blood supply, the endocardium. As the duration of theocclusion increases, the area of myocardial cell death enlarges, extending from the endocardium to the myocardium and ultimately to the epicardium. Thearea of myocardial cell death then spreads laterally to areas of watershed or collateral perfusion. The extent of myocardial cell death defines the magnitude ofthe AMI. If blood flow can be restored to at-risk myocardium, more heart muscle can be saved from irreversible damage or death. The ischemic zone willundergo inflammatory necrotic changes, and the myocardial tissue will eventually be completely replaced by fibrous infarct tissue. In the early stages after anAMI, the damage causes deterioration of cardiac muscle contractility and structural integrity. This results in thinning of the walls of the heart, which can havesevere consequences including rupture at the site, expansion of the area of damage, and the formation of blood clots. After some weeks or months, this canevolve to dilatation of the heart, which further reduces its ability to pump blood efficiently, resulting in heart failure. 1.1.4 Treatment of AMI The goal of treatment for AMI is early reperfusion by rapid revascularization of the occluded culprit coronary artery both by medical means to dissolve theclot with thrombolytics or by cardiac catheterization with primary coronary intervention (PCI) and deployment of stents to Page 15 of 52 maintain patency of the culprit coronary artery. However, while re-opening of the culprit coronary vessel can prevent the development of a large AMI andprevent further loss of viable myocardium, it does not affect myocardial tissue that has already undergone irreversible damage. An undeniable adverseoutcome of AMI is progressive worsening of ventricular function that, if left unattended, culminates in the syndrome of congestive heart failure. To date, notreatment has been developed to reliably prevent the deterioration of ventricular function that follows a large AMI. Treatment options for AMI and for theresulting heart failure include medical management, heart transplantation. mechanical circulatory assist devices (left ventricular assist device, etc.), andsurgical ventricular restoration, all of which have specific limitations. 1.2 Rationale and justification BL-1040 Myocardial Implant presents a novel, safe and non-surgical therapy that directly addresses the stability and structural integrity of myocardial tissuein this patient population. BL-1040 potentially prevents post infarction remodeling primarily via limiting left ventricle (LV) dilation, while the untreatedpatient LV will continue to dilate or enlarge. BL-1040, by creating a scaffold, may stabilize the AMI and limit post AMI expansion manifested as LVdilation. There are currently no other available medical and/or surgical interventions that directly address the stability and structural integrity of myocardial tissuedamaged as a result of AMI. In the setting of an AMI, an inflammatory response triggers the degradation of the extracellular matrix, thus weakening of thecollagen cross-link structure or structural “backbone” of the myocardium. Degradation of the extracellular matrix leads to infarct expansion manifested bymyocardial wall thinning and often, aneurysmal dilation with subsequent ventricular enlargement. This process results in progressive LV remodeling andincreased LV wall stress. The latter can increase myocardial oxygen consumption, a condition that the infarcted and/or failing LV can ill afford and one thatcan contribute to increased long-term mortality and morbidity. LV dilation is the predominant cause for morbidity and mortality in congestive heart failure [2], demonstrated that patients with LV end systolic volumesmaller than 95 mL showed a 94 % survival after 5 years while LV patients with LV end systolic volume greater than 130 mL showed a 52 % survival after 5years. Both diastolic and systolic were the main predictors for mortality. Patients with end-stage ischemic heart failure presenting dilated LV with anakinetic/dyskinetic region over 35% and with left ventricular end systolic index >60 mL/m2 are offered LV reconstruction or surgical ventricular restoration(SVR) in order to reduce LV volume and to restore normal LV shape. Overall, in a large number of studies performed using SVR, there is strong evidence thatSVR is safe and effective, showing significant reduction in mortality and readmission levels together with significant improvement in ejection fraction aswell as in LV end systolic/diastolic index. Page 16 of 52 2 Study Objectives The objectives of this study are: · to evaluate the safety of the BL-1040 myocardial implant in patients after MI at high risk for LV remodeling and CHF, and· to provide feasibility data in order to initiate and conduct a pivotal clinical study evaluating the safety and efficacy of the BL-1040 implant inpatients following myocardial infarction. Page 17 of 52 3 Safety Endpoints 3.1 Primary endpoints Primary safety endpoints include: · occurrence of all adverse events including but not limited to· all MLs· cardiovascular hospitalization· serious ventricular arrhythmias sustained· VT (symptomatic or sustained VT [duration longer than 30 seconds or 100 beats, or associated with hemodynamic collapse])· VF· symptomatic bradycardia, pauses of longer than 3.0 seconds, complete atrioventricular block, Mobitz II atrioventricular block· symptomatic heart failure (NYHA criteria + physical examination OR hospitalization because of heart failure)· renal failure· stroke· death 3.2 Secondary endpoints Secondary safety endpoints include: · change from baseline in LV dimensions (end-systolic volume index, end-diastolic volume index, left ventricular mass)· change from baseline in regional (infarct related) and global wall motion score· change from baseline in ejection fraction· cardiac rupture· NT-proBNP Page 18 of 52 4 Investigational Plan 4.1 Summary of study design This is an open label, multi-center, sequentially enrolled. Phase I study to assess the safety and feasibility of the injectable BL-1040 myocardial implant toprovide scaffolding to infarcted myocardial tissue. Patients who experience an MI will be admitted to the hospital. As part of the treatment for the MI, patients will undergo PCI and stent implantation. Patientswill also undergo an echocardiography (and if they agree, an MRI) to determine the extent of damage to the infarct related artery (IRA). Patients who satisfyinclusion/exclusion criteria will be enrolled into the study. The BL-1040 myocardial implant will be injected into the IRA, distally to the implanted stent. The first 2 patients will be sequentially enrolled. After both patients have completed Day 30 assessments, and after approval by the Independent SafetyMonitoring Board (ISMB), the decision will be made to enroll 3 additional patients. After the ISMB reviews the Day 30 assessments of these patients, thedecision will be made to enroll a maximum of 25 additional patients. Details are provided in Sec. 4.2. Both female and male patients must agree to use effective contraception (as agreed with the Investigator) for 6 months (180 days) after the procedure. 4.1.1 Estimated study duration The study is planned to last from Q1 2008 to Q1 2010. The clinical study phase is 180 days for each patient. A long term safety follow-up will include visitsat Months 12, 24, 36, 48, and 60. Patients will be consented for the entire 5 year period. 4.1.2 Number of Patients The maximum number of patients enrolled in this study will be 30. 4.2 Sequential enrollment The first 2 patients will be sequentially enrolled into the study. After the 1 patient has completed Day 30 assessments, the Independent Safety MonitoringBoard (ISMB, Sec. 4.3) will review the patient’s data through Day 30. The ISMB will then decide whether to give approval to enroll the 2 patient. After the2 patient has completed Day 30 assessments, the ISMB will again review the data and provide approval for enrollment of the next 3 patients. After all 3patients have completed Day 30 assessments, the ISMB will review the data from these patients and provide approval for opening enrollment to the balanceof the patients (maximum of 25). 4.3 Responsibilities of the Independent Safety Monitoring Board An Independent Safety Monitoring Board (ISMB) will be established prior to the start of the study to monitor the safety of BL-1040 during the conduct of theprotocol. This ISMB will consist of physicians with expertise in cardiovascular disease, particularly in the area of coronary artery disease and with experiencemonitoring safety of drugs and/or devices for cardiovascular applications, and will have no participation in the trial in any other capacity. The ISMB will ensure that this study meets the highest standards of patient safety. During the study the ISMB will have the following main responsibilities: Page 19 of 52stndnd · review 30 day safety data patients from the first 2 sequentially enrolled patients to determine whether 3 additional patients may be enrolled: afterreviewing the 30 day safety data from these 3 patients, will determine whether the balance of patients may be enrolled· within 30 days of enrolment of each successive group of 5 patients receiving the device, will review all SAEs occurring to date and will recommendcontinuation, discontinuation, or modification of the procedure or protocol, based on a determination of whether the occurrence of serious,unexpected, or device-related adverse events (Sec. 7) might outweigh the potential benefit achievable with the device· review emerging findings in patients and identify potential safety concerns with BL-1040· will receive information, on an expedited basis, on all Serious Adverse Events (SAEs), clinically significant laboratory values/vital signs, ECGabnormalities and data from patients who decided to prematurely discontinue the study. All SAES that occur in the cath lab during or after theprocedure to administer BL-1040 should be reviewed promptly by the ISMB. The ISMB will review this information and may decide to interrupt,alter, or terminate the trial· will adjudicate whether or not an event is unexpected, based on a pre-specified list of expected SAEs within the study population. 4.3.1 Stopping Criteria Given the uncontrolled nature of the study, and the small sample size, it is not practical to provide a quantitative stopping rule. Moreover, given the severely ill nature of the patients who will be enrolled in the study (those with large myocardial infarction and substantial LVdysfunction), adverse cardiac outcomes, including fatal ones, are to be expected in this population, regardless of participation in the study. The study will be stopped when any of the following occur: 1. Completion of the study2. ISMB and sponsor judge that the study treatment appears to be unsafe for patients. The ISMB will make this assessment based not only upon thefrequency of observed complications, but also upon the character and qualitative nature of the events. This determination will be made in thecontext of clinical judgement of experienced cardiologists regarding the expected outcome in this population of patients and whether observedoutcomes differ substantively from the expectation. The committee reserves the right to stop the study after analysis of outcomes of sequentialprocedures. A decision to stop will be considered by the ISMB in the event of occurrence of severe, unusual or unexpected events.3. The ISMB may consider putting the trial on hold or terminating it and will base it decision on weighing the balance between potential buthypothetical benefits and possible risks to the participants in the study. 4.4 Inclusion criteria The inclusion criteria for this study are: · voluntarily signed the informed consent form prior to the conduct of any study specific procedures· male or female inpatients aged 18 to 75, inclusive Page 20 of 52 · negative pregnancy test for all women of child-bearing potential, or surgically sterilized (i.e. tubal ligation, hysterectomy) prior to Screening, orpost-menopausal for at least 1 year· acute MI defined as:· typical rise and gradual fall (troponin) or more rapid rise and fall (CK-MB) of biochemical markers of myocardial necrosis with at least oneof the following: a) ischemic symptoms; b) development of pathologic Qwaves on the ECG; c) ECG changes indicative of ischemia (STsegment elevation or depression)· first anterior or inferolateral STEMI or Qwave MI (QMI Anterior: V1-V3 or V1-V4 or V1-V5 or V1-V6.QMI Inferior: L2, L3, AVF, or L2,L3, AVF+ V5, V6 or L2, L3, AVF+ V6-V9 [posterior leads])· regional wall motion score index (at least 4 out of 16 akinetic segments)· one or more of the following:· LVEF >20% and <45% measured and calculated by 2-dimensional measurement· Biomarkers: peak CK > 2000 IU· infarct size > 25% as measured by MRI· successful revascularization with PCI within 7 days of the index MI (only safe and MRI compatible stents)· at time of application of device patient must have patent infarct related artery (IRA) and TIMI flow grade = 3 4.5 Exclusion criteria Exclusion criteria for this study are: · history of CHF, Class I to Class IV, as per NYHA criteria· history of prior LV dysfunction· at time of application of study device - Killip III-IV (pulmonary edema, cardiogenic shock - hypotension (systolic < 90 mmHg) and evidence ofperipheral hypoperfusion (oliguria, cyanosis, sweating) or HR > 100 bpm· patient with pacemaker· prior CABG· prior MI· history of stroke· significant valvular disease (moderate or severe)· patient is a candidate for CABG or PCI on non-IRA· patient is being considered for CRT within the next 30 days· renal insufficiency (eGFR < 60)· chronic liver disease (> 3 times upper limit of normal)· life expectancy < 12 months· current participant in another clinical trial, or participation in another trial within the last 6 months· any contraindication to coronary angiography, MRI or PCI procedures· patient taking anti-coagulation medication prior to MI· pregnant or lactating women; pregnancy confirmed by urine pregnancy test· patients with a reasonable likelihood for non-compliance with the protocol· any other reason that, in the Investigator’s opinion, prohibits the inclusion of the patient into the study Page 21 of 52 4.6 Withdrawal criteria during the study Each patient has the right to withdraw from the trial at any time for any reason. The Investigator must make at least 3 documented attempts to contact those patients who do not return for the scheduled follow-up visits. Attempts must berecorded in the patient’s file. The Sponsor reserves the right to terminate the study at any time. Upon withdrawal from the study any time after administration of study device, the patient will undergo the End of Study assessments (Section 6.2.1.5:Table 6.1). Dropouts that occur after implantation of BL-1040 will not be replaced.4.7 Treatment allocation This is an open label study. All patients will be treated with BL-1040. Patient eligibility will be established prior to treatment with BL-1040. If a patient discontinues from the study, the patient number will not be reused. 4.8 Method of blinding and unblinding As this is an open label study, there will be no blinding or unblinding procedure. Page 22 of 52 5 Product Overview 5.1 BL-1040 BL-1040 myocardial implant is a non-pharmacologic, non-surgical, cross-linked alginate solution administered via intracoronary (IC) injection to infarctedtissue. BL-1040 completely disintegrates into its constituent polymers within approximately 90 days after deposition, and is excreted in the urine. 5.2 Formulation The formulation of BL-1040 is shown in Table 5.1. Table 5.1 Formulation of BL-1040 0.3% Calcium D-Gluconate (Gluconic acid hemicalcium salt)Sigma, Dr. Paul Lohmann GmbH KG1% PRONOVA UP VLVG Generic name: Sodium AlginateFMC BioPolymer/ NovaMatrixWater for Injection USP/EP 5.3 Dosage and application BL-1040 will be administered to the coronary vasculature using multiple commercially available devices. Table 5.2 provides a list of the commerciallyavailable components that will be required in order to delivery the BL-1040 implant. Table 5.2 List of Commercially Available BL-1040 Delivery Devices BL-1040 Implant Delivery Devices 1Standard endovascular sheath (femoral or radial or brachial)2Standard coronary guiding catheter (example — Launcher, ref LA6AR10SH)3Guidewire 0.014 inch (example - Boston Scientific, ref. 383931-035J)4Torque device (example - Boston Scientific, ref. K903606))5Guidewire introducer (example Input Ref. 87311)6Microcatheter designed for coronary intravascular use such as multipurpose probing endovascular microcatheter.Example:(Boston Scientific Catalog number SCH 50058) or Transit microcatheter, (Cordis Endovascular Systems, MiMI Lakes, Fla.) orRenegase Hi-Flo microcatheter (Boston Scientific)7.Disposable syringe, Intmed 5 mL sterile CE, ISO9001, ISO13488 Cardiac catheterization should be done according to the guidelines of the American College of Cardiology/Society for Cardiac Angiography andInterventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards. All angiographies will be evaluated by a corelaboratory. BL-1040 is delivered intra-coronary (IC) via a microcatheter that is intended for coronary intravascular use. The timing of BL-1040 administration is within 7 days after the index MI. Two (2) mL of BL-1040 will be injected IC through the infarct related arterysupplying the infarcted area. BL-1040 may not be mixed with any contrast medium. All patients will be treated in the same manner. Detailed instructions for the application of BL-1040 are provided in a separate Instruction Manual. Page 23 of 52 5.4 Labelling/Packaging BL-1040 will be packed in a sterile cylindrical injection vial, type A glass. Vials are filled with sterile BL-1040 and sealed with a 20 mm rubber stopper,spun-on aluminum seal and a flip-off top. All packages will be labeled according to the GMP guideline Volume 4, Annex 13 Manufacture of Investigational Medicinal Products (July 2003 Revision1) [1] and local laws. BL-1040 will be packed in labeled boxes, with at least the following information: study number, patient number, route of administration, storage guidelines,batch number, expiry date, instructions for administration, manufacturer name/code, and “Investigational use only”. The Sponsor must notify the Site Investigator, who has the overall responsibility for the study device, of the anticipated date of arrival. 5.5 Storage The Site Investigator is responsible for ensuring that BL-1040 is stored in a safe refrigerated location (2-8° C) with controlled access. At this temperature, BL-1040 has a shelf life of 3 months. The temperature must be monitored once daily, and recorded on a temperature log. BL-104 must be removed from the refrigerator and kept at room temperature 30 minutes prior to administration. 5.6 Compliance BL-1040 will be administered by the Investigator only, and will not be dispensed to the patient or any other personnel. 5.7 BL-1040 accountability Under no circumstances is it permitted to use study supplies for any purposes other than those specified in the protocol. The Investigator will be provided with forms to enable accurate recording of all investigational product at all times. The Investigator must sign a statementthat he/she has received BL-1040 for the study. At any time the figures of supplied, used and remaining BL-1040 must match. At the end of the study, it mustbe possible to reconcile delivery records with those of used and unused stocks. Account must be given of any discrepancies. At the end of the study, all unused BL-1040 supplies and empty containers must be returned to the Sponsor. 5.8 Concomitant medication The following medications may only be administered as indicated: · ceftriaxone may not be administered during the 48 hours immediately prior to the administration of BL-1040, and for the 48 hours immediatelyfollowing administration of BL-1040· calcium solutions may not be administered during the first week of the study The introduction of any medication not allowed by the protocol at any point in the study will require a discussion between the Investigator and the Sponsor.If, in the opinion of the Investigator, it becomes necessary to administer any medication during the study, the Page 24 of 52 Investigator will determine the dose and time of intake, and document the medication(s) in the patient’s CRF. Patients must be instructed not to begin any new medication before consulting with the Investigator (unless required for emergency medical use). The patientmust be instructed that this prohibition applies to over-the-counter products as well as prescription drugs. All patients will receive optimal medical therapy according to the relevant, updated guidelines from the European Society of Cardiology [3,4,5]. Optimaltherapy including aspirin, anticoagulation if indicated, angiotensin-converting-enzyme inhibition, beta-blockade, aldosterone antagonists, whenappropriate, and lipid-lowering therapy, unless contraindicated. Clopidogrel therapy will be initiated before PCI and continued for 1 year after myocardialinfarction [3]. Page 25 of 52 6 Study Procedures 6.1 General study aspects This is an open label, multi-center study to assess the safety and feasibility of the injectable BL-1040 myocardial implant to provide scaffolding to infarctedmyocardium. Patients will be admitted to the hospital for treatment of an acute myocardial infarction (AMI), to include angioplasty and implantation of a-stent/s. Within 7days of successful revascularization, patients will undergo an echocardiogram for assessment of the extent of the changes to the heart, and to verify cardiacinclusion/exclusion criteria. MRIs are to be encouraged as an additional assessment, but are contingent upon the agreement of the patient. After theechocardiogram/MRI, but still within 7 days of the index AMI, patients will undergo a 2 cardiac catheterization to administer BL-1040. Patients willremain hospitalized for at least 48 hours after the procedure. The BL-1040 scaffold will be injected into one infarct related artery (IRA), distally to the implanted stent/s. Patients will undergo cardiac monitoring before,during and after the procedure: a 12-lead ECG will be done prior to and after administration of BL-1040; patients will be connected to a continuous ECGmonitor and will have continuous hemodynamic measurements during the procedure; immediately after the completion of the 12-lead ECG, a Holter monitorwill be placed and will remain connected for the following 24 hours. Patients will undergo physical examinations, assessment of vital signs and an ECG daily during hospitalization; safety blood sampling will be done on theday of discharge. Patients who have been discharged from the hospital will be contacted by phone on Day 8 to confirm the administration of any concomitant medications,general status of the patient, and any doctor visits since hospital discharge. Patients will return for follow-up visits on Day 30, Day 90 and Day 180 (End of Study). Additional follow-up safety visits are planned for Months 12, 24, 36,48 and 60. At each visit, patients will again undergo a physical examination with measurement of vital signs, ECG, blood sampling, echocardiography andcompletion of the Minnesota Living with Heart Failure questionnaire. At each follow-up visit, the patients will be hooked up to a 24-hour ambulatoryHolter monitor, which will be returned the following day. MRIs are to be encouraged through Day 180 as an additional assessment, but are contingent uponthe agreement of the patient. MRIs are not to be requested as part of the long term safety visits. Echocardiograms, ECGs, Holters, angiographies and MRIs, will be evaluated in a core laboratory. The first 2 patients will be sequentially enrolled; if approved by the ISMB; 3 additional patients will be enrolled. After review and approval of the 30 daysafety data from these 3 patients, the balance of patients may be enrolled. Details are provided in Sec. 4.2. Both female and male patients must agree to use effective contraception (as agreed with the Investigator) for 6 months (180 days) after the procedure. 6.2 Outline of study procedures All study procedures are outlined in the Schedule of Assessments below (Table 6.1). A more detailed description of the study procedures performed at eachstudy stage/visit is given in the following sections. Page 26 of 52nd® Table 6.1 Schedule of Events HospitalizationPost discharge follow-up Visits/WeekStudy days ScreeningDay (-7) toDay (-1) Day 1Day of application(1)Daily duringhospitalization(2) Day of dischargeTelephoneContactDay 8(+ 1 day) Day 30(+5 days) Day 90(+5 days) Day 180(+ 7 days)End of Study Visit Follow-up SafetyVisits(Months 12, 24,36, 48 60,+ 30 days) AM1XHospitalizationXCoronary angiography, PCI,stent(1)XInformed consentXInclusion/exclusion criteriaXPregnancy testXDemography medicalhistory; concurrentillnessesXPhysical examinationXXXXXXXXVital signs (temperature,arterial BP. weight)XXXXXXXX12-lead ECGXX(4)XXXXXXLaboratory safetyparametersX(5)X(6)X(6)XXXXTotal CK/CK MBXX(7)NT-proBNPXX(8)X(6)XXXEchocardiography/MRIXXXXXContinuous ECGmonitoringX(9)Cardiac catheterization;application of BL- 1040;coronary angiographyXPTT or ACT measurementsX(10)24-hour ambulatory HollermonitoringXXXXXSafety contact fordischarged patientsXMinnesota Living withHeart Failure®XXXXSerious/Adverse events andconcomitant medicationXXXXXXXXX (1)Device to be administered within 7 days of AMI(2)Patient must remain hospitalized for at least 48 hours after procedure.(3)Done as treatment of AMI(4)Prior to and after administration of BL-1040(5)Troponin I or T to be measured at Screening only(6)If not done within previous 48 hours(7)Parameters to be assessed prior to. and 8, 16, 24 and 48 hours after administration of BL-1040(8)Echocardiography to be done at each visit. MRIs are to be encouraged as an additional assessment through Day 180, but are contingent upon patientagreement. MRIs are net to be requested as part of the Follow-up Safety visits.(9)Patient to be connected prior to implantation of BL-1040, and for the duration of the procedure(10)Measured prior to implantation of BL-1040, and prior to removal of sheath Page 27 of 52 6.2.1 Detailed description of study stages/visits 6.2.1.1 Screening, Day -7 to Day -1Patients are admitted to the hospital for treatment of an AMI, prior to enrollment into the study. The treatment will include PCI with placement of a stent.After signing of Informed Consent, and prior to initiation of any study-related procedures, the following activities will be carried out: · confirmation of inclusion/exclusion criteria· negative pregnancy test for all women of child-bearing potential (as defined in Inclusion Criteria)· demographics· medical history· physical examination· vitals signs· 12-lead ECG, in supine position· blood and urine sampling for laboratory safety parameters (biochemistry, hematology and urinalysis)· blood sampling for Total CK/CK MB· blood sampling for NT-proBNP· echocardiography· MRI, if patient agrees· concomitant medication record (all currently prescribed and over the counter medications must be recorded in the Case Report Form [CRF], withdose and reason for use)· pre-device serious/adverse events 6.2.1.2 Day 1 BL-1040 must be implanted within 7 days of the index AMI; the day of implant will be considered Day 1 of the study. Prior to implantation, the followingassessments will be carried out: · physical examination· vital signs· 12-lead ECG· blood and urine sampling for laboratory safety parameters (biochemistry [excluding troponin I or T], hematology, and urinalysis), if not done withinthe previous 48 hours· Total CK/CK MB· NT-proBNP, if not done within the previous 48 hours· connection to continuous ECG monitoring BL-1040 will be implanted in the infarcted tissue via the IRA, distally to the stent as outlined in the separate BL-1040 Instruction Manual. During theprocedure the following assessments will be done: · continuous ECG monitoring· continuous hemodynamic measurements (arterial blood pressure)· blood sampling for PTT or ACT, prior to implantation of BL-1040 and prior to removal of sheath An additional coronary angiography will be done 3 minutes after implantation of the BL-1040, and will include an assessment of TIMI flow and myocardialblush. Page 28 of 52 The following assessments will be done after the procedure: · urinalysis· blood sampling at 8 hours, 16 hours and 24 hours after the procedure, for assessment of Total CK/CK MB· 12-lead ECG· connection to 24 hour Holtter monitor Adverse events and concomitant medications will be monitored continuously during the procedure and recorded on the patient’s CRF. 6.2.1.3 Daily during hospitalization The patient must remain hospitalized for at least 48 hours after the procedure. The following assessments and procedures will be carried out during each dayof hospitalization, including day of discharge: · physical examination· vital signs· 12-lead ECG· blood and urine sampling for laboratory safety parameters (biochemistry [excluding troponin I or T], hematology and urinalysis) on day of dischargeand only if not done within the previous 48 hours· NT-proBNP on day of discharge and only if not done within the previous 48 hours· serious/adverse events· concomitant medication 6.2.1.4 Telephone Contact, Day 8, ±1 Patients who have been discharged from the hospital will be contacted by phone 7 days after application of BL-1040. The patient should be asked thefollowing questions: 1. How have you been feeling since your discharge? Have you had any chest pain or experienced any shortness of breath?2. Did you call your doctor for any reason? If so, when, and for what reason? Did you go to the emergency room for any reason? If so, when and forwhat reason?3. Are you taking any medications? If so, which ones? The information collected from this phone call is to be recorded in the patient’s CRF. 6.2.1.5 Day 30, Day 90 and Day 180 (End of Study) The patient will return to the hospital for the following assessments and procedures on Day 30, Day 90 and Day 180. The visit on Day 180 will be consideredthe End of Study visit. If a patient is discontinued prior to Day 180 for any reason, the following assessments should be done at the time of discontinuation. Assessments to be carried out include: · physical examination:· vital signs· 12-lead ECG Page 29 of 52 · connection to 24-hour Holter monitor; to be returned on Day 31/Day 91/Day 181· blood and urine sampling for laboratory safety parameters (biochemistry [excluding troponin I or T], hematology and urinalysis)· NT-proBNP· echocardiography· MRI, if patient agrees· completion of the Minnesota Living with Heart Failure questionnaire· serious/adverse events· concomitant medication 6.2.1.6 Extended safety follow-up (Months 12, 24, 36, 48, 60 ±30 days) Patients will return to the hospital yearly for completion of follow-up assessments. Assessments are to include:: · physical examination· vital signs· 12-lead ECG· connection to 24-hour Holter monitor; the patient is to be connected at the time of the follow-up visit, and the monitor is to be returned thefollowing day· blood and urine sampling for laboratory safety parameters (biochemistry [excluding troponin I or T], hematology and urinalysis)· echocardiography· completion of the Minnesota Living with Heart Failure questionnaire· completion of the following questions:· How have you been feeling since your last check up?· Have you been hospitalized for any reason? If so, when, and for what reason?· serious/adverse events· concomitant medication 6.3 Study evaluations and procedures Safety will be evaluated by analyzing the results of physical examinations, laboratory examinations and cardiac assessments, as well as AEs (Section 7) andvital signs. Assessments will be carried out at the time points specified in Section 6.2, and as shown in Table 6.1. All safety related investigations are to be performed by the Principal Investigator or a medically qualified designee, who is responsible for the overalltreatment of the patient. 6.3.1 Safety 6.3.1.1 Physical examinations Physical examinations will include height (Screening only), weight, and a general assessment of overall body systems (cardiovascular, respiratory). 6.3.1.2 Vital signs The following vital signs will be assessed: · pulse rate Page 30 of 52®® · blood pressure (supine, systolic and diastolic)· body temperature The actual blood pressure and pulse rate should be recorded in the patient’s CRF. Rounding of values is not allowed. The following ranges will be used to define acceptable blood pressure: · supine systolic blood pressure: 100 - 160 mmHg· supine diastolic blood pressure: 60 - 95 mmHg· supine pulse <100 bpm Body temperature should be measured using the same methodology at each assessment, and should be measured in decimals. 6.3.1.3 ECGs A standard supine 12-lead ECG shall be recorded. ECG morphology and ECG intervals (PR, RR, QRS, QT, and QTc) will be determined: QTc will becalculated using Bazett’s formula. Patients will be connected to a 24-hour ambulatory Holter monitor at each follow-up visit (Day 30, Day 90, Day 180). Printouts/copies must be placed in the patient’s chart, clearly labeled with the patient number, time, date, visit, and study number, and signed by theInvestigator. A core laboratory will evaluate the results of both the ECG and Holter. 6.3.1.4 Echocardiograms Echocardiograms will be performed and recorded according to specific criteria established for this study, and provided in a separate EchocardiogramReference Manual. The same parameters will be measured at each assessment, throughout the study. A core laboratory will evaluate echocardiograms. The Principal Investigator, the Sponsor or the ISMB may review echocardiograms at any time if any safety concerns arise. Echocardiograms will be performedat the times indicated on the Schedule of Events and in Sec. 6.2 of the protocol. 6.3.1.5 MRIs While the MRI is an optional procedure for cardiac assessment at Screening and all follow-up visits (Day 30, Day 90, Day 180/End of Study), patients shouldbe encouraged to undergo the procedure at each relevant visit. Performance of the procedure is always contingent upon patient agreement. MRIs will be performed according to specific criteria established for this study, and provided in a separate MRI Reference Manual. A core laboratory willevaluate MRIs. The Principal Investigator, the Sponsor or the ISMB may review MRIs at any time if any safety concerns arise. Page 31 of 52 6.3.1.6 Clinical safety evaluations Safety blood sampling All laboratory samples will be processed at the local laboratory, except for NT-proBNP, which will be assessed at a core lab. The Investigator must review the laboratory assessments (initialed and dated) within 24 hours after the receipt of those results. Out of range values will beinterpreted by the Investigator with a comment of “not clinically significant” (NCS) or “clinically significant” (CS). Clinically significant abnormallaboratory values must be repeated on the appropriate clinical follow-up arranged by the Investigator and documented on the lab report until the lab valuehas stabilized or has returned to a clinically acceptable range (regardless of relationship to BL-1040). Any laboratory value that remains abnormal at the Endof Study visit and is judged to be clinically significant will be followed according to accepted medical standards for up to 30 days or until resolution of theabnormality. Approximately 15 mL safety blood samples will be collected at the time points indicated in Sec 6.2 and shown in Table 6.1. Analyses will include: · biochemistry· total protein· albumin· total bilirubin· ALT· AST· GGT· LDH· alk phosphate· glucose· sodium· potassium· calcium· phosphate· urea/BUN· creatinine· PTT or ACT· troponin I or T (Screening only) · hematology· red blood cell count· hemoglobin· hematocrit· mean cell hemoglobin· mean cell hemoglobin concentration· mean cell volume· white blood cell count and differential· platelet count · cardiac biomarkers· Total CK/CK MB· NT-proBNP · urinalysis Page 32 of 52 · urine protein· urine glucose· urine blood· leukocytes· nitrites· urobilinogen· bilirubin· pH· specific gravity· ketones If dipstick analysis reveals any pathological results, a full urine analysis will be conducted and the following should be checked: 1. Color2. Appearance3. Leukocytes + erythrocytes per HPF (High Power Field)4. Squamos epithelial cells5. Non squamos epithelial cells6. Yeast in urine7. Amorphous cells8. Mucous in urine9. Casts10. Crystals 6.3.2 Core laboratories Results of echocardiograms, ECGs, Holters, angiographies, and MRIs will be evaluated at Biomedical Systems: Biomedical Systems1945 Ch. de WavreB-1160 Brussels-Belgiumphone: +32 2 661 20 70fax: +32 2 661 20 71email: sjacobs@biomedsys.com NT-proBNP samples will be assessed at the central laboratory at the University of Heidelberg: Universitatsklinikum HeidelbergZentrallaborIm Neuenheimer Feld 67169120 Heidelberg, GermanyTel.: 06221-56-8803Fax: 06221-56-5205 6.4 Minnesota Living with Heart Failure questionnaire The Minnesota Living with Heart Failure questionnaire (MLHQ) is a standardized and validated questionnaire designed to measure the effects of heartfailure and treatments for heart failure on an individual’s quality of life (ref. 6-8). The questionnaire measures the effects of symptoms, functional limitations,and psychological distress on the individual’s life. These items are measured using a 6 point Likert scale (0-5) to indicate how much each of 21 items hasaffected their quality of life. Page 33 of 52®® The scales will be administered by the Investigator or trained/designated personnel, in the local language. Page 34 of 52 7 Adverse and Serious Adverse Events 7.1 Adverse event definition An adverse event (AE) is any untoward medical occurrence in a clinical trial patient who was administered a medicinal product and/or medical device andwhich does not necessarily have a causal relationship with this treatment. This includes any noxious, pathological or unintended change in anatomical,physiological or metabolic functions as indicated by physical signs, symptoms and/or laboratory detected changes occurring in any phase of the clinicalstudy whether associated with the study drug/device and whether or not considered related to study intervention. This includes an exacerbation of pre-existing conditions or events, intercurrent illnesses, or drug/device interaction. Anticipated day-to-day fluctuations of pre-existing conditions that do notrepresent a clinically significant exacerbation need not be considered AEs. Discrete episodes of chronic conditions occurring during a study period should bereported as AEs in order to assess changes in frequency or severity. AEs should be documented in terms of signs and symptoms observed by the Investigator or reported by the patient at each study visit. A medical diagnosisshould be added. Pre-existing conditions or signs and/or symptoms (including any which are not recognized at study entry but are recognized during the study period) presentin a patient prior to the start of the study should be recorded in the Medical History form within the patient’s CRF. 7.2 Recording adverse events All non-serious AEs (serious or non-serious) will be recorded from the time of implantation of BL-1040 on Day 1 until the end of the active study period (Day180); all serious AEs will be recorded from the time of implantation of BL-1040 until the end of the long term follow-up (Month 60). AEs are to be recordedon the appropriate AE pages in the patient’s CRF: if the AE is serious, the appropriate box on the AE page of the CRF should also be ticked. Where possible,a diagnosis rather than a list of symptoms should be recorded. If a diagnosis has not been made then each symptom should be listed individually. The nature,time of onset and cessation, and any treatment provided shall be recorded. According to “Medical Devices: Post Market Surveillance: Global Guidance for Adverse Event Reporting for Medical Devices — GHTF/SG2/N54R8: 2006,Study Group 2 Final Document’’, typical adverse events for medical devices include but are not limited to: · a malfunction or deterioration in the characteristics or performance· an incorrect or out of specification test result· an inaccuracy in the labeling, instructions for use and/or promotional materials. Inaccuracies include omissions and deficiencies. Omissions donot include the absence of information that should generally be known by the intended users.· use error All AEs (serious and non-serious) shall be reported as specified in this section of the Protocol and the expanded Medical Device Reporting Guidelines, whichwill be provided to all investigators prior to the start of the study. 7.3 Pre-device events The Investigator will report any pre-device event directly observed or mentioned by the patient from the time of signing Informed Consent until theimplantation of BL-1040 on Day 1. Pre-device events are reported in the CRF with at least the nature, the start date and the treatment (if applicable). Page 35 of 52 7.4 General adverse events Information on any AE must be recorded when volunteered by the patient, observed by study personnel, or elicited by a non-leading question, such as “Howare you feeling?”. 7.4.1 Assessment of severity of general adverse events General events should be assessed according to the following scale: ·mildthe event is easily tolerated and does not interfere with usual activity; disappears without residual effects·moderatethe event interferes with daily activity, but the patient is still able to function·severethe event is incapacitating and the patient is unable to work or complete usual activity; considered as unacceptable by theInvestigator 7.4.2 Assessment of causality of adverse events Every effort should be made by the Investigator to explain each AE, both serious and non-serious, and assess its causal relationship, if any, to implantation ofBL-1040. The relationship of BL-1040 to the event will be determined by how well the event can be understood in terms of one or more of the following relatedthere is suspicion of a relationship between BL-1040 and AE (without determining the extent of probability); there are no other morelikely causes and administration of BL-1040 is suspected to have contributed to the AE possibleAE occurs within a reasonable time after the implantation of BL-1040 but can also be reasonably explained by other factors (asmentioned below) unrelatedthere is no suspicion that there is a relationship between BL-1040 and AE, there are other more likely causes and implantation of BL-1040 is not suspected to have contributed to the AE Non-serious and serious AEs will be evaluated as two distinct types of events given their different medical nature. The Investigator will examine all eventsassessed as “serious” (Sec. 7.5.1) in order to determine, as far as possible, ALL contributing factors applicable to each serious AE. Other possible contributors include: · underlying disease· Other medication· protocol required procedure· other (specify) 7.4.3 Follow-up of adverse events and assessment of outcome All AEs will be followed to resolution (patient’s health has returned to baseline status or all variables have returned to normal); until an outcome has beenreached; stabilization (Investigator does not expect any further improvement of worsening of the event); or the event is otherwise explained, regardless ofwhether the patient is still participating in the study. Where Page 36 of 52 Page appropriate, medical tests and examinations will be performed to document resolution of the event. All follow-up information will be recorded in thepatient’s CRF until Day 180. 7.5 Serious Adverse Events 7.5.1 Definition of Serious Adverse Event (SAE) A serious adverse event (SAE) is any untoward medical occurrence or effect that led to one of the following outcomes: · death of a patient, user or other person· serious injury of a patient, user or other personSerious injury (also known as serious deterioration in state of health) is either:· a life threatening illness or injury *· permanent impairment of a body function or permanent damage to a body structure†· a condition necessitating medical or surgical intervention to prevent permanent impairment of a body function or permanent damage to a bodystructureThe term “permanent” means irreversible impairment or damage to a body structure or function, excluding minor impairment or damageMedical intervention is not in itself a serious injury. It is the reason that motivated the medical intervention that should be used to assess thereportability of an event.· in-patient hospitalization‡ or prolongation of existing hospitalization· an event that might lead to death or serious injury of a patient, user or other person if the event recurs (sometimes called a ‘‘near incident’’) *Life threatening: An AE is life threatening if the patient was at risk of death at the time of the event; it does not refer to an event which hypothetically mighthave caused death if it were more severe. †Disabling/incapacitating: An AE is incapacitating or disabling if the event results in a substantial disruption of the patient’s ability to carry out normal lifefunctions. This definition is not intended to include experiences of relatively minor medical significance such as headache, nausea, vomiting, diarrhea,influenza, or accidental trauma (e.g. sprained ankle). ‡Hospitalization: In general, hospitalization signifies that the patient has been detained (usually involving at least an overnight stay) at the hospital oremergency ward for treatment that would not have been appropriate in the physician’s office or out-patient setting. Hospitalization for either elective surgery related to a pre-existing condition which did not increase in severity or frequency following initiation of the studyor for routine clinical procedures¶ (including hospitalization for “social” reasons) that are not the result of an AE need not be considered as AEs and aretherefore not SAEs. When in doubt as to whether ‘hospitalization’ occurred or was necessary, the AE should be considered serious. ¶Routine Clinical Procedure: procedure which may take place during the study period and should not interfere with the implantation of BL-1040 or any ofthe ongoing protocol specific procedures. If anything untoward is reported during an elective procedure, that occurrence must be reported as an AE, either‘serious’ or non-serious according to the usual criteria. For medical devices, typical serious adverse events include but are not limited to: · use error (e.g. untrained user, incorrect route of administration) related to medical devices, which did result in death or serious injury· damage to tissue or tissue function following administration of study device Page 37 of 52 · impairment of an organ or organ function following administration of study device· interaction with concomitant treatment (other devices or drugs) that might lead to death or serious injury· interaction with materials (e.g. catheters, stent), substances or gases entering into contact with the device during normal use that might lead to deathor serious injury· non-biocompatibility leading to serious irritation/allergy that results in in-patient hospitalization or prolongation of existing hospitalization 7.5.2 Pre-defined SAEs For the purposes of this study, the following events will be defined as serious: · re-infarction· stroke or transient ischemic attack (TIA)· acute heart failure (decompensation) The occurrence of any of these events after implantation of BL-1040 will be considered an SAE; they are to be reported and followed up as specified inSections 7.5.3 and 7.5.4. 7.5.3 Reporting serious adverse events All Serious Adverse Events (SAEs) must be reported immediately by the Investigator without filtration, whether considered to be associated with BL-1040and whether or not considered related to BL-1040. The Investigator must report SAEs within one calendar day of becoming aware of the event by telephone,fax or e-mail to the Study Contact for Reporting Serious Adverse Events as indicated below. This initial notification should include minimal, but sufficientinformation to permit identification of the reporter, the patient, study device, any medications administered, AEs, causality assessment and date of onset. TheInvestigator should not wait for additional information to fully document the event before providing notification. An acknowledgement letter will confirmthe first notification. The report is then to be followed by submission of a completed SAE Report Form provided by Venn Life Sciences AG as soon aspossible but at latest within 3 calendar days of the initial telephone/fax or e-mail report detailing relevant aspects of the AEs in question. All actions taken bythe Investigator and the outcome of the event must also be reported immediately. For documentation of the SAE, any actions taken, outcome and follow-upreports, the SAE Report Forms are to be used. Where applicable, hospital case records and autopsy reports should be obtained. Investigators must report SAEs to the appropriate ethics committee if requested by the committee and/or according to local legal requirements. Study Contact for Reporting Serious Adverse Events. Venn Life Sciences AG, Elisabethenstrasse 23/3, CH-4051 Basel Fax:00800 201 11 011e-mail:SAE@vlsworldwide.comTel:+41 61 201 11 83 24/24 hour and 7/7 day availability 7.5.4 Follow-up of serious adverse events All SAEs must be collected and documented until the end of the long term follow-up (Month 60), and followed up until the event either resolved, subsided,stabilized, disappeared or is otherwise Page 38 of 52 explained or the study patient is lost to follow-up. All follow-up activities must be reported, if necessary on one or more consecutive SAE report forms, in atimely manner. All fields with additional or changed information must be completed and the report form should be forwarded to the Study Contact forReporting Serious Adverse Events as soon as possible but latest within 7 calendar days after receipt of the new information. Clinically significant laboratoryabnormalities will be followed up until they have returned to normal, or a satisfactory explanation has been provided. Reports relative to the subsequentcourse of an AE noted for any patient must be submitted to Venn Life Sciences AG. 7.6 Treatment of adverse events Treatment of any AE is at the sole discretion of the Investigator and according to current available best treatment. The applied measures should be recordedin the CRF of the patient. 7.7 Pregnancy The Sponsor must be notified immediately of any pregnancy that occurs during the study. The SAE report form should be used to report the pregnancy, eventhough the pregnancy is not considered an SAE. Women who become pregnant during the study will be followed up until birth of the child. The health statusof the newborn will be reported in the patient’s CRF. Page 39 of 52 8 Data Evaluation and Statistics In all analyses where a change from baseline is performed, baseline is defined as the last available value before device implantation. 8.1 Endpoints The primary endpoints are occurrence of all adverse events including but not limited to: · all MIs· cardiovascular hospitalization· serious ventricular arrhythmias sustained· VT (symptomatic or sustained VT [duration longer than 30 seconds or 100 beats, or associated with hemodynamic collapse]· VF· symptomatic bradycardia, pauses of longer than 3.0 seconds, complete atrioventricular block, Mobitz II atrioventricular block· symptomatic heart failure (NYHA criteria + physical examination OR hospitalization due to heart failure)· renal failure· stroke· death Secondary Endpoints include the parameters: · change from baseline in LV dimensions (end-systolic volume index, end-diastolic volume index, left ventricular mass)· change from baseline in regional (infarct related) and global wall motion score· change from baseline in ejection fraction· cardiac rupture· NT-proBNP 8.2 Estimated sample size No formal sample size calculation was performed. Twenty patients followed up to Day 180 were deemed necessary to meet the objectives of this Phase Istudy. Taking into account drop-outs after the device implantation, thirty patients will be enrolled. 8.3 Planned methods of analysis All data recorded will be presented in data listings and summary tables, as appropriate. Missing values will not be replaced. No formal hypothesis testing willbe performed. 8.3.1 Analysis population All participants who received the BL-1040 myocardial implant will be included in the safety analysis. Any excluded cases will be documented together withthe reason for exclusion. All decisions on exclusions from the analysis will be finalized prior database lock. 8.3.2 Analysis of demographics Continuous demographic variables (age, height, weight) will be summarized using mean, median, standard deviation, minimum, maximum, and number ofavailable observations. Page 40 of 52 Qualitative demographic characteristics will be summarized by counts and percentages. Other patient characteristics (medical history, clinical findings, priormedications, inclusion/exclusion criteria) will only be listed. 8.3.3 Analysis of safety AEs will be described in individual listings and frequency tables by system organ class and preferred terms (MedDRA version 10.0 or higher), regardless ofrelationship as well as for related AEs. The severity of AEs will also be tabulated. Vital signs will be listed and changes from baseline and raw results will be summarized by means and standard deviations. Laboratory test values will be presented by individual listings with flagging of values outside the normal ranges. Raw laboratory results and changes frombaseline will be summarized by means and standard deviations. 12 lead ECG findings will be presented by listings and frequency tables, as appropriate. Continuous ECG data will be summarized using standard descriptivestatistics. The change from baseline in cardiac parameter (LV dimensions, wall motion score, ejection fraction) as well as the NT-proBNP data will be summarized usingstandard descriptive statistics. 8.4 Interim analysis An interim safety analysis will be performed after 5 patients have completed the Day 30 visit, on all data collected up to this timepoint. 8.5 Final and follow-up reporting The final clinical study report will be prepared based on data from Day 180, or End of Study, from the final patient. Thereafter, an annual safety report will beprepared after each yearly safety follow-up visit (Months 12, 24, 36, 48, 60). 8.6 Quality assurance All data collected in the CRF will be double entered into a validated computerized clinical data management system (Clintrial). Laboratory values from thelocal lab will be entered into the CRF. Analysis of the data will only be performed after all queries have been resolved using an appropriate software foranalysis (SAS 8.1). Page 41 of 52 9 Ethics and regulatory considerations The study will be conducted according to Good Clinical Practice, the Declaration of Helsinki 2000 (Appendix A), and the rules and regulations of theEuropean Union and Israel. 9.1 Informed Consent The nature, purpose and potential risk of the study as well as the action of the BL-1040 myocardial implant will be explained to all patients both verballyand in writing. They will be given adequate time to consider the study before signing the consent form. Their questions will be actively encouraged. Theywill be informed that they may withdraw from the study at any time. This information is documented in the protocol and participants in the study will sign aconsent form confirming that they have read and understood it; no study activities will take place until the consent form has been signed. They will also begiven a Patient Information Sheet and copy of the consent form. 9.2 Authorities The procedures laid out by the local regulatory authorities must be followed and all documents must be submitted to all concerned authorities, and whereneeded, approved before a clinical study may commence. 9.3 Protocol Amendments There will be no alteration to the protocol without the express written approval of the Sponsor. The local authorities or ethics committees must approve all major protocol amendments prior to implementation. No protocol amendments should be adopted without prior written approval from the ethics committee except in the following cases: · in order to eliminate immediate hazard to the patients,· changes involving only logistical or administrative aspects of the trial. Then notification to the relevant authorities should be submitted. In these cases, the implemented deviation or change should be submitted as soon as possible to the relevant authorities for review and approval. No protocol deviations are anticipated. However, should any protocol deviations occur, the Principal Investigator must report the matter to the Sponsor assoon as reasonably practical. Details of the deviation and, if possible, the reason for its occurrence must be included in the study report. Major modifications will need further approval, and will be submitted to the local authorities or ethics committees, according to local regulations, in the formof an Amendment. Minor administrative changes require only that the Chairman of the Ethics Committee be informed in writing without delay. 9.4 Patient confidentiality Individual patient data obtained as a result of this study is considered confidential. A patient identification number will identify any patient data collectedthroughout the study only. Page 42 of 52 Data generated as a result of this study are to be available for inspection on request by all authorized Sponsor personnel, Venn Life Sciences AG personnel,audit personnel and regulatory authorities. The Informed Consent must clearly reflect this access. 9.5 Insurance The compensation of the patient in the event of study related injuries will comply with the applicable obligatory requirements. Details will be included in theinformed Consent. 9.6 Duration of the study The active study phase for each patient is 180 days. Enrolment is expected to begin in Q1 2008; the study is expected to end Q1 2010. Page 43 of 52 10 Data Handling and Record Keeping 10.1 Documentation Records must be retained for 15 years after study completion 10.2 Case Report Forms The Investigator is responsible for maintaining adequate and accurate medical records from which accurate information will be transferred into the studydatabase. Case Report Forms (CRFs) should be completed by the Investigator or delegated personnel. CRFs will be provided for each patient. All data will be entered in black ink. Data/corrections entered will be signed or initialed by the study personnelundertaking that procedure. Overwriting data or use of liquid correcting fluid is not allowed. Detailed instructions are provided with the CRF. 10.3 Monitoring and quality control To ensure compliance with relevant regulations, data generated by this study must be available for inspection upon request by representatives of BioLineInnovations Jerusalem, Venn Life Sciences AG(CRO), auditing personnel and relevant local regulatory authorities. Regular on-site visits for monitoring of study activities and data recording will be scheduled. Formal reports of these visits will be generated and copiesprovided to relevant Sponsor and study personnel. 10.4 Publication policy The results of the study are the property of the Sponsor. All manuscripts, abstracts or other modes of presentation arising from the results of the study must bereviewed and approved in writing by the Sponsor, in advance of submission. Co-authorship with any Sponsor personnel will be discussed and mutuallyagreed upon before submission of a manuscript to a publisher. Page 44 of 52 11 References 1. GMP guideline Volume 4, Annex 13 Manufacture of Investigational Medicinal Products (July 2003 Revision 1)2. Marcus ML, Wilson RF and White CW. Methods of measurement of myocardial blood flow in patients: a critical review, Circulation 1987, 76; 245-2533. Bassand et al., Guidelines for the diagnosis and treatment of patients with non-ST-segment elevation acute coronary syndromes. European Heart Journal2007, 27; 1598-16604. Silber S et al. ESC Guidelines: Guidelines for percutaneous coronary interventions. European Heart Journal 2005, 26; 804-8475. Van de Werf et at., Management of acute myocardial infarction in patients presenting with ST-segment elevation. European Heart Journal 2003, 24; 28-66.6. Rector TS, Francis GS, Cohn JN. Patients’ self-assessment of their congestive heart failure. Part 1 Patient perceived dysfunction and its poor correlationwith maximal exercise tests. Heart Failure 1987, Oct/Nov; 192-196.7. Rector TS, Kubo SH, Cohn JN: patients’ self-assessment of their congestive heart failure Part 2: Content, reliability and validity of a new measure, theMinnesota Living with Heart Failure questionnaire. Heart Failure. 1987, Oct/Nov; 198-209.8. Rector TS. A conceptual model of the quality of life in relation to heart failure. J Cardiac Failure 2006. Page 45 of 52 Appendix A: Declaration of Helsinki Initiated: 1964 17.C Original: English WORLD MEDICAL ASSOCIATION DECLARATION OF HELSINKIEthical Principlesfor Medical Research Involving Human Subjects Adopted by the 18th WMA General AssemblyHelsinki, Finland, June 1964and amended by the29th WMA General Assembly, Tokyo, Japan, October 197535th WMA General Assembly, Venice, Italy, October 198341st WMA General Assembly, Hong Kong, September 198948th WMA General Assembly, Somerset West, Republic of South Africa, October 1996and the52nd WMA General Assembly, Edinburgh, Scotland, October 2000 Note of Clarification on Paragraph 29 added by the WMA General Assembly, Washington 2002Note of Clarification on Paragraph 30 added by the WMA General Assembly, Tokyo 2004 A. INTRODUCTION 1. The World Medical Association has developed the Declaration of Helsinki as a statement of ethical principles to provide guidance to physicians andother participants in medical research involving human subjects. Medical research involving human subjects includes research on identifiable humanmaterial or identifiable data. 2. It is the duty of the physician to promote and safeguard the health of the people. The physician’s knowledge and conscience are dedicated to thefulfillment of this duty. 3. The Declaration of Geneva of the World Medical Association binds the physician with the words, “The health of my patient will be my firstconsideration,” and the International Code of Medical Ethics declares that, “A physician shall act only in the patient’s interest when providing medicalcare which might have the effect of weakening the physical and mental condition of the patient.” 4. Medical progress is based on research which ultimately must rest in part on experimentation involving human subjects. 5. In medical research on human subjects, considerations related to the well-being of the human subject should take precedence over the interests of scienceand society. 6. The primary purpose of medical research involving human subjects is to improve prophylactic, diagnostic and therapeutic procedures and theunderstanding of the aetiology and pathogenesis of disease. Even the best proven prophylactic, diagnostic, and Page 46 of 52 therapeutic methods must continuously be challenged through research for their effectiveness, efficiency, accessibility and quality. 7. In current medical practice and in medical research, most prophylactic, diagnostic and therapeutic procedures involve risks and burdens. 8. Medical research is subject to ethical standards that promote respect for all human beings and protect their health and rights. Some research populationsare vulnerable and need special protection. The particular needs of the economically and medically disadvantaged must be recognised. Special attentionis also required for those who cannot give or refuse consent for themselves, for those who may be subject to giving consent under duress, for those whowill not benefit personally from the research and for those for whom the research is combined with care. 9. Research Investigators should be aware of the ethical, legal and regulatory requirements for research on human subjects in their own countries as well asapplicable international requirements. No national ethical, legal or regulatory requirement should be allowed to reduce or eliminate any of theprotections for human subjects set forth in this Declaration. B. BASIC PRINCIPLES FOR ALL MEDICAL RESEARCH 10. It is the duty of the physician in medical research to protect the life, health, privacy, and dignity of the human subject. 11. Medical research involving human subjects must conform to generally accepted scientific principles, be based on a thorough knowledge of the scientificliterature, other relevant sources of information, and on adequate laboratory and, where appropriate, animal experimentation. 12. Appropriate caution must be exercised in the conduct of research which may affect the environment, and the welfare of animals used for research must berespected. 13. The design and performance of each experimental procedure involving human subjects should be clearly formulated in an experimental protocol. Thisprotocol should be submitted for consideration, comment, guidance, and where appropriate, approval to a specially appointed ethical review committee,which must be independent of the Investigator, the sponsor or any other kind of undue influence. This independent committee should be in conformitywith the laws and regulations of the country in which the research experiment is performed. The committee has the right to monitor ongoing trials. Theresearcher has the obligation to provide monitoring information to the committee, especially any serious adverse events. The researcher should alsosubmit to the committee, for review, information regarding funding, sponsors, institutional affiliations, other potential conflicts of interest and incentivesfor subjects. 14. The research protocol should always contain a statement of the ethical considerations involved and should indicate that there is compliance with theprinciples enunciated in this Declaration. 15. Medical research involving human subjects should be conducted only by scientifically qualified persons and under the supervision of a clinicallycompetent medical person. The responsibility for the human subject must always rest with a medically qualified person and never rest on the subject ofthe research, even though the subject has given consent. 16. Every medical research project involving human subjects should be preceded by careful assessment of predictable risks and burdens in comparison withforeseeable benefits to the subject or to others. This does not preclude the participation of healthy volunteers in medical research. The design of allstudies should be publicly available. Page 47 of 52 17. Physicians should abstain from engaging in research projects involving human subjects unless they are confident that the risks involved have beenadequately assessed and can be satisfactorily managed. Physicians should cease any investigation if the risks are found to outweigh the potentialbenefits or if there is conclusive proof of positive and beneficial results. 18. Medical research involving human subjects should only be conducted if the importance of the objective outweighs the inherent risks and burdens to thesubject. This is especially important when the human subjects are healthy volunteers. 19. Medical research is only justified if there is a reasonable likelihood that the populations in which the research is carried out stand to benefit from theresults of the research. 20. The subjects must be volunteers and informed participants in the research project. 21. The right of research subjects to safeguard their integrity must always be respected. Every precaution should be taken to respect the privacy of thesubject, the confidentiality of the patient’s information and to minimise the impact of the study on the subject’s physical and mental integrity and on thepersonality of the subject. 22. In any research on human beings, each potential subject must be adequately informed of the aims, methods, sources of funding, any possible conflicts ofinterest, institutional affiliations of the researcher, the anticipated benefits and potential risks of the study and the discomfort it may entail. The subjectshould be informed of the right to abstain from participation in the study or to withdraw consent to participate at any time without reprisal. Afterensuring that the subject has understood the information, the physician should then obtain the subject’s freely given informed consent, preferably inwriting. If the consent cannot be obtained in writing, the non-written consent must be formally documented and witnessed. 23. When obtaining informed consent for the research project the physician should be particularly cautious if the subject is in a dependent relationship withthe physician or may consent under duress. In that case the informed consent should be obtained by a well-informed physician who is not engaged in theinvestigation and who is completely independent of this relationship. 24. For a research subject who is legally incompetent, physically or mentally incapable of giving consent or is a legally incompetent minor, the Investigatormust obtain informed consent from the legally authorised representative in accordance with applicable law. These groups should not be included inresearch unless the research is necessary to promote the health of the population represented and this research cannot instead be performed on legallycompetent persons. 25. When a subject deemed legally incompetent, such as a minor child, is able to give assent to decisions about participation in research, the Investigatormust obtain that assent in addition to the consent of the legally authorised representative. 26. Research on individuals from whom it is not possible to obtain consent, including proxy or advance consent, should be done only if the physical/mentalcondition that prevents obtaining informed consent is a necessary characteristic of the research population. The specific reasons for involving researchsubjects with a condition that renders them unable to give informed consent should be stated in the experimental protocol for consideration andapproval of the review committee. The protocol should state that consent to remain in the research should be obtained as soon as possible from theindividual or a legally authorised surrogate. 27. Both authors and publishers have ethical obligations. In publication of the results of research, the Investigators are obliged to preserve the accuracy ofthe results. Negative as well as positive results should be published or otherwise publicly available. Sources of funding, institutional affiliations and anypossible conflicts of interest should be declared in Page 48 of 52 the publication. Reports of experimentation not in accordance with the principles laid down in this Declaration should not be accepted for publication. C. ADDITIONAL PRINCIPLES FOR MEDICAL RESEARCH COMBINED WITH MEDICAL CARE 28. The physician may combine medical research with medical care, only to the extent that the research is justified by its potential prophylactic, diagnosticor therapeutic value. When medical research is combined with medical care, additional standards apply to protect the patients who are research subjects. 29. The benefits, risks, burdens and effectiveness of a new method should be tested against those of the best current prophylactic, diagnostic, and therapeuticmethods. This does not exclude the use of placebo, or no treatment, in studies where no proven prophylactic, diagnostic or therapeutic method exists. 30. At the conclusion of the study, every patient entered into the study should be assured of access to the best proven prophylactic, diagnostic andtherapeutic methods identified by the study. 31. The physician should fully inform the patient which aspects of the care are related to the research. The refusal of a patient to participate in a study mustnever interfere with the patient-physician relationship. 32. In the treatment of a patient, where proven prophylactic, diagnostic and therapeutic methods do not exist or have been ineffective, the physician, withinformed consent from the patient, must be free to use unproven or new prophylactic, diagnostic and therapeutic measures, if in the physician’sjudgement it offers hope of saving life, re-establishing health or alleviating suffering. Where possible, these measures should be made the object ofresearch, designed to evaluate their safety and efficacy. In all cases, new information should be recorded and, where appropriate, published. The otherrelevant guidelines of this Declaration should be followed. § § § Page 49 of 52 Appendix B: Minnesota Living with Heart Failure® questionnaire Page 50 of 52 LIVING WITH HEART FAILURE QUESTIONNAIRE Instructions for Use 1. Patients should respond to the questionnaire prior to other assessments and interactions that may bias responses. You may tell the patient that youwould like to get his or her opinion before doing other medical assessments. 2 Ample, uninterrupted time should be provided for the patient to complete the questionnaire. 3. The following instructions should be given to the patient each time the questionnaire is completed. a. Read the introductory paragraph at the top of the questionnaire to the patient. b. Read the first question to the patient - “Did your heart failure prevent you from living as you wanted during the past month by causingswelling in your ankles or legs”? Tell the patient. “If you did not have any ankle or leg swelling during the past month you should circlethe zero after this question to indicate that swelling was not a problem during the past month”. Explain to the patient that if he or she didhave swelling that was caused by a sprained ankle or some other cause that was definitely not related to heart failure he or she should alsocircle the zero. Tell the patient, “If you are not sure why you had the swelling or think it was related to your heart condition, then rate howmuch the swelling prevented you from doing things you wanted to do and from feeling the way you would like to feel”. In other words, howbothersome was the swelling? Show the patient how to use the 1 to 5 scale to indicate how much the swelling affected his or her life duringthe past month - from very little to very much. 4. Let the patient read and respond to the other questions. The entire questionnaire may be read directly to the patient if one is careful not to influenceresponses by verbal or physical cues. 5. Check to make sure the patient has responded to each question and that there is only one answer clearly marked for each question. If a patient electsnot to answer a specific question(s) indicate so on the questionnaire. 6. Score the questionnaire by summating the responses to all 21 questions. In addition, physical (items 2, 3, 4, 5, 6, 7, 12 and 13) and emotional (items17, 18, 19, 20, and 21) dimensions of the questionnaire have been identified by factor analysis, and may be examined to further characterize theeffect of heart failure on a patient’s life. Page 51 of 52 LIVING WITH HEART FAILURE QUESTIONNAIRE These questions concern how your heart failure (heart condition) has prevented you from living as you wanted during the last month. The items listed belowdescribe different ways some people are affected. If you are sure an item does not apply to you or is not related to your heart failure then circle 0 (No) and goon to the next item. If an item does apply to you, then circle the number rating how much it prevented you from living as you wanted. Did your heart failure prevent you from living as you wanted during the last month by: NoVerylittle Verymuch1.Causing swelling in your ankles, legs. etc.?0123452.Making you sit or lie down to rest during the day?0123453.Making your walking about or climbing stairs difficult?0123454.Making your working around the house or yard difficult?0123455.Making your going places away from home difficult?0123456.Making your sleeping well at night difficult?0123457.Making your relating to or doing things with your friends or family difficult?0123458.Making your working to earn a living difficult?0123459.Making your recreational pastimes, sports or hobbies difficult?01234510.Making your sexual activities difficult?01234511.Making you eat less of the foods you like?01234512.Making you short of breath?01234513.Making you tired, fatigued, or low on energy?01234514.Making you stay in a hospital?01234515.Costing you money for medical care?01234516.Giving you side effects from medications?01234517.Making you feel you are a burden to your family or friends?01234518.Making you feel a loss of self-control in your life?01234519.Making you worry?01234520.Making it difficult for you to concentrate or remember things?01234521.Making you feel depressed’?012345 Copyright University of Minnesota 1986 Page 52 of 52 SCHEDULE 1.31 DESCRIPTIONS OF OTHER ON-GOING TRIALS Name of StudyEstimated Duration Estimated End Date[**][**][**][**][**][**][**][**][**] SCHEDULE 1.35 OUTLINE OF STRUCTURE FOR PIVOTAL CLINICAL TRIAL FOR PRIMARY INDICATION (see Schedule 3.1) SCHEDULE 1.42(a) INDEPENDENT SAFETY MONITORING BOARD CHARTER Independent Safety Monitoring Board Charter For Bioline Innovations Jerusalem Protocol No. BL-1040 A Phase I, multi-center, open label study designed to assess the safety and feasibility of the injectable BL-1040 implant to provide scaffolding toinfarcted myocardial tissue APPROVING OFFICIALS Name Title Signature Date Lincoff, A. Michael, M.DChairman ISMB Moti GalSponsor Contact Person Andrea Kempf-Müller, M.DDrug Safety Officer Contact details ISMB members Lincoff, A. Michael, M.D.ISMB ChairmanThe Cleveland Clinic Foundation9500 Euclid Avenue - F25Cleveland, OH 44195Phone: 216.444.2367FAX: 216.636.0609lincofa@ccf.org Philippe Gabriel Steg, M.D., F.A.C.CHopital Bichat-Claude BernadService de Cardiologie46 Rue Henri Huchard75018 ParisFRANCEgabriel.steg@bch.aphp.fr Michael Marber BSc, MB.BS, PhD, FRCPProfessor of CardiologyKing’s College LondonHonorary Consultant CardiologistGuy’s & St Thomas’ HospitalsThe Rayne Institute, St Thomas’ HospitalLambeth Palace Rd, London SE1 7EHmike.marber@kcl.ac.uk Kerry Lee, Ph.D.Duke Clinical Research Institute2400 Pratt StreetRoom 0311 Terrace LevelDurham, NC 27705Ph: 919-668-8725Fx: 919-668-7055kerry.lee@duke.edu Contact details BioLine and Averion Project ManagerAddress: 2268 chemin de SourdaineAverion:F-84140 MontfavetFrederic Liegeois, MscPhone: +33 (0)490140997Mobile: +33 (0)681607626Email: frederic.liegeois@averionintl.com Senior Drug Development ManagerBioline:Tuvia Shmuel, PhD Address: BioLine Innovations Jerusalem,19 Hartum St., POB 45158 Jerusalem, Israel 91450Phone: +972-2-548-9100, ext. 124Fax: +972-2-548-9101e-mail: shmuelt@biolinerx.com ISMB Sponsor RepresentativeBioline:Adina PoratAddress: BioLine Innovations Jerusalem,19 Hartum St., POB 45158Phone: +972-2-548-9100 ex. 135Mobile: +972-54-5594613Fax: +972-2-548-9101E-Mail: adinap@biolinerx.com Clinical Operations ManagerBioline:Moti GalAddress: BioLine Innovations Jerusalem,19 Hartum St., POB 45158Telephone: +972-2-548-9100 ex. 147Mobile: +972-54-5933127Fax: +972-2-548-9101E-Mail: motig@biolinerx.com ISMB CoordinatorVenn Life Sciences AG Medical Monitor, EuropeAndrea Kempf-Müller, MDVenn Life Sciences AGElisabethenstrasse 23/34051 Basel, Switzerland Tel: +41 61 201 11 83Mobile: + 41 79 348 54 59Fax: +41 61 273 42 50Email: andrea.kempf-mueller@vlsworldwide.com Medical Monitor, US (only for ISMB contact) Sanjay Machado, MDVenn Life Sciences7355 Trans-Canada Suite 200 St-Laurent, QC, CanadaH4T-1T3Tel: (541) 315-2992 117Mobile: (514) 946-7678Fax: (514) 315-0995Email: sanjaym@vlscanada.com 1. PROTOCOL BL-1040 A Phase I, multi-center, open label study designed to assess the safety and feasibility of the injectable BL-1040 implant to provide scaffolding to infarctedmyocardial tissue. Venn Life Sciences AG has been contracted by Bioline Innovations Jerusalem to provide services as the Contract Research Organization (CRO) for the trial. 2. SCOPE OF THE ISMB CHARTER The International Independent Safety Monitoring Board (ISMB) was formed to monitor the safety of patients participating in this trial on an ongoing basis. The ISMB will evaluate quality, accuracy and timeliness of data flow and assure confidentiality of data. The ISMB will develop stopping rules for the termination of the study prior to the initiation. Bioline Innovations Jerusalem will forward the charter to Regulatory Authorities, and/or Ethics Committees as necessary. The objective of the ISMB Charter is to outline the specific purposes and functions of the ISMB. In addition, it describes the procedures for data abstractionand data delivery conventions to and from the ISMB members for review purposes. 3. COMPOSITION OF THE ISMB The ISMB is composed of three members, three voting members including the Chairman. In addition a bio-statistician will consult the ISMB however willnot attend as a voting member. The members are independent physicians in the field of cardiology and a bio-statistician experienced in evaluating safetydata from cardiology clinical studies. Prof. Lincoff will serve as Chairman of the ISMB. All ISMB members have been approved by the sponsor, BiolineInnovations Jerusalem. By signing the ISMB Charter, voting ISMB members verify that they do not have a vested interest in the outcome of the study, nor do they have a financialconflict of interest. ISMB members are not employees of Bioline Innovations Jerusalem have outside employment and will not be involved in patientrecruitment or as investigators in the study. The ISMB members are expected to serve until the study is completed. Should a member resign, the reason and effective date of resignation must besubmitted in writing to Bioline Innovations Jerusalem and the ISMB Chairman. A replacement member will be sought by Bioline Innovations Jerusalem inconsultation with the ISMB Chairman. Except for the initial meeting of the ISMB where the background data on BL-1040 and the study design will be discussed by Bioline InnovationsJerusalem’s’ representatives, Bioline Innovations Jerusalem will not participate in the ISMB meetings unless requested by the ISMB. ISMB Administration From Venn Life Sciences AG, the ISMB Coordinator will arrange for the provision of the data and narratives required by the ISMB. Bioline InnovationsJerusalem will provide administrative, logistical and coordinating services to the ISMB. ISMB Contacts & Consultants The Chairman will be the representative of the ISMB who will be responsible for timely official communications between the ISMB and Bioline InnovationsJerusalem. The Chairman will provide leadership and oversee that the direction of ISMB meeting operations are in accordance with the ISMB charter. From the sponsor, Bioline Innovations Jerusalem, an identified representative will serve as the primary contact person for the ISMB. The sponsor primarycontact is named on the ISMB charter. This individual is not considered to be a member of the ISMB and will only attend open and final sessions of ISMBData Review Meetings. From Venn Life Sciences AG, the ISMB Coordinator will serve as the primary contact person for any questions the ISMB members have regarding thecontents of the ISMB Data Reports. This individual is not considered to be a member of the ISMB and will only attend open and final sessions of ISMB Data Review Meetings. Additional individuals may also be invited to attend the open and final sessions of theISMB Data Review meetings, as deemed appropriate. The ISMB Chairman will ensure that ISMB contacts are not exposed to the ISMB review of the data until the ISMB has arrived at a conclusion. ISMBcontacts may not be present during closed sessions, when the ISMB Data Report is reviewed, ISMB deliberations are made, ISMB recommendations arediscussed and/or ISMB voting procedures are conducted. 4. ISMB ROLE & RESPONSIBILITIES The ISMB is an independent expert advisory group commissioned and charged with the responsibility of evaluating accumulating data at regular intervalsand ensuring the safety of the subjects enrolled in the study by monitoring cumulative safety data collected in the clinical program and providingrecommendations to Bioline Innovations Jerusalem based on review of this data. The ISMB will contribute to efficient conduct of the trial by providing a fastreview of emerging findings from the study. This ISMB will consist of physicians with expertise in cardiovascular disease, particularly in the area of coronaryartery disease and with experience monitoring safety of drugs and/or devices for cardiovascular applications, and will have no participation in the trial in anyother capacity. These reviews in subsets of patients will have the objective of searching for signals of clinically important adverse safety findings that may be indicative ofrisk to currently enrolled patients as well as increased risk for future patients. In these reviews, the ISMB will assume a conservative approach in assessingsafety. The Chairman will be directly responsible for reporting the outcome of all ISMB meetings and be the primary contact for any emergency meetings, asappropriately convened. He will be a voting member of the ISMB. The Chairman will also be responsible for the preparation of the report and/orrecommendations to Bioline Innovations Jerusalem. The three voting members of the ISMB (along with the Chairman) will be responsible for evaluating the safety data and making recommendations on thecontinuation of the study as set out in the protocol. They may also make other pertinent safety recommendations for the conduct of the study. They will beguided by the ISMB Biostatistician’s evaluation of the data, as required. The bio-statistician will be involved in conducting any analysis that the ISMB recommends. The Bio-statistician will be responsible for designing andmaintaining the safety database that the ISMB will use for its analysis. This database may differ from the database by Venn Life Sciences AG and, as such, ismeant only for the use of the ISMB. The database will be created in such a way that it is reproducible and can be audited, if necessary. If the ISMB isconsidering a recommendation of premature termination of the study, the bio-statistician can contact Venn Life Sciences AG for additional data and/or for theperformance of confirmatory analysis. The Bio-statistician can also arrange for the necessary ISMB communications to be documented and stored and only tobe released after study completion. The ISMB will ensure that this study meets the highest standards of patient safety. In their analysis of the data from the patients, the ISMB will be focused ondetermining if there is a signal of clinically significant pattern of change in safety parameters that may lead to termination of study. This may require theISMB to perform/request additional data/analyses prior to making a decision. The operating procedures of the ISMB are based on and are in compliance with guidance and definitions of the International Conference on Harmonizationand the Food and Drug Administration. The ISMB will conduct all of its operations under the ICH Good Clinical Practices (GCP). Specifically, the ISMB is authorized and charged to perform the following functions: · review 30 day safety data patients from the first 2 sequentially enrolled patients to determine whether 3 additional patients may be enrolled; afterreviewing the 30 day safety data from these 3 additional patients, will determine whether the rest of patients may be enrolled· within 30 days of enrolment of each successive group of 5 patients receiving the device, will review all Serious and Severe Adverse Eventsoccurring to date and will recommend continuation, discontinuation, or modification of the procedure or protocol, based on a determination ofwhether the occurrence of serious, unexpected, or device-related adverse events (Sec. 7 in protocol) might outweigh the potential benefit achievablewith the device· review emerging findings in patients and identify potential safety concerns with BL-1040· will receive information, on an expedited basis, on all Serious and Severe Adverse Events, clinically significant laboratory values (as defined in thestudy safety plan), ECG abnormalities and vital signs that are associated with Serious and Severe Adverse Events, and data from patients whodecided to withdraw from the study due to Serious and Severe Adverse Events. All Serious and Severe Adverse Events that occur in the catheter labduring the administration of BL-1040 or the hospitalization period after the procedure should be reviewed promptly by the ISMB. The ISMB will review this information and may decide to interrupt, alter, or terminate the trial.· will adjudicate whether or not an event is unexpected, based on a pre-specified list of expected Serious and Severe Adverse Events as well asclinical judgment within the study population. All ISMB members will review the safety data provided by the CRO. The members will reach their own individual decision on the relatedness and thepotential hazard posed by the event. The ISMB will then collectively discuss the cases. In the event the majority opinion of the Board is that the events donot pose any significant risk then the ISMB will recommend continuing the trial as designed. However, if the Board decides that undue risk could accruefrom continuation of the study as designed, the ISMB has the freedom to recommend appropriate changes to the study selection criteria, safetyevaluations, etc. In addition, the CRO will provide datasets and listings capturing disposition, AEs, clinically significant Echocardiography, MRI,angiography, Holter, ECG vital signs/laboratory changes, once all patients complete study. 5. VENN LIFE SCIENCES AG ROLE & RESPONSIBILITIES Venn Life Sciences AG will provide coordinating services for the study. The ISMB Coordinator will provide information, on an expedited basis, on allSerious and Severe Adverse Events, clinically significant laboratory values (as defined in the study safety plan, ECG abnormalities and vital signs that areassociated with Serious and Severe Adverse Events as required, to the ISMB members. Venn Life Sciences AG will be charged with the followingresponsibilities: · To identify a specific individual to interface with the ISMB.· To provide all required information in advance of the meeting in a mutually agreeable format approved at the initial meeting of the ISMB.· To provide a standard safety narrative for all patients who withdraw from the study due to Serious or Severe Adverse Events.· To provide specific meeting issues in advance of the meeting.· To keep the ISMB Chairman informed of any serious safety issues as the study progresses· To inform each principal investigator of the ISMB recommendations, as required.· To notify Bioline Innovations Jerusalem of any issues related to the ISMB which might negatively influence the study. 6. BIOLINE INNOVATIONS JERUSALEM’S RESPONSIBILITIES Bioline Innovations Jerusalem will be responsible for the following: · To make any necessary changes to the protocol recommended by the ISMB and approved by Bioline Innovations Jerusalem.· To ensure that the ISMB is operating as needed for the purpose of the study. 7. ONGOING COMMUNICATIONS & NOTIFICATIONS The ISMB Chairman will receive relevant information regarding serious adverse events and Early Terminations on an ongoing basis. The ISMB Chairmanwill determine whether further distribution of this material to the remaining voting ISMB members is necessary. 8. DATA REVIEW MEETINGS ISMB Data Review meetings will be held in person or through teleconferences based on the volume of data to be reviewed. The ISMB Coordinator willestablish the agenda for each ISMB Data Review meeting, with input from Bioline Innovations Jerusalem and the ISMB Chairman. It is expected that there will be one initiation and at least three scheduled ISMB Data Review meetings. The initiation meeting will be held via face-to-faceformat, while the Data Review Meetings may be held via teleconference. The first 2 patients will be sequentially enrolled into the study. After the 1st patient has completed Day 30 assessments, the Independent SafetyMonitoring Board (ISMB, Sec. 4.3) will review the patient’s data through Day 30 (first ISMB meeting). The ISMB will then decide whether to giveapproval to enroll the 2nd patient. After the 2nd patient has completed Day 30 assessments, the ISMB will again review the data and provide approvalfor enrollment of the next 3 patients (2nd ISMB meeting). After all 3 patients have completed Day 30 assessments, the ISMB will review the data fromthese patients and provide approval for opening enrollment to the rest of the patients (3rd meeting) The ISMB may also elect to hold ad hoc meetings outside of the scheduled dates, if deemed necessary. For instance, as the ISMB Chairman will receiveinformation regarding reported serious adverse events on a regular basis, ad-hoc ISMB meetings may also be held on a triggered basis (e.g. in response to ahigh number of safety events). Voting Input must be obtained from all three ISMB members, for voting purposes. The ISMB will strive for a consensus opinion regarding the data reviewed. If ISMBconsensus is not possible, a majority vote will be required, to determine the final ISMB recommendation. If the ISMB vote does not result in a clear majority,the ISMB Chairman will assemble and present majority and dissenting opinions for all recommendations considered. Meeting Minutes ISMB Data Review meeting minutes will be divided by session and will reflect the attendance of voting ISMB members, the ISMB Coordinator, ISMBcontacts and consultants and other individuals, as well as whether each individual attended in person or via teleconference. Since all details of ISMB deliberations must be kept strictly confidential among members of the ISMB, portions of the ISMB Data Review meeting minutesmust remain confidential until the completion of the final study analysis. The ISMB Chairman will file all minutes from all sessions, centrally. Once the final study analysis is complete, the ISMB Chairman will forward the centralfile of all ISMB minutes for all sessions to Bioline Innovations Jerusalem for appropriate filing. 9. RECORDS RETENTION The ISMB Chairman should maintain a record of all ISMB minutes until the investigation of the study device is discontinued. After this period, the ISMBChairman will forward to the sponsor all records to the sponsor to determine if further retention and/or archiving is necessary. Data Source and Content 10. ISMB COMMUNICATION OF FINAL CONCLUSIONS The ISMB Chairman will contact Bioline Innovations Jerusalem within two working days after an ISMB meeting (via facsimile or telephone) to notify themof recommendations forthcoming from that meeting. Bioline Innovations Jerusalem will act upon these recommendations as appropriate, i.e., the finaldecision will rest with Bioline Innovations Jerusalem. Bioline Innovations Jerusalem’s VP of Medical Affairs or designee will notify the project team and theCRO of the ISMB recommendations. Bioline Innovations Jerusalem’s VP of Medical Affairs will also write a memo to the files documenting the recommendations of the ISMB and convey to allinvestigators the decision to continue/discontinue the study. 11. IMPLEMENTATION OF THE ISMB RECOMMENDATIONS The decision to implement the recommendations of the ISMB will be made by Bioline Innovations Jerusalem. Bioline Innovations Jerusalem will notify theISMB of the actual action taken, in response to all recommendations. If the ISMB recommends early study termination or protocol modification and such action is not accepted or implemented, Bioline Innovations Jerusalemwill address this decision with the ISMB in writing. 12. CONFIDENTIALITY The ISMB will maintain a strictly confidential relationship to the study data. The ISMB will only reveal specific details and information associated withISMB data review to appropriate parties, as specified by this ISMB Charter. SCHEDULE 2.3 EXISTING PRODUCT AGREEMENTS [**] SCHEDULE 3.1 INITIAL DEVELOPMENT PLAN Project Boston Clinical Development Plan Objective This product is a unique concept, and will require a unique and sophisticated development plan to satisfy all stakeholders. This product has been given a regulatory designation as a device (rather than drug). The objective of this development plan is to leverage that designation fora rapid and efficient regulatory approval, while providing adequate evidence for safety within the intended patient population. Strategy The strategy is to complete a minimal additional amount of preclinical safety in parallel with the clinical development program. [**]. The filing will be based on a [**]. We note that the current phase 2 study has no control group, and can give only general information about safety andtolerability, and no real information on efficacy in humans. For this reason the [**] will be designed with a ‘vanguard’ cohort of approximately [**] patients.Once the vanguard has completed 6 months of follow up, and interim analysis will be performed, assessing the study for 1) safety, 2) efficacy or futility and 3)performance of the endpoint. Specific, detailed and comprehensive criteria will be established to allow for stopping or continuation, or adjustments in samplesize or inclusion criteria. The rules for the interim analysis will be agreed with regulatory authorities in advance of any unblinding, and appropriateadjustments will be made for type 1 error. Following the interim analysis the number of participating centers will be increased to speed enrollment, and the study will continue to completion. Endpoint and sample size We will define [**] and then power the study to show at least a [**] with BL-1040 compared to placebo. This difference is clinically meaningful. To give maximum power we want to define an endpoint that has a [**] after treatment, which would be reduced to [**]. We will design a [**] that ensures anevent rate that is [**] in the control arm. Failure could include [**] Any one of these events and the patient is [**]; none of these events and the patient is considered [**]. It is possible that otherclinically relevant events may be added to the composite. Next we will estimate how often each of these events will happen. [**]. Control GroupEvent Rate Treatment GroupEvent Rate Sample size per arm90% power and type1 error < 5% Total[**][**][**][**][**][**][**][**][**][**][**][**] Although not required under device approval regulations, approximately [**] patients would be desirable for a safety database. If we assume that the placeboevent rate will be approximately [**], we would estimate the sample size of the pivotal study to be approximately [**] patients, including the [**] patients inthe vanguard cohort. Budget 20092010201120122013201420152016TOTAL[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]TOTAL[**][**][**][**][**][**][**][**][**] Phase III Study Budget will assume [**] of [**] patients, with a primary endpoint at [**] major adverse cardiac outcomes at [**], and a safety follow up annually for [**]. Clinical:Monitoring:[**]Per Patient total:[**][**]Pre Clinical[**][**]Total[**] Given that 15-20% of the total clinical costs are committed before the first patient is enrolled, we estimate that cost to decision point is approximately [**]. Itmay be possible to reduce cost to the decision point by [**], trading off for time-to-launch. This alternative scenario has not been modeled. Cost by Year ($M) [**][**][**][**][**][**][**][**][**][**][**][**] [**] Study Budget will assume a [**] (including ethnicity) of [**] patients. Study will start in [**] and end [**] Cost by Year ($M) [**][**][**][**][**][**][**][**][**][**][**][**][**][**] Timeline Phase III Study Enrollmentw/ [**] per site per monthPart 1 Part 2Total Enrollment[**][**]Active Sites[**][**]Enrollment/Site/Month (on average)[**][**]Monthly Study Enrollment[**][**]Time to Enroll Patient per Part (months)[**][**]TOTAL ENROLLMENT TIME (months)[**] Trial TaskEnd DateInitiate Project[**]FPI[**][**][**]LPI[**]DB Lock[**]CSR[**]Submit PMA[**] Probability of success Based on the available preclinical data it is not possible to come to a firm estimate of POS at this time. However, there is evidence of efficacy in preclinicalmodels, and a consensus among experts that the mechanism is plausible. Given the existing data on the prior use of this class of compounds in humans, thelikelihood of adequate safety and tolerability seems higher than would otherwise be possible at this stage, and given the device designation, the probabilityof clinical and regulatory success is likewise higher than it might otherwise be. Assuming the likelihood of adequate safety at [**] and the likelihood ofadequate efficacy at [**], the overall POS to filing is in the range of [**]. SCHEDULE 3.7 PRELIMINARY COMMERCIALIZATION PLAN Preface: This document is prepared for the management of BioLineRx as a basis for discussion only, and is intended to be indicative of Ikaria’s currentintent with respect to global commercialization of BL-1040. Actual launch plans will continue to evolve over time, in accordance with the evolutionof market dynamics, the global environment for cardiovascular drugs and devices, and the emerging product profile of BL-1040. I. Situation Analysis a. Unmet Medical Need Each year cardiovascular disease (CVD) causes over 4.3 million deaths in Europe. CVD is estimated to cost the European Union (EU)economy €192 billion a year. The main forms of CVD are coronary heart disease (CHD) and stroke. Just under half of all deaths from CVDare from CHD. CV is also a large problem in Japan, and is emerging as a public health issue even in the developing countries. Each year smoking kills over 1.2 million people in Europe (450,000 from CVD)). Dietary patterns across Europe are playing an increasingrole in CVD. Levels of physical inactivity are high in many European countries and levels of obesity are increasing across Europe in bothadults and children. Over 48 million adults in Europe have diabetes and the prevalence is increasing. Estimates for population and cardiovascular statistics are presented in Table 1 Table 1 Est.Annual non-fatal Country Population(000,000) MI(000) InterventionalCardiologist Annual PCIProcedures[**]10.434.723028[**]5.518.38515[**]5.317.78014[**]64.4214.71,772172[**]82.3274.31,500219[**]16.755.726645[**]0.31.0141[**]58.1193.71,879155[**]40.5135.0730108[**]7.625.312420[**]61.1203.71,000163Total Europe352.21,174.07,682939[**]127.0423.32,500339[**]217037356Grand Total479.21,597.310,1821,278 b. Product BL-1040, a novel, injectable, biodegradable polymer designed to be used in conjunction with Percutaneous coronary intervention (PCI) toprovide mechanical scaffolding and reduce the risk of structural remodeling and heart failure in post-myocardial infarction (post-MI)patients, is currently in development and could be on the market as early as [**]. If successful, BL-1040 could be a breakthrough in themanagement of patients with cardiovascular disease and could represent a large commercial opportunity for Ikaria and BioLineRx. c. Assessment of current level of CV practice There is significant variability around the medical management of CHD across Europe. Theses groupings give a high level overview of themost common interventions: Hospital admissions Rates of admission for CVD vary considerably across Europe. In general, higher admission rates are found in Eastern European andScandinavian countries. Similar geographical trends are seen for CHD. Coronary revascularization and other procedures for CVD While rates of revascularization vary widely across Europe, all countries have seen rates increase significantly since the 1990s. Forexample, since 1990 rates of PCI have increased fifteen-fold in Italy and twelve-fold in Finland. We expect that advances in medicaltechnique and continued development of medical infrastructure around the world will drive continued growth in the coronaryrevascularization market. Drugs The use of drugs for secondary prevention in CHD patients varies considerably across populations, except in the case of anti-platelet drugs.Over 80% of patients took this form of drug (mostly aspirin). The use of beta blockers, lipid-lowering drugs and ACE inhibitors variesthroughout the EU. d. Pricing and reimbursement environment The global market for cardiovascular drugs and devices is highly variable in terms of pricing and reimbursement climates. Pricing Pricing in the developed markets of western Europe tends to be similar to U.S. pricing, although prices can vary significantly by market,with Northern European markets having higher prices than southern European markets. By contrast, pricing in less developed markets(Eastern Europe, Latin America and the Far East) is highly variable, and will require careful study to ensure an appropriate price is selectedin order to maximize penetration and profitability. A clear target product profile will be critical to assessment of pricing strategy in allmarkets. Reference pricing is common practice in Europe, so timing of local launches must be carefully coordinated to ensure optimized pricingacross the territory. [**] Reimbursement With the exception of regulatory approval, reimbursement will be the single most important driver of commercial success. The process by which products gain reimbursement can vary greatly from country to country, and may take a considerable amount of time. A recent study by IMS suggested that it was common for newly approved drugs to take between one and three years to gain widespreadreimbursement coverage in the top 16 EU markets. Because most European countries operate centralized, government-financed healthsystems, it is not typical for patients to pay for treatments privately. In many countries where there is virtually no habit of citizens payingfor their own healthcare, initiating selling activity without reimbursement would be virtually impossible, while inhabitants of some othercountries may have no problem paying for healthcare out of their own disposable income. Expected timing of reimbursement will, therefore, be a major driver of the timetable for building out sales infrastructure, and commencingselling activities. Ikaria will conduct extensive research between deal closing and launch to ensure that reimbursement conditions areclearly understood and that plans are in place to ensure broad and favorable access to major commercial markets. II. Commercialization Plan Product Positioning Strategy Given the current expectations of the product profile, we aspire to — and expect that — BL-1040 will be positioned as the de facto standardfor prevention of post-MI remodeling. While this depends on the specific results of the clinical trials, the market conditions, including competitive scenario, and prevailingclinical practice standards, the goal will be to make BL-1040 use prevalent across a range of patient sub-groups that are at risk forremodeling. Specifically, the following patient groups will be addressed in the marketing plan: · High-risk STEMI (includes patients with large myocardial Infarctions (MIs), anterior wall MIs and long lead time to PCI): [**] · Other STEMI (includes all STEMI patients not considered of the highest risk): [**] · NSTEMI (all patients who have an NSTEMI): [**] In addition to the market development efforts listed above, the focus of marketing strategy will be on creating broad awareness of thesignificant long-term effects of remodeling as well as discussing the risks of myocardial damage and resulting negative consequences for allpatients with MIs. In Europe, this will also require resetting of the current paradigm of treating non-primary PCI patients with medicaltherapy alone, and illustrating the benefits of treatment with a mechanical scaffolding device such as BL-1040. Organization Size and Structure As an experienced critical care company, Ikaria is committed to providing doctors and other medical professionals with a high level ofcustomer service. Operating in a highly specialized, life-or-death environment Ikaria strives to match our customers own urgency andcommitment to patient care. To be successful in the area of post-MI care we anticipate creating an organization capable of delivering both the commercial and medicalsupport desired by our target customer base. Ikaria intends to establish itself as the leader in critical care globally, and will use BL-1040 asthe platform on which to establish its international presence. As such, we intend to build a robust but flexible organization with all thecompetencies necessary to achieve leadership of the field. Although BL-1040 will likely be Ikaria’s first global product, we anticipate thatour own internal pipeline candidates IK-1001 and Covox will not be far behind. The infrastructure envisioned by Ikaria and described inthis document will therefore be sufficient to successfully commercialize all of Ikaria’s present and future pipeline compounds. Ikaria proposed to use a “hub and spoke” approach to commercializing BL-1040 in Europe—the “hub” being a European headquarters andthe “spokes” representing local operating companies (LOCs) in major markets. The headquarters will provide overall strategic leadershipand will spearhead European product development and commercial strategy, while local operating companies will be responsible forselling activity and local tactic implementation. In addition to strategic marketing and leadership support, the European headquarters will be responsible for financial management andreporting of regional results, management of European regulatory affairs functions, development of a European clinical developmentprogram, development of effective key opinion leadership, development of compelling health economic data and development of HRstrategies to maintain a strong and vibrant European organization. The primary role of LOCs is to provide the necessary local sales and marketing efforts necessary to achieve financial objectives for BL-1040. In addition to the necessary commercial infrastructure, the local operating companies would also be staffed with the supportfunctions essential to commercial success. This would include a small local finance team, medical affairs, regulatory affairs and humanresource functions. The role of the local support staff is to implement strategic initiatives conceived at headquarters level, and supportlocal initiatives as necessary. The medical affairs staff will be particularly important in supporting marketing in disseminating the fullmedical information on BL-1040 and the clinical specialists will also lead the training of physicians in using this product appropriately. The LOC staffing level will be determined as a function of country population, disease prevalence and target doctor population. SalesRepresentatives will be recruited from companies with a depth of experience in cardiovascular drug and device sales to ensure we gainrapid access to the necessary prescriber base. Representatives will be compensated through a blend of base salary and sales incentivebonus, according to Ikaria’s existing sales force incentive plan. (See Table 2) Table 2 Est.Annual non-fatal Country Population(000,000) MI(000) InterventionalCardiologistAnnual PCIProcedures (000)SalesReps[**]10.434.723028[**][**]5.518.38515[**][**]5.317.78014[**][**]64.4214.71,772172[**][**]82.3274.31,500219[**][**]16.755.726645[**][**]0.31.0141[**][**]58.1193.71,879155[**][**]40.5135.0730108[**][**]7.625.312420[**][**]61.1203.71,000163[**]Total Europe352.21,174.07,682939[**][**]127.0423.32,500339[**][**]21.070.037356[**]Grand Total479.21,597.310,1821,278[**] NB: The number of sales reps anticipated to be needed in each market has been estimated as a function of [**] Launch Timelines To maximize the value of BL-1040 Ikaria intends to be ready to launch at the earliest possible opportunity. As described above, a key driver of launchreadiness in any given market will be the ability to access reimbursement for BL-1040. Without appropriate reimbursement in place, attempting to launchBL-1040 would be at best un-productive, and at worst, damaging to the long-term perception of the product. Ikaria proposes to immediately undertake a battery of research and analysis to understand the market-specific reimbursement environments across majortarget markets. Results of this research would guide future launch plans, and help inform the timing of key investments in people and infrastructure. Development of Ikaria’s ex-US presence will occur differently throughout the world: 1) Ikaria already has management structures in place in Canada, Japan and Australia. These budding organizations would be expanded in the near termto allow essential market preparation activities to begin as soon as possible. As the product profile of BL-1040 becomes clearer, and theexpectations for launch timing crystallize, this existing in-country leadership infrastructure will be expanded to include all the local sales andmedical affairs capability necessary to a successful launch. 2) Establishment of a European Headquarters function would be a high priority. We anticipate filling key leadership positions as early as [**], so thathigh-level reimbursement, medical affairs and commercial strategic planning can commence. As a clearer view of the likely launch timeline for BL-1040 emerges, remaining HQ infrastructure will be built out to ensure a fully operational European headquarters well in advance of launch. In theevent that a positive result emerges from the interim analysis and a decision is made to move up the commercial launch of the product, thedevelopment of the launch plans — including execution of reimbursement strategy and creation of marketing materials — will occur in parallel tothe ramp up of the LOCs. 3) Additional, 2-tier markets will be evaluated in parallel with [**] commercial infrastructure development. Ikaria believes that there will be greatpotential for BL-1040 in markets such as [**], but will need more time to evaluate the optimal way to maximize sales in those territories. [**] nd Proposed European Structure Headquarters Human Resources Human Resources will oversee European benefits programs, ensure compliance with local employment law, promote employee development and successionplanning, and all functions necessary to building a world-class critical care business in Europe. The European HQ team will work closely with LOC countrymanagers to ensure local employee needs are met and compliance with local laws is maintained. Local in-country contractors may be employed to deliverHR services at the local level. Anticipated headcount: 2 Government Affairs Appropriate reimbursement will be critical to the success of BL-1040. As described above, reimbursement can be highly variable across Europe. Development of a skilled government affairs capability within Ikaria Europe will be critical to our success, for BL-1040 as well as future Ikaria pipelineproducts. Anticipated headcount: 1 Commercial Development The European Commercial Development team is responsible for commercial strategy formulation across the European area, including both product and salesforce strategy. The HQ marketing team will work closely with the Clinton, NJ-based marketing team to develop a cohesive global strategy suitable forimplementation in European markets. The European team will have responsibility to ensure that brand strategies are implemented consistently across thearea, and will perform market research to monitor performance and adjust strategy as appropriate. The team will also work in concert with country GMs andlocal marketing management to implement large-scale promotional and educations programs. The European HQ team will also develop and implement European sales force strategies including development and maintenance of a customer relationshipmanagement system, sales skills training programs, and sales leadership development. The HQ team will work closely with LOC commercial management toensure a top-class sales effort in each country. Anticipated headcount: 5 Medical Affairs Development of a strong base of key opinion leaders will be critical to the success of BL-1040. Cardiology is a fast moving, highly technical field, and forIkaria to be a credible player we will need to make a significant commitment to supporting the medical community through education, research support, etc. The European Medical Affairs team will take the lead in formulating strategy for the engagement of key opinion leaders in the formulation of branddevelopment strategy, the development of brand champions and building high-level relationships between Ikaria and the medical community. The HQMedical Affairs team will work closely with LOC Medical Affairs teams to align strategy across Europe and ensure a consistent medical approach. The HQ Medical Affairs team will also be responsible for development of health outcome data to support cost-effectiveness arguments. The HQ team willwork closely with LOC commercial teams to package health outcome data for effective presentation to in-country prescribers and reimbursement decisionmakers. The HQ Medical Affairs team will also take responsibility for developing responses to requests for medical information about Ikaria products. The team willwork with LOC Commercial and Medical Affairs teams to ensure a high level of customer support and satisfaction. Anticipated headcount: 3 Regulatory Affairs The European Regulatory Affairs (RA) team will lead all regulatory efforts on behalf of Ikaria’s European operations. The HQ RA team will work closely withthe Medical Affairs team to ensure development programs have maximal likelihood of success and that regulatory compliance is maintained at all times. TheRA team will work in concert with in-country RA teams to execute on regulatory strategies and maintain product registrations with local authorities. Anticipated headcount: 2 Finance The European Finance team will support all local operating companies with financial reporting and planning functions as well as accounts payable andaccounts receivable activities. The HQ team will consolidate European results and maintain a full European operating P&L. The HQ team will perform mostof the finance functions on behalf of the European Area, with LOCs having minimal local requirement for finance headcount. Anticipated headcount: 9 Information Technology Ikaria’s European IT requirements will be delivered by the European HQ team, with local support from 3-party contract services. The HQ team will liaisewith Ikaria’s corporate headquarters IT function in Clinton, NJ to ensure reliable systems functionality and robust customer support. Anticipated headcount: 3 rd Local Operating Country (LOC) Structure Human Resources Human Resources support will be provided from HQ as described above. Specific local needs will be coordinated with HQ HR and delivered by local3 party providers Anticipated headcount: None Commercial Development The LOC Commercial Development team is responsible for implementation of commercial strategy at the local level. The marketing team is responsible forimplementation of European product strategy and for directing local tactical marketing in support of BL-1040. The LOC commercial director is alsoresponsible for the development of a skilled critical care sales organization, including recruitment, training and management of reps and managers. The number of sales reps required to promote BL-1040 will vary from country to country according to the market opportunity, the number of prescribingdoctors, and the incidence of PCI procedures. (See Appendix A) Anticipated headcount: Various Medical Affairs Maintenance of a strong relationships and robust medical affairs response capability will be essential for success at the local level. The LOC medical directorwill take responsibility for development of strong local relationships, coordination of company response to medical information requests. Clinical Specialistsin each LOC will be responsible for training of physicians on use of product and for customer service. Anticipated headcount: 1-2 Regulatory Affairs (RA) The LOC RA team will work together with HQ RA teams to execute on regulatory strategies and maintain product registrations with local authorities. Anticipated headcount: 1-2 rd Finance The HQ team will perform most of the finance functions on behalf of the European Area, with LOCs having minimal local requirement for finance headcount. Anticipated headcount: None Information Technology Ikaria’s European IT requirements will be delivered by the European HQ team, with local support from 3-party contract services. Anticipated headcount: None rd SCHEDULE 4.3(a) BIOLINERX WIRE TRANSFER INFORMATION Bank Name:[**] Bank Address:[**] SWIFT Number:[**] IBAN Number:[**] Account Number:[**] Account Name:[**] EXHIBIT A TECHNOLOGY EXCHANGE PLAN Upon Ikaria’s request, the following will be provided by BioLineRx to Ikaria or its designee: 7. All materials (original or copies as appropriate) in BioLineRx’s possession and Control relating to Product, including documentation relating toDevelopment and all regulatory filings, clinical information, and data and other documents relating to the On-Going Phase I/II Trial and the OtherOn-Going Trials. 8. Copies of all documents and available information in BioLineRx’s possession and Control necessary for Manufacturing of Product at the time oftechnology exchange. These documents will include information necessary to assist Ikaria or its designee in setting up Manufacturing operationsfor such things as: · raw material test methods, specifications, qualification and justification for use· raw material vendor lists with part numbers· analytical methods stated purpose, development, qualification and validation reports· process development reports, laboratory notebooks and associated electronically stored data· Manufacturing summary including· detailed process description with process schematics, operating parameters and target ranges, flow charts outlining critical processcontrols and steps, cartoons, verbal description including abbreviations, process scale, yield, and standard process instructions· in-process controls/tests and acceptance criteria including stated purpose of in-process tests· master batch record(s)· filling/packaging process· aseptic and process development and validation documents· facility and equipment requirements and design documents· descriptions of process equipment, including suppliers, part numbers, and historic invoices· product test methods, specifications and justification of specifications· product stability, test methods and qualification/validation reports, stability reports, shelf life recommendations As available and agreed upon by the JDC at the time of a technology exchange, BioLineRx will provide requested technical manufacturing orengineering advice to Ikaria or its designee. Ikaria will ensure designee has necessary expertise in place to exchange the documentation andexpertise in an orderly fashion. EXHIBIT B BIOLINERX PATENT RIGHTS Family 1 INJECTABLE CROSS-LINKED POLYMER PREPARATIONS AND USES THEREOF Country Earliest Priority Entry Date Filing DateApplication No. Issue DatePatent No. Status Owner[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**] Family 2 A METHOD OF TREATING MUSCLE TISSUES Country EarliestPriority EntryDate Filing DateApplication No. Issue DatePatent No. Status Owner[**][**][**][**][**][**] PAYMENT DATE EXTENSION AMENDMENT Ikaria Development Subsidiary One LLC, a Delaware limited liability company having a principal place of business at 6 State Route 173, Clinton, NJ 08809,USA (“Ikaria”), BioLineRx Ltd., a corporation organized and existing under the laws of the State of Israel and having a principal place of business at 19Hartum Street, P.O. Box 45158, Jerusalem 91450, Israel (“BioLineRx Ltd.”), and BioLine Innovations Jerusalem L.P., a limited partnership organized andexisting under the laws of the State of Israel and having a principal place of business at 19 Hartum Street, P.O. Box 45158, Jerusalem 91450, Israel (“BioLineInnovations”; together with BioLineRx Ltd., “BioLineRx”) are party to an Amended and Restated License and Commercialization Agreement dated as of the26th day of August, 2009 (the “Agreement”). Any defined terms used herein shall have them meaning ascribed thereto in the Agreement. Pursuant to Section 4.1(a) the Agreement, Ikaria is required to make a milestone payment to BioLineRx of USD $10,000,000 upon the Successful Completionof the On-Going Phase I/II Trial (the “Second Milestone Payment”) on or before [**]. BioLine and Ikaria are currently in discussions to determine whetherIkaria is required to withhold United States federal income taxes from the Second Milestone Payment. In order to enable the parties to complete thosediscussions, Ikaria and BioLine hereby agree that the due date for the Second Milestone Payment is hereby extended to [**]. Sections 10.2 (“Governing Law”) and 10.3 (“Submission to Jurisdiction”) of the Agreement are hereby incorporated herein by reference. Acknowledged, Agreed, and Confirmed /s/ Daniel Tassé/s/ Kinneret SavitskyDaniel TasséKinneret Savitsky,Chief Executive OfficerChief Executive OfficerIkaria Development Subsidiary One LLCOn behalf of, and as authorized representative of, both BioLineRx Ltd.and BioLine Innovations Jerusalem L.P. AMENDMENT TO THE AMENDED AND RESTATED LICENSE AND COMMERCIALIZATION AGREEMENT This Amendment (this “Amendment”) is entered into this 21 day of April 2010 (the “Amendment Effective Date”) by and between IkariaDevelopment Subsidiary One LLC, a Delaware limited liability company with a place of business at 6 Route 173, Clinton, NJ, 08809 USA (“Ikaria”), andBiolineRx Ltd., a corporation organized and existing under the laws of the State of Israel and having a principal place of business at 19 Hartum Street,P.O. Box 45158, Jerusalem 91450, Israel (“BioLineRx Ltd.”), and BioLine Innovations Jerusalem L.P., a limited partnership organized and existing underthe laws of the State of Israel and having a principal place of business at 19 Hartum Street, P.O. Box 45158 Jerusalem 91450, Israel (“BioLine Innovations”;together with BioLineRx Ltd., “BioLine Rx”) . This Amendment amends the Amended and Restated License and Commercialization Agreement entered intoby and between Ikaria and BioLineRx dated as of the 26 day of August 2009 (the “Agreement”). Any defined term used in this Amendment not expresslydefined herein shall have the meaning ascribed thereto in the Agreement. 1. Modification of Payee. All payments to be made under the Agreement shall be made to BiolineRx Ltd. or any Third Party assignee of BioLineRxLtd. permitted under Section 10.4 of the Agreement. 2. Modification of Assignment. The last two sentences of Section 10.4 of the Agreement are hereby amended and restated as follows: “BioLineRx Ltd. may assign its right to receive payments hereunder to a Third Party, in its sole discretion, provided that BioLineRx Ltd. providesIkaria with prior written notice of the assignment and the name and address of the assignee. Any such Third Party assignee may not further assignthe right to receive payments hereunder without providing Ikaria with prior written notice of the assignment and the name and address of theassignee. Ikaria shall maintain a written record of any such assignments. The parties intend that this Agreement shall be considered to be in“registered form” as defined in United States Treasury Regulations Section 5f.103-1(c). BiolineRx shall not otherwise be permitted to assign thisAgreement, in whole or in part, without the prior written consent of Ikaria, which approval shall not be unreasonably withheld, conditioned, ordelayed. Any assignment in contravention of this Section 10.4 shall be null and void.” 3. Ratification of Agreement. Except as set forth in this Amendment, all of the other terms and conditions of the Agreement are hereby ratified andconfirmed to be of full force and effect, and shall continue in full force and effect. This Amendment is hereby integrated into and made a part of theAgreement. 4. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be effective as of the Amendment Effective Date,and all of which shall constitute one and the same instrument. Each such counterpart shall be deemed an original, and it shall not be necessary in makingproof of this Amendment to produce or account for more than one such counterpart. Page 1 of 2stth 5. Execution and Delivery. This Amendment shall be deemed executed by the parties when any one or more counterparts hereof, individually or takentogether, bears the signatures of each of the parties hereto. Acknowledged and Agreed to: BIOLINERX LTD.IKARIA DEVELOPMENT SUBSIDIARY ONE LLC By: /s/ Kinneret L. Savitsky /s/ Philip SerlinBy: /s/ Matthew M. BennettSignatureSignature Kinneret L. Savitsky Philip SerlinMatthew M. BennettPrinted NamePrinted Name CEO CFOVice President and SecretaryTitleTitle April 21, 2010April 21, 2010 BIOLINE INNOVATIONS JERUSALEM L.P., BY ITS GENERALPARTNER BIOLINE INNOVATIONS JERUSALEM, LTD. By: /s/ Kinneret L. Savitsky /s/ Philip SerlinSignature Kinneret L. Savitsky Philip SerlinPrinted Name CEO CFOTitle April 21, 2010 Page 2 of 2 Execution copy AMENDMENTTOAMENDED AND RESTATED LICENSE AND COMMERCIALIZATION AGREEMENT Amendment to Amended and Restated License and Commercialization Agreement (this “Amendment”), dated as of January 8, 2015 (the“Amendment Effective Date”), by and among Bellerophon BCM LLC, a Delaware limited liability company formerly known as Ikaria DevelopmentSubsidiary One LLC (“Bellerophon”), on the one hand, and BioLineRx Ltd., a corporation organized and existing under the laws of the State of Israel(“BioLineRx”), on the other hand. Each of Bellerophon and BioLineRx may be referred to herein as a “Party” and Bellerophon and BioLineRx may bereferred to herein collectively as the “Parties.” WHEREAS, Bellerophon, BioLineRx and BioLine Innovations Jerusalem L.P., a limited partnership organized and existing under the laws of theState of Israel (“BioLine Innovations”) entered into an Amended and Restated License and Commercialization Agreement as of August 26, 2009 (the“Agreement”); WHEREAS, BioLine Innovations has assigned all of its rights and obligations under the Agreement to BioLineRx, and BioLineRx has assumedsuch rights and obligations; WHEREAS, Bellerophon has consented to the foregoing assignment and assumption in accordance with Section 10.4 of the Agreement; WHEREAS, BioLineRx has alleged certain breaches or potential breaches of the Agreement in correspondence to Bellerophon, and Bellerophon hasdenied that any breach of the Agreement exists; and WHEREAS, the Parties desire to amend certain provisions of the Agreement and to resolve all disputes relating to the Agreement that have arisenbetween them; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration,the Parties, intending to be legally bound, hereby agree as follows: 1. Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. For theavoidance of doubt, Bellerophon, as defined in this Amendment, and Ikaria, as defined in the Agreement, are one and the same entity. 2. Amendment to Agreement Terms. Section 4.1(a)(3) of the Agreement is hereby amended and restated to read as follows: “[**] ” 3. Release. BioLineRx, on its own behalf and on behalf of its predecessors, successors, assigns, affiliates, agents and representatives, and each of themin all of their capacities, shall, and hereby does (in such capacity, the “Releasing Parties”), forever waive, release and discharge Bellerophon andBellerophon’s affiliates, and its and their predecessors, successors, assigns, affiliates, agents, representatives, officers, directors, employees, stockholders,attorneys and advisors, and each of them in all of their capacities (in such capacity, the “Released Parties”), of and from any and all claims, causes of action, demands, damages, debts, liabilities, obligations, equitable and provisional remedies, costs, expenses (including attorneys’ and accountants’ fees andexpenses) actions and causes of action of any nature whatsoever, whether now known or unknown, suspected or unsuspected, that such Releasing Party nowhas or at any time previously had, based in any way, directly or indirectly, on the Agreement or the spin-out of Bellerophon from Ikaria Holdings, Inc. and itsaffiliates, or based on any act or failure to act, or on any disclosure or failure to disclose, by Bellerophon under or in connection with the Agreement (each, a“Claim”). Each Releasing Party irrevocably covenants and agrees not to assert directly or indirectly any Claim, or to commence, institute or cause to becommenced, any proceeding of any kind against any of the Released Parties, based upon, regarding, related to or arising out of any matters released in thisrelease, and further covenants and agrees that this Amendment is a bar to any such Claim. 4. Miscellaneous. The Parties hereby confirm and agree that, as amended hereby, the provisions of the Agreement shall remain unchanged and in fullforce and effect and the Agreement remains a binding obligation of the Parties. This Amendment may be executed in counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures and signatures transmitted via PDF shall betreated as original signatures. Headings used herein are for convenience only and shall not in any way affect the construction of or be taken intoconsideration in interpreting the Agreement. IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized representatives. BELLEROPHON BCM LLCBIOLINERX LTD. By:/s/ Jonathan PeacockBy:/s/ Kinneret Savitsky /s/ Philip Serlin Name:Jonathan PeacockName:Kinneret Savitsky Philip Serlin Title:Chief Executive OfficerTitle:CEO CFO/COO 2Exhibit 10.16 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT, dated as of February 12, 2015, is made and entered into by and among (i) BellerophonTherapeutics, Inc., a Delaware corporation (formerly Bellerophon Therapeutics LLC, a Delaware limited liability company), (ii) New Mountain Partners II(AIV-A), L.P., a Delaware limited partnership (“NMP II-A”), New Mountain Partners II (AIV-B), L.P., a Delaware limited partnership (“NMP II-B”), NewMountain Affiliated Investors II, L.P., a Delaware limited partnership (“NMAI”), and Allegheny New Mountain Partners, L.P., a Delaware limited partnership(“ANMP” and, collectively with NMP II-A, NMP II-B and NMAI, the “NMP Entities”), (iii) ARCH Venture Fund VI, L.P., a Delaware limited partnership(“ARCH”), (iv) Venrock Partners, L.P., a Delaware limited partnership, Venrock Associates IV, L.P., a Delaware limited partnership, and VenrockEntrepreneurs Fund IV, L.P., a Delaware limited partnership (collectively, the “Venrock Entities”), (v) Linde North America, Inc., a Delaware corporation(“Linde”), (vi) 5AM Ventures LLC, a Delaware limited liability company, and 5AM Co-Investors LLC, a Delaware limited liability company (together, the“5AM Entities”), (vii) Aravis Venture I L.P., a Cayman Islands limited partnership (“Aravis” and, together with the NMP Entities, ARCH, the VenrockEntities, Linde and the 5AM Entities, the “Investors”), and (viii) such other Holders who are signatories hereto or who become signatories hereto from time totime as provided for herein. Capitalized terms shall have the meanings assigned to them in Section 1. WHEREAS, the Company is party to a Registration Rights Agreement, dated as of February 12, 2014, with (i) NMP II-A, NMAI and ANMP,(ii) IRDO Holding Corp., a Delaware corporation (and an Affiliate of ARCH) (“ARCH Blocker”), (iii) Venrock IK Holdings BT, Inc., a Delaware corporation(and an Affiliate of the Venrock Entities) (“Venrock Blocker”), (iv) Linde, (v) 5AM-BT, Inc., a Delaware corporation (and an Affiliate of the 5AM Entities)(“5AM Blocker”), and (vi) Aravis (the “Original Registration Rights Agreement”); WHEREAS, Section 14.01 of the Amended and Restated Limited Liability Company Agreement of Bellerophon Therapeutics LLC, dated as ofFebruary 9, 2014, provides that, concurrently with a conversion of Bellerophon Therapeutics LLC from a limited liability company into a corporation, thesuccessor corporation shall enter into a registration rights agreement in a form substantially similar to, and which shall replace, the Original RegistrationRights Agreement; WHEREAS, in anticipation of its initial public offering, Bellerophon Therapeutics LLC has been converted on the date hereof from a limitedliability company into a corporation known as Bellerophon Therapeutics, Inc. and, in connection therewith, each of New Mountain Partners II Special (AIV-A), L.P., a Delaware limited partnership (and an Affiliate of NMP II-A), ARCH Blocker, Venrock Blocker and 5AM Blocker have been merged with and intoBellerophon Therapeutics, Inc.; and WHEREAS, in light of the foregoing, the parties have agreed to enter into this Agreement to provide the parties with the rights and obligations setforth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION. 1. Defined Terms. 1.1. Definitions. For purposes of this Agreement, the following terms have the following meanings: “Affiliate” means (a) with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is undercommon control with such Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of suchPerson, whether through the ownership of voting securities, by contract or otherwise, and (b) with respect to any individual, also means the spouse or child ofsuch individual. “Agreement” means this Registration Rights Agreement, as the same may be amended, restated, modified or supplemented from time totime. “Beneficially Own” means beneficially own as determined under Rule 13d-3 promulgated under the Exchange Act. “Board” means the board of directors of the Company as it may be composed from time to time in accordance with the Certificate ofIncorporation, the Company’s bylaws (as in effect from time to time), the Voting Agreement, dated as of February 12, 2014, by and among the Company andthe Investors, as the same may be amended, restated, modified or supplemented from time to time, the Stockholders Agreement and the General CorporationLaw of the State of Delaware (as in effect from time to time). “Business Day” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York,or is a day on which banking institutions located in New York, New York are authorized or required by law or other governmental action to close. “Certificate of Incorporation” means the Certificate of Incorporation of the Company, as in effect from time to time. “Common Stock” means any shares of common stock, par value $0.01 per share, of the Company, now or hereafter authorized to be issued,and any and all Equity Interests of any kind whatsoever of the Company which may be issued on or after the date hereof in respect of, in exchange for, orupon conversion of Common Stock pursuant to a merger, consolidation, stock split, reverse split, stock dividend, recapitalization of the Company orotherwise. 2 “Company” means Bellerophon Therapeutics, Inc., a Delaware corporation, and shall, to the extent this Agreement survives, include anysuccessor thereto by merger, consolidation, acquisition of substantially all the assets thereof, or otherwise, including any parent or subsidiary thereof thatundertakes a Public Offering in lieu of the Company. “Convertible Securities” means (a) any options or warrants to purchase or other rights to acquire Common Stock, (b) any securities by theirterms convertible into, or exercisable or exchangeable for, Common Stock (directly or indirectly) and (c) any options or warrants to purchase or other rights toacquire any such convertible, exercisable or exchangeable securities. “Counsel to the Participating Holders” means one (1) law firm selected by the Majority Participating Holders. “Equity Interests” of any Person means any and all units, shares, participations or other equivalents of or interests in (however designated)the equity (including common stock, preferred stock and limited liability company, partnership and joint venture interests) of such Person. “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any similar federal statute, and the rules andregulations of the SEC thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Exchange Act shall include a referenceto the comparable section, if any, of any such similar federal statute. “FINRA” means the Financial Industry Regulatory Authority, Inc. or any successor Person. “Holder” means, at any time of determination, (a) any Investor, (b) any Permitted Assignee of any Investor or other Holder, or (c) any otherPerson (i) that has acquired Common Stock, (ii) that the Company and Holders holding in the aggregate at least 50% of the outstanding RegistrableSecurities then held by the Holders consent in writing to becoming a party to this Agreement and (iii) that has executed and delivered a written agreement(which may be in the form of a counterpart signature page or joinder to this Agreement) satisfactory to the Company agreeing to be bound by this Agreementas a Holder, in each case of clauses (a), (b) and (c) only if such Person holds Common Stock at such time. “indemnified party” means any Person seeking indemnification pursuant to Section 2.6. “indemnifying party” means any Person from whom indemnification is sought pursuant to Section 2.6. “Initial Public Offering” means the first Public Offering. “Initiating Holder” means the Holder or Holders delivering a Holder Demand as provided for under Section 2.1(a). 3 “Majority Participating Holders” means, at any time, Participating Holders holding more than fifty percent (50%) of the RegistrableSecurities proposed to be included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or 2.2. “NMP Holders” means, at any time of determination, any of the NMP Entities that hold Common Stock at such time. “Participating Holders” means any Holder or Holders participating in any offering of Registrable Securities pursuant to Section 2.1 or 2.2. “Person” means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liabilitycompany, organization or other legal entity. “Pre-IPO Certificate of Incorporation” means the Certificate of Incorporation of the Company, as in effect immediately prior to an InitialPublic Offering. “Public Offering” means a public offering of Equity Interests of the Company through a registration statement (except registrations(i) solely for registration of Equity Interests of the Company in connection with an employee benefit plan or dividend reinvestment plan on Form S-8 or anysuccessor form thereto or (ii) in connection with any acquisition, merger or other business combination transaction on Form S-4 or any successor form thereto)filed with, and declared effective by, the SEC and pursuant to which such Equity Interests are authorized and approved for listing on a national securitiesexchange. “Quarterly Outstanding Common Stock” means, at any time of determination, (a) if such time is prior to the consummation of an InitialPublic Offering, the number of shares of Common Stock that were outstanding on the last day of the immediately preceding fiscal quarter (including anyshares of Common Stock issuable upon conversion or exercise of or in exchange for any Convertible Securities to the extent any such Convertible Securitiesare (i) convertible, exercisable or exchangeable at such time and (ii) convertible, exercisable or exchangeable at a price that is less than the fair market value(as determined by the Board in good faith) of a share of Common Stock issuable upon such conversion, exercise or exchange at such time) and (b) if suchtime is after the consummation of an Initial Public Offering, the number of shares of Common Stock that were set forth as outstanding on the cover of theCompany’s then most recently filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be. “Registrable Securities” means any Common Stock held by a Holder. For purposes of this Agreement, a Person will be deemed to be aHolder of Registrable Securities whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (including upon conversion,exercise or exchange of any Convertible Securities but disregarding any restrictions or limitations upon the exercise of such right), whether or not suchacquisition has actually been effected, and such Person shall not be required to convert, exercise or exchange such Convertible Securities (or otherwiseacquire such Registrable Securities) to participate in any registered offering hereunder until the closing of such offering. As to any particular 4 Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities shallhave become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) suchsecurities shall have been sold to the public pursuant to Rule 144, or (c) such securities shall have ceased to be outstanding. “Registration Expenses” means all fees and expenses incurred in connection with the Company’s performance of or compliance withSection 2, including (a) all registration, filing and applicable SEC fees, FINRA fees, national securities exchange or inter-dealer quotation system fees,foreign stock exchange fees, and fees and expenses of complying with state, federal or foreign securities or “blue sky” laws (including fees and disbursementsof counsel to the underwriters and Counsel to the Participating Holders in connection with “blue sky” or foreign qualification of the Registrable Securitiesand determination of their eligibility for investment under the laws of the various jurisdictions), (b) all printing (including printing certificates for theRegistrable Securities (if they are to be certificated) in a form eligible for deposit with The Depository Trust Company and printing preliminary and finalprospectuses or other offering documents), word processing, duplicating, telephone and facsimile expenses, and messenger and delivery expenses, (c) all feesand disbursements of counsel to the Company and of its independent public accountants, including the expenses of “cold comfort” letters or any specialaudits required by, or incidental to, such registration, (d) all fees and expenses of Counsel to the Participating Holders, (e) all fees and expenses of one (1) firmof accountants selected by the Majority Participating Holders, (f) all fees and expenses of any special experts or other Persons retained by the Company inconnection with any registration, (g) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require inaccordance with then-customary underwriting practices, (h) all applicable rating agency fees with respect to the Registrable Securities, (i) all fees andexpenses of a “Qualified Independent Underwriter” (as such term is defined by FINRA) and its counsel or similar fees and expenses, (j) all fees anddisbursements of the underwriters (other than underwriting discounts and commissions), (k) all transfer taxes and (l) all expenses incurred in connection withpromotional efforts or “roadshows”; provided that Registration Expenses shall exclude, and the Participating Holders shall pay, underwriting discounts andcommissions in respect of the Registrable Securities being registered for such Participating Holders. “Requisite Approval” means the approval of the Board and the NMP Entities in accordance with the terms of the Stockholders Agreement. “Rule 144” means Rule 144 promulgated under the Securities Act. “SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the SecuritiesAct. “Securities Act” means the Securities Act of 1933, as amended from time to time, or any similar federal statute, and the rules andregulations of the SEC thereunder, all as the same shall be in effect at the time. References to a particular section of the Securities Act shall include areference to the comparable section, if any, of any such similar federal statute. 5 “Stockholders Agreement” means the Stockholders Agreement, dated as of , 2015, by and among the Company and the NMPEntities, as the same may be amended, restated, modified or supplemented from time to time. “Tag-Along Holder” means (i) a holder of Tag-Along Securities on the date of this Agreement that has the right to participate in an InitialPublic Offering with respect to such Tag-Along Securities pursuant to the Pre-IPO Certificate of Incorporation or (ii) any Permitted Transferee (as defined inthe Pre-IPO Certificate of Incorporation) of any Tag-Along Holder that holds Tag-Along Securities. “Tag-Along Securities” means any Common Stock subject to restrictions on transfer under the Pre-IPO Certificate of Incorporation (but notany Common Stock held by a Holder). For purposes of this Agreement, a Person will be deemed to be a holder of Tag-Along Securities whenever such Personhas the right to acquire, directly or indirectly, such Tag-Along Securities (including upon conversion, exercise or exchange of any Convertible Securities),whether or not such acquisition has actually been effected, and such Person shall not be required to convert, exercise or exchange such Convertible Securities(or otherwise acquire such Tag-Along Securities) to participate in any registered offering hereunder until the closing of such offering. As to any particularTag-Along Securities, such securities shall cease to be Tag-Along Securities upon the earliest of (a) the closing of an Initial Public Offering, (b) such time asRule 144 or another similar exemption under the Securities Act is available for the sale of all of the Tag-Along Securities held by such Tag-Along Holderwithout limitation during a three-month period without registration or (c) the time at which such securities shall have ceased to be outstanding. “Ten Percent Holder” means, at any time of determination, any Holder or Holders that hold at least ten percent (10%) in the aggregate ofthe Quarterly Outstanding Common Stock. 1.2. Other Defined Terms. The following is a list of the remaining defined terms used in this Agreement: TermSection 5AM BlockerRecitals5AM EntitiesPreambleANMPPreambleAravisPreambleARCHPreambleARCH BlockerRecitalsautomatic shelf registration statement2.1(l)Demand Exercise Notice2.1(a)Demand Registration2.1(i)Holder Demand2.1(a)Indemnitees2.6(a)InvestorsPreamble 6 LindePreambleLosses2.6(a)NASDAQ2.3(a)(x)NMAIPreambleNMP EntitiesPreambleNMP II-APreambleNMP II-BPreambleOriginal Registration Rights AgreementRecitalsPartner Distribution2.1(a)Permitted Assignee4.10Postponement Period2.1(k)Section 2.2 Sale Amount2.2(d)Venrock BlockerRecitalsVenrock EntitiesPreambleWKSI2.1(l) SECTION. 2. Registration Under Securities Act. 2.1. Registration on Demand. (a) Demand. At any time (subject to the provisions of Section 3 of the Stockholders Agreement) or from time to time, an NMP Holder(or a Permitted Assignee of an NMP Holder to the extent permitted by Section 4.10 hereof) holding Registrable Securities or, at any time from and after anInitial Public Offering, a Ten Percent Holder holding Registrable Securities, may require the Company to effect the registration under the Securities Act of allor part of their Registrable Securities, by delivering a written request (a “Holder Demand”) therefor to the Company specifying the number of RegistrableSecurities to be registered and the intended method of distribution thereof. As promptly as practicable, but no later than ten (10) Business Days after receiptof a Holder Demand, the Company shall give written notice (the “Demand Exercise Notice”) of the Holder Demand to all other Holders. Each such otherHolder shall have the option, within ten (10) Business Days after the receipt of the Demand Exercise Notice (or five (5) Business Days if, at the request of theInitiating Holder, the Company states in such written notice or gives telephonic notice to each Holder, with written confirmation to follow promptlythereafter, that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date) to request, in writing,that the Company include in such registration any Registrable Securities held by such Holder (which request shall specify the maximum number ofRegistrable Securities desired to be disposed of by such Holder). The Company shall as expeditiously as possible (but in any event within eighty (80)Business Days after receipt of a Holder Demand with respect to an Initial Public Offering and within sixty (60) Business Days otherwise) use its reasonablebest efforts to effect the registration under the Securities Act of the Registrable Securities which the Company has been so requested to register by theInitiating Holder and by any other Holders which have made such written request. The Company shall (i) use its reasonable best efforts to effect theregistration of Registrable Securities for distribution in accordance with the intended method of distribution set forth in a written request delivered by theMajority Participating Holders, which may include, at the option of such Majority Participating Holders, a distribution of Registrable 7 Securities to, and resale of such Registrable Securities by, the equity holders of any Holder or its equity holders (a “Partner Distribution”), and (ii) ifrequested by the Majority Participating Holders, obtain acceleration of the effective date of the registration statement relating to such registration. (b) Partner Distributions. Notwithstanding anything contained herein to the contrary, the Company shall, at the request of anyParticipating Holder seeking to effect a Partner Distribution, file any prospectus supplement or post-effective amendments and shall otherwise take any actionnecessary to include such language, if such language was not included in the initial registration statement, or revise such language if deemed necessary bysuch Participating Holder, to effect such Partner Distribution (including adding one or more selling equity holders to the registration statement through aprospectus supplement or post-effective amendment, as necessary or required). (c) Registration Statement Form. Registrations under this Section 2.1 shall be on such appropriate form of the SEC (i) as shall beselected by the Majority Participating Holders and as shall be reasonably acceptable to the Company and (ii) as shall permit the disposition of suchRegistrable Securities in accordance with the intended method or methods of disposition specified in such Participating Holders’ requests for suchregistration, including a Partner Distribution or a continuous or delayed basis offering pursuant to Rule 415 under the Securities Act. The Company agrees toinclude in any such registration statement all information which, in the opinion of Counsel to the Participating Holders and counsel to the Company, isnecessary or desirable to be included therein. (d) Expenses. The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registrationrequested pursuant to this Section 2.1, regardless of whether the registration is effected, except as set forth in clause (v) of Section 2.1(e) with respect to aregistration statement that was withdrawn at the request of the Participating Holders. Notwithstanding the foregoing, the provisions of thisSection 2.1(d) shall be deemed amended to the extent necessary to cause these expense provisions to comply with “blue sky” laws of each state or thesecurities laws of any other jurisdiction in the United States and its territories or any foreign jurisdiction in which the offering is made. (e) Effective Registration Statement. A registration requested pursuant to this Section 2.1 shall not be deemed a Demand Registration(including for purposes of Section 2.1(i)) unless a registration statement with respect thereto has become effective and has been kept continuously effectivefor a period of at least one hundred eighty (180) days (or such shorter period which shall terminate when all the Registrable Securities covered by suchregistration statement have been sold pursuant thereto) or, if such registration statement relates to an underwritten offering, such longer period as in theopinion of Counsel to the Participating Holders or counsel to the underwriter or underwriters a prospectus is required by law to be delivered in connectionwith sales of Registrable Securities by an underwriter or dealer. Should a Demand Registration not become effective due to the failure of a ParticipatingHolder to perform its obligations under this Agreement, or in the event the Majority Participating Holders withdraw the request for the Demand Registrationas provided for in Section 2.1(h) (in each of the foregoing cases, provided that at such time the Company is in compliance in all material 8 respects with its obligations under this Agreement), then such Demand Registration shall be deemed to have been effected (including for purposes ofSection 2.1(i)); provided that, if (i) the Demand Registration is withdrawn or does not become effective because a material adverse change has occurred, or isreasonably likely to occur, in the condition (financial or otherwise), prospects, business, assets or results of operations of the Company and its subsidiariestaken as a whole subsequent to the date of the delivery of the Demand Exercise Notice, (ii) after the Demand Registration has become effective, suchregistration is interfered with by any stop order, injunction, or other order or requirement of the SEC or other governmental agency or court, (iii) the DemandRegistration is withdrawn at the request of the Majority Participating Holders due to the advice of the managing underwriter(s) that the Registrable Securitiescovered by the registration statement could not be sold in such offering within a price range acceptable to the Majority Participating Holders, (iv) theDemand Registration is withdrawn for any reason at any time during a Postponement Period or within ten (10) days thereafter, or (v) the Participating Holdersreimburse the Company for any and all Registration Expenses incurred by the Company in connection with such request for a Demand Registration that waswithdrawn for reasons other than any of those enumerated in clauses (i) through (iv) of this Section 2.1(e), then the Demand Registration shall not be deemedto have been effected and will not count as a Demand Registration. (f) Selection of Underwriters. The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.1shall be selected by the Majority Participating Holders. (g) Tag-Along Securities. Following receipt of a Holder Demand with respect to any proposed Initial Public Offering, the Companyshall give any Tag-Along Holders notice thereof, and shall include in such offering any Tag-Along Securities as to which the Tag-Along Holders are entitledto, and have elected to, participate (as though they were Registrable Securities), pursuant to and in accordance with the Pre-IPO Certificate of Incorporationand this Section 2.1. (h) Right to Withdraw. Any Participating Holder shall have the right to withdraw its request for inclusion of Registrable Securities inany registration statement pursuant to this Section 2.1 by giving written notice to the Company of its request to withdraw at any time prior to the effectivedate of such registration statement or otherwise in accordance with the process established in connection with the offering. Upon receipt of notices from theMajority Participating Holders to such effect, the Company shall cease all efforts to obtain effectiveness of the applicable registration statement, and whetherthe Initiating Holder’s request for registration pursuant to this Section 2.1 shall be counted as a Demand Registration for purposes of Section 2.1(i) shall bedetermined in accordance with Section 2.1(e). (i) Limitations on Registration on Demand. The Company shall be required to effect eight (8) registrations in the aggregate pursuantto this Section 2.1, other than registrations on Form S-3, which shall not be subject to this limitation, of which (i) the NMP Holders (or the PermittedAssignees of the NMP Holders to the extent permitted by Section 4.10 hereof) shall be entitled to require the Company to effect six (6) registrations in theaggregate, including for an Initial Public Offering, and (ii) after an Initial Public Offering, the Ten Percent 9 Holders shall be entitled to require the Company to effect two (2) registrations in the aggregate (each, a “Demand Registration”); provided that the Companyshall not be required to effect a Demand Registration until at least ninety (90) days after the effective date of any other registration statement filed by theCompany pursuant to a previous Demand Registration. The aggregate offering value of the Registrable Securities to be registered pursuant to any DemandRegistration shall be at least $10 million (determined as of the date the demand is made), unless the registration is of the balance of the Registrable Securitiesheld by all the Holders. (j) Priority in Registrations on Demand. Whenever the Company effects a registration pursuant to this Section 2.1 in connection withan underwritten offering by Holders, no securities other than Registrable Securities and Tag-Along Securities shall be included among the securities coveredby such registration unless the Majority Participating Holders consent in writing to the inclusion therein of such other Equity Interests of the Company,which consent may be subject to terms and conditions determined by the Majority Participating Holders in their sole discretion. If any registration pursuantto a Holder Demand involves an underwritten offering and the managing underwriter(s) of such offering shall inform the Company of its belief that thenumber of Registrable Securities requested to be included in such registration pursuant to this Section 2.1, when added to the number of any other EquityInterests of the Company to be offered in such registration (including any Tag-Along Securities), exceeds the largest number that can be sold in an orderlymanner in such underwritten offering within a price range acceptable to the Majority Participating Holders, then the Participating Holders and Tag-AlongHolders shall be entitled to participate on a pro rata basis based on the aggregate number of Registrable Securities and Tag-Along Securities (treating them asa single class of securities) requested to be included in the offering by each such Participating Holder and Tag-Along Holder (but in the case of any Tag-Along Holder, not in excess of the number of Tag-Along Securities with respect to which such Tag-Along Holder is entitled to participate pursuant to theterms of the Pre-IPO Certificate of Incorporation). (k) Postponement. The Company shall be entitled once in any twelve (12) month period to postpone for a reasonable period of time(but not exceeding ninety (90) days) (the “Postponement Period”) the filing of any registration statement required to be prepared and filed by it pursuant tothis Section 2.1 if the Company determines, in its reasonable judgment upon advice of counsel, as authorized by a resolution of its Board, that suchregistration and offering would require premature disclosure of any material financing, acquisition, corporate reorganization, business combination or othermaterial transaction involving the Company or any of its subsidiaries, and promptly gives the Participating Holders written notice of such determination,containing a statement of the reasons for such postponement and an approximation of the anticipated delay; provided, however, that the Company shall beentitled to postpone the filing of any registration statement required to be prepared and filed by it pursuant to this Section 2.1 if such postponement isrequired by applicable law arising from events outside of the control of the Company. (l) WKSI. (i) To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a“WKSI”) at the time any Holder Demand is 10 submitted to the Company, and such Holder Demand requests that the Company file an automatic shelf registration statement (as defined in Rule 405 underthe Securities Act) (an “automatic shelf registration statement”) on Form S-3, the Company shall file an automatic shelf registration statement which coversthose Registrable Securities which are requested to be registered. The Company shall use commercially reasonable efforts to remain a WKSI (and not becomean ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which such automatic shelf registration statement is requiredto remain effective. If the Company does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement isfiled, the Company shall pay such fee at such time or times as the Registrable Securities are to be sold. If the automatic shelf registration statement has beenoutstanding for at least three (3) years, at the end of the third year the Company shall refile a new automatic shelf registration statement covering theRegistrable Securities. If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, theCompany shall use commercially reasonable efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-1 and keepsuch registration statement effective during the period during which such registration statement is required to be kept effective. (ii) If the Company files any shelf registration statement for the benefit of the holders of any of its securities other thanthe Holders, the Company agrees that it shall include in such registration statement such disclosures as may be required by Rule 430B under the SecuritiesAct (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensurethat the Holders may be added to such shelf registration statement at a later time through the filing of a prospectus supplement rather than a post-effectiveamendment. 2.2. Incidental Registration. (a) Right to Include Registrable Securities. If the Company at any time proposes to register any of its Equity Interests under theSecurities Act by registration on Form S-1 or S-3, or any successor or similar form(s) (except registrations (i) pursuant to Section 2.1, (ii) in connection with anInitial Public Offering that is approved by the NMP Entities and in which no NMP Entity is selling Registrable Securities, (iii) solely for registration ofEquity Interests of the Company in connection with an employee benefit plan or dividend reinvestment plan on Form S-8 or any successor form thereto or(iv) in connection with any acquisition, merger or other business combination transaction on Form S-4 or any successor form thereto), whether or not for salefor the Company’s own account, the Company will each such time give prompt written notice (but in no event less than thirty (30) days prior to theeffectiveness of a registration statement with respect thereto) to each of the Holders of its intention to do so and such notice shall offer the Holders of suchRegistrable Securities the opportunity to register under such registration statement up to such number of Registrable Securities as each such Holder mayrequest in writing. Upon the written request of any of the Holders (which request shall specify the maximum number of Registrable Securities intended to bedisposed of by such Holder), within ten (10) Business Days after the receipt of any such notice (or within five (5) Business Days if the Company states in suchwritten notice or gives telephonic notice to each Holder, with written confirmation to follow promptly thereafter, stating that (i) such registration will be on 11 Form S-3 and (ii) such shorter period of time is required because of a planned offering date), the Company shall include in such registration under theSecurities Act all Registrable Securities which the Company has been so requested to register by each Holder; provided that if, at any time after givingwritten notice of its intention to register any Equity Interests of the Company and prior to the effective date of the registration statement filed in connectionwith such registration, the Company shall determine for any reason not to register or to delay registration of such Equity Interests, the Company shall givewritten notice of such determination and its reasons therefor to the Holders and (i) in the case of a determination not to register, shall be relieved of itsobligation to register any Registrable Securities in connection with such registration (but not from any obligation of the Company to pay the RegistrationExpenses in connection therewith as provided for in Section 2.2(e)), without prejudice, however, to the rights of the Holders to request that such registrationbe effected as a registration under Section 2.1 and (ii) in the case of a determination to delay registering, shall be permitted to delay registering anyRegistrable Securities for the same period as the delay in registering such other Equity Interests of the Company. No registration effected under thisSection 2.2 shall relieve the Company of its obligation to effect any registration upon request under Section 2.1. (b) Tag-Along Securities. In the case of an Initial Public Offering with respect to which the Company receives a written request froman NMP Holder (or a Permitted Assignee of an NMP Holder) to include Registrable Securities in such registration in connection with the exercise of suchNMP Holder’s (or such Permitted Assignee’s) registration rights under Section 2.2(a) hereof, the Company shall give any Tag-Along Holders notice thereof,and shall include in such offering any Tag-Along Securities as to which the Tag-Along Holders are entitled to, and have elected to, participate (as thoughthey were Registrable Securities), pursuant to and in accordance with the Pre-IPO Certificate of Incorporation. (c) Right to Withdraw; Option to Participate in Shelf Takedowns. Any Holder shall have the right to withdraw its request forinclusion of Registrable Securities in any registration statement pursuant to this Section 2.2 by giving written notice to the Company of its request towithdraw at any time prior to the effective date of such registration statement or otherwise in accordance with the process established in connection with theoffering. In the event that the Holder has requested inclusion of Registrable Securities in a shelf registration, the Holder shall have the right, but not theobligation, to participate in any offering of the Company’s Equity Interests under such shelf registration. (d) Priority in Incidental Registrations. If any registration pursuant to this Section 2.2 involves an underwritten offering and themanaging underwriter(s) of such offering shall inform the Company of its belief that the number of Registrable Securities requested to be included in suchregistration or offering, when added to the number of other Equity Interests of the Company to be offered in such registration or offering (including any Tag-Along Securities) exceeds the largest number that can be sold in an orderly manner in such underwritten offering within a price range acceptable to theMajority Participating Holders (the “Section 2.2 Sale Amount”), then the Company shall include in such registration or offering (i) all of the Equity Interestsof the Company proposed by the Company to be sold for its own account; (ii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, theRegistrable Securities and Tag-Along Securities requested by the Participating Holders and Tag-Along Holders (provided that if 12 all of the Registrable Securities and Tag-Along Securities requested by the Participating Holders and Tag-Along Holders may not be included, theParticipating Holders and Tag-Along Holders shall be entitled to participate on a pro rata basis based on the aggregate number of Registrable Securities andTag-Along Securities (treating them as a single class of securities) requested to be included in the offering by the Participating Holders and Tag-AlongHolders (but, in the case of any Tag-Along Holder, not in excess of the number of Tag-Along Securities with respect to which such Tag-Along Holder isentitled to participate pursuant to the terms of the Pre-IPO Certificate of Incorporation); and (iii) thereafter, to the extent the Section 2.2 Sale Amount is notexceeded, any other Equity Interests of the Company requested to be included by holders of Equity Interests of the Company holding other such registrationrights. (e) Expenses. The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registrationrequested pursuant to this Section 2.2. Notwithstanding the foregoing, the provisions of this Section 2.2(e) shall be deemed amended to the extent necessaryto cause these expense provisions to comply with “blue sky” laws of each state or the securities laws of any other jurisdiction in the United States and itsterritories or any foreign jurisdiction in which the offering is made. (f) Selection of Underwriters. The underwriters of each underwritten offering which may include Registrable Securities pursuant tothis Section 2.2 shall be selected by the Majority Participating Holders; provided that such underwriters shall be reasonably acceptable to the Company. (g) Plan of Distribution; Partner Distributions. Any participation by Holders in a registration by the Company shall be in accordancewith the Company’s plan of distribution, which shall include, upon the written request of such Holder or Holders, a Partner Distribution. Notwithstandinganything contained herein to the contrary, the Company shall, at the request of any Holder seeking to effect a Partner Distribution, file any prospectussupplement or post-effective amendments and otherwise take any action necessary to include such language, if such language was not included in the initialregistration statement, or revise such language if deemed reasonably necessary by such Holder to effect such Partner Distribution. 2.3. Registration Procedures. (a) If and whenever the Company is required to effect the registration of any Registrable Securities under the Securities Act pursuantto either Section 2.1 or 2.2, the Company shall as expeditiously as possible: (i) prepare and file, or confidentially submit, if permissible, with the SEC as promptly as practicable (and in the caseof a demand pursuant to Section 2.1, within forty-five (45) days after receipt by the Company of a Demand Exercise Notice) a registration statement on anappropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof(including a Partner Distribution) which registration statement shall comply as to form in all material respects with the requirements of the applicable formand include all financial statements required by the SEC to be filed therewith, and thereafter use its reasonable best efforts to cause such registration 13 statement to become and remain effective (A) with respect to an underwritten offering, for a period of at least one hundred eighty (180) days or until allRegistrable Securities subject to such registration statement have been sold, and (B) with respect to a shelf registration, until the later of (1) the sale of allRegistrable Securities thereunder and (2) the third anniversary of the effective date of such shelf registration; (ii) prepare and file with the SEC any amendments and supplements to such registration statement and theprospectus used in connection therewith, or any free writing prospectus related thereto, as may be necessary to keep such registration statement effective andto comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement inaccordance with the intended methods of disposition by the Participating Holders set forth in such registration statement for such period as provided for inSection 2.3(a)(i); (iii) furnish, without charge, to each Participating Holder and each underwriter such number of conformed copies ofsuch registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of theprospectus contained in such registration statement (including each preliminary prospectus and summary prospectus) and any other prospectus filed underRule 424 under the Securities Act, in conformity with the requirements of the Securities Act, each free writing prospectus utilized in connection therewith,and such other documents, as the Majority Participating Holders and such underwriters may request (it being understood that the Company consents to theuse of such prospectus or any amendment or supplement thereto or free writing prospectus by each Participating Holder and the underwriters in connectionwith the offering and sale of the Registrable Securities covered by such prospectus or any amendment or supplement thereto); (iv) use its reasonable best efforts (A) to register or qualify all Registrable Securities and other Equity Interests of theCompany covered by such registration statement under such state, federal or foreign securities or “blue sky” laws where an exemption is not available and asthe Majority Participating Holders or any managing underwriter shall request, (B) to keep such registration or qualification in effect for so long as suchregistration statement remains in effect, and (C) to take any and all other actions which may be necessary or advisable to enable the Participating Holders orunderwriters to consummate the disposition in such jurisdictions of the Equity Interests of the Company to be sold by the Participating Holders orunderwriters, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in anyjurisdiction wherein it would not, but for the requirements of this Section 2.3(a)(iv), be obligated to be so qualified; (v) use its reasonable best efforts to cause all Registrable Securities covered by such registration statement to beregistered with or approved by such other local, state, federal, or foreign governmental agencies or authorities as may be necessary in the opinion of counselto the Company and Counsel to the Participating Holders to consummate the disposition of such Registrable Securities; 14 (vi) use its reasonable best efforts to furnish to each Participating Holder and each underwriter a signed counterpartof (A) an opinion of counsel to the Company and (B) a “comfort” letter signed by the independent public accountants who have certified the Company’sfinancial statements included or incorporated by reference in such registration statement, in each case, addressed to each Participating Holder and eachunderwriter covering matters with respect to such registration statement (and the prospectus included therein) as such Majority Participating Holders andmanaging underwriter(s) shall request; (vii) promptly notify each Participating Holder and each managing underwriter (A) when such registration statement,any pre-effective amendment, the prospectus or any prospectus supplement related thereto, any post-effective amendment to such registration statement orany free writing prospectus has been filed and/or used and, with respect to such registration statement or any post-effective amendment, when the same hasbecome effective; (B) of the receipt by the Company of any comments from the SEC or receipt of any request by the SEC for additional information withrespect to any registration statement or the prospectus related thereto or any request by the SEC for amending or supplementing the registration statement andthe prospectus used in connection therewith; (C) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement orthe initiation of any proceedings for that purpose; (D) of the receipt by the Company of any notification with respect to the suspension of the qualification ofany of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose; (E) atany time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as aresult of which, the prospectus included in such registration statement, any document incorporated therein by reference, any free writing prospectus orinformation conveyed to any purchaser, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to bestated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and in the case ofthis clause (E), promptly prepare and furnish, at the Company’s expense, to each Participating Holder and each managing underwriter a number of copies of asupplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Equity Interests of theCompany, 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 tomake the statements therein not misleading in the light of the circumstances under which they were made; (F) at any time when the representations andwarranties of the Company contemplated by Section 2.4(a) or 2.4(b) cease to be true and correct; and (G) of the Company’s filing of a document pursuant toSection 13(a), 13(c), 14 or 15(d) of the Exchange Act that, in the reasonable judgment of the Company, must be included in the registration statementpursuant to a post-effective amendment to the registration statement or supplement to the related prospectus, and in the case of this clause (G), promptlyprepare and furnish, at the Company’s expense, to each Participating Holder and each managing underwriter copies of a supplement to or an amendment ofsuch prospectus on account of such Exchange Act filing; (viii) otherwise comply with all applicable rules and regulations of the SEC, and make available to each ParticipatingHolder, as soon as practicable (and in any event within sixteen (16) months after the effective date of the registration statement), an 15 earnings statement covering the period of at least twelve (12) consecutive months beginning with the first full calendar month after the effective date of suchregistration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; (ix) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by suchregistration statement from and after a date not later than the effective date of such registration statement; (x) (A) use its reasonable best efforts to cause all Registrable Securities covered by such registration statement to belisted on the principal securities exchange on which similar Equity Interests of the Company are then listed (if any), if the listing of such RegistrableSecurities is then permitted under the rules of such exchange, or (B) if no such similar Equity Interests are then so listed, use its reasonable best efforts to(1) cause all such Registrable Securities to be listed on a national securities exchange, (2) secure designation of all such Registrable Securities as a NationalAssociation of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”) “national market system security” within the meaning of Rule 11Aa2-1 ofthe SEC, or (3) failing that, to secure NASDAQ authorization for such shares and, without limiting the generality of the foregoing, to arrange for at least twomarket makers to register as such with respect to such shares with FINRA; (xi) deliver promptly to Counsel to the Participating Holders and each underwriter, if any, participating in theoffering of the Registrable Securities, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating todiscussions with the SEC or its staff with respect to such registration statement; (xii) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of theregistration statement; (xiii) provide a CUSIP number for all Registrable Securities no later than the effective date of the registrationstatement and provide the applicable transfer agents with printed certificates for the Registrable Securities which are in a form eligible for deposit with TheDepository Trust Company; (xiv) cause its officers and employees to participate in, and to otherwise facilitate and cooperate with, the preparationof the registration statement and prospectus and any amendments or supplements thereto (including participating in meetings, drafting sessions, duediligence sessions and the marketing of the Registrable Securities covered by the registration statement (including participation in “road shows”) taking intoaccount the Company’s business needs); (xv) enter into and perform its obligations under such customary agreements (including, if applicable, anunderwriting agreement as provided for in Section 2.4) and take such other actions as the Majority Participating Holders or managing underwriter(s) shallrequest in order to expedite or facilitate the disposition of such Registrable Securities; 16 (xvi) promptly incorporate in a prospectus supplement or post-effective amendment such information as the managingunderwriter(s) or Majority Participating Holders request to be included therein relating to the plan of distribution with respect to such Registrable Securities;and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters to beincorporated in such prospectus supplement or post-effective amendment; (xvii) cooperate with each Participating Holder and each underwriter, and their respective counsel in connection withany filings required to be made with FINRA, the New York Stock Exchange, the Nasdaq National Market, or any other securities exchange on which suchRegistrable Securities are traded or will be traded; (xviii) promptly prior to the filing of any document which is to be incorporated by reference into the registrationstatement or the prospectus contained therein (after the initial filing of such registration statement), and prior to the filing or use of any free writingprospectus, provide copies of such document to Counsel to the Participating Holders and to each managing underwriter, and make the Company’srepresentatives available for discussion of such document and make such changes in such document concerning the Participating Holders prior to the filingthereof as Counsel to the Participating Holders or underwriters may request; (xix) furnish to each Participating Holder and each managing underwriter, without charge, at least one (1) signed copyof the registration statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein byreference and all exhibits (including those incorporated by reference) and any free writing prospectus utilized in connection therewith; (xx) cooperate with the Participating Holders and the managing underwriter(s) to facilitate the timely preparation anddelivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to beissued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to theunderwriters or, if not an underwritten offering, in accordance with the instructions of the Participating Holders at least five (5) Business Days prior to anysale of Registrable Securities and instruct any transfer agent or registrar of Registrable Securities to release any stop transfer orders in respect thereof; (xxi) to the extent required by the rules and regulations of FINRA, retain a Qualified Independent Underwriter, whichshall be acceptable to the Majority Participating Holders; (xxii) take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided that to theextent that any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable; (xxiii) take all reasonable action to ensure that any free writing prospectus utilized in connection with any registrationcovered by Section 2.1 or 2.2 complies in 17 all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with theSecurities Act to the extent required thereby and, when taken together with the related prospectus, prospectus supplement and related documents, will notcontain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances underwhich they were made, not misleading; (xxiv) in connection with any underwritten offering (whether or not off of a shelf registration statement), if at any timethe information conveyed to a purchaser at the time of sale includes any untrue statement of a material fact or omits to state any material fact necessary inorder to make the statements therein, in light of the circumstances under which they were made, not misleading, promptly file with the SEC such amendmentsor supplements to such information as may be necessary so that the statements as so amended or supplemented will not, in light of the circumstances, bemisleading; and (xxv) in connection with any underwritten offering (whether or not off of a shelf registration statement), if theCompany files a document pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that, in the reasonable judgment of the Company, must beincluded in the registration statement pursuant to a post-effective amendment to the registration statement or supplement to the related prospectus, promptlyfile with the SEC such amendments or supplements to such information as may be necessary on account of such Exchange Act filing. (b) Each Participating Holder agrees that upon receipt of any notice from the Company of the happening of any event of the kinddescribed in clause (C), (E) or (G) of Section 2.3(a)(vii), each Participating Holder will, to the extent appropriate, discontinue its disposition of RegistrableSecurities pursuant to the registration statement relating to such Registrable Securities until, in the case of clause (C) of Section 2.3(a)(vii), its receipt ofnotice from the Company that such stop order or suspension of effectiveness is no longer in effect, and in the case of clauses (E) and (G) of Section 2.3(a)(vii),its receipt of the copies of the supplemented or amended prospectus contemplated by clause (E) or (G) of Section 2.3(a)(vii) and, if so directed by theCompany, will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in its possession, of the prospectusrelating to such Registrable Securities current at the time of receipt of such notice. If the disposition by a Participating Holder of its Registrable Securities isdiscontinued pursuant to the foregoing sentence, the Company shall extend the period of effectiveness of the registration statement by the number of daysduring the period from and including the date of the giving of such notice to and including the date when the Participating Holder shall have received (in thecase of clause (C) of Section 2.3(a)(vii)) notice that such stop order or suspension of effectiveness is no longer in effect, and (in the case of clauses (E) and(G) of Section 2.3(a)(vii)) copies of the supplemented or amended prospectus contemplated by clause (E) or (G) of Section 2.3(a)(vii); and, if the Companyshall not so extend such period, the Participating Holder’s request pursuant to which such registration statement was filed shall not be counted for purposes ofthe requests for registration to which the Participating Holder is entitled pursuant to Section 2.1. If for any other reason the effectiveness of any registrationstatement filed pursuant to Section 2.1 or 2.2 is suspended or interrupted prior to the expiration of the time period regarding the maintenance of 18 the effectiveness of such registration statement required by Section 2.3(a)(i) so that Registrable Securities may not be sold pursuant thereto, the applicabletime period shall be extended by the number of days equal to the number of days during the period beginning with the date of such suspension orinterruption to and ending with the date when the sale of Registrable Securities pursuant to such registration statement may be resumed. (c) If any such registration statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as theholder of any Equity Interests of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substancesatisfactory to such Holder and the Company, to the effect that the holding by such Holder of such Equity Interests is not to be construed as arecommendation by such Holder of the investment quality of the Company’s Equity Interests covered thereby and that such holding does not imply that suchHolder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise isnot in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state or foreign “blue sky” orsecurities law then in force, the deletion of the reference to such Holder. (d) Holders may seek to register different types of Registrable Securities simultaneously and the Company shall use its reasonable bestefforts to effect such registration and sale in accordance with the intended method or methods of disposition specified by such Holders. (e) In connection with an underwritten offering related to a shelf take-down, the Company will comply with all of these registrationprocedures as reasonably appropriate in the opinion of the Majority Participating Holders. 2.4. Underwritten Offerings. (a) Demand Underwritten Offerings. If requested by the underwriters for any underwritten offering by the Participating Holderspursuant to a registration requested under Section 2.1, the Company shall enter into a customary underwriting agreement with the managingunderwriter(s) selected by the Majority Participating Holders pursuant to Section 2.1(f). Such underwriting agreement shall be reasonably satisfactory in formand substance to the Majority Participating Holders and the Company and shall contain such representations and warranties by, and such other agreementson the part of, the Company and such other terms as are generally prevailing in agreements of that type, including customary provisions relating toindemnification and contribution which are no less favorable to the recipient than those provided in Section 2.6. Each Participating Holder shall be a partyto such underwriting agreement. The Majority Participating Holders may, at their option, require that any or all of the representations and warranties by, andthe other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of each ParticipatingHolder and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent tothe obligations of each Participating Holder; provided that the Company shall not be required to make any representations or warranties with respect towritten information specifically provided by a 19 Participating Holder for inclusion in the registration statement. No Participating Holder shall be required to make any representations or warranties to oragreements with the Company or the underwriters other than representations, warranties or agreements regarding such Participating Holder, its ownership ofand title to the Registrable Securities, its intended method of distribution, and disclosures related to the foregoing; and any liability of any ParticipatingHolder to any underwriter or other Person under such underwriting agreement shall be limited to liability arising from breach of its representations andwarranties and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts and commissions) that it derives from suchregistration, except in the case of willful fraud by such Participating Holder. (b) Incidental Underwritten Offerings. In the case of a registration pursuant to Section 2.2, if the Company shall have determined toenter into an underwriting agreement in connection therewith, all of the Registrable Securities to be included in such registration shall be subject to suchunderwriting agreements. The Majority Participating Holders may, at their option, require that any or all of the representations and warranties by, and theother agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of the Participating Holdersand that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to theobligations of the Participating Holders; provided that the Company shall not be required to make any representations or warranties with respect to writteninformation specifically provided by a Participating Holder for inclusion in the registration statement. None of the Participating Holders shall be required tomake any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regardingsuch Participating Holder, its ownership of and title to the Registrable Securities, its intended method of distribution and disclosures related to the foregoing;and any liability of any Participating Holder to any underwriter or other Person under such underwriting agreement shall be limited to liability arising frombreach of its representations and warranties and shall be limited to an amount equal to the proceeds (net of expenses and underwriting discounts andcommissions) that it derives from such registration, except in the case of willful fraud by such Participating Holder. (c) Participation in Underwritten Registrations. In the case of an underwritten registration pursuant to Section 2.1 or 2.2, as theCompany may from time to time reasonably request in writing, the Company may require the Participating Holders (i) to furnish the Company suchinformation regarding such Participating Holders and the distribution of the Registrable Securities to enable the Company to comply with the requirementsof applicable laws or regulations in connection with such registration and (ii) to complete and execute all customary questionnaires, powers of attorney,indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. The Company shall notbe obligated to effect the registration of any Registrable Securities of a particular Participating Holder unless such information and documents regarding suchParticipating Holder and the distribution of such Participating Holder’s Registrable Securities is provided to the Company. 2.5. Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement under the Securities Actpursuant to this Agreement, the Company will give the Participating Holders, the managing underwriter(s), and their respective 20 counsel, accountants and other representatives and agents the opportunity to participate in the preparation of such registration statement, each prospectusincluded therein or filed with the SEC, and each amendment thereof or supplement thereto or comparable statements under securities or “blue sky” laws ofany jurisdiction, and give each of the foregoing parties access to its books and records, all financial and other records, pertinent corporate documents andproperties of the Company and its subsidiaries, and such opportunities to discuss the business of the Company and its subsidiaries with their respectivedirectors, officers and employees and the independent public accountants who have certified the Company and its subsidiaries’ financial statements, andsupply all other information and respond to all inquiries requested by such Participating Holders, managing underwriter(s), or their respective counsel,accountants or other representatives or agents in connection with such registration statement, as shall be necessary or appropriate, in the opinion of counselto such Participating Holder or managing underwriter(s), to conduct a reasonable investigation within the meaning of the Securities Act, and the Companyshall not file any registration statement or amendment thereto or any prospectus or supplement thereto to which the Majority Participating Holders or themanaging underwriter(s) shall object. 2.6. Indemnification. (a) Indemnification by the Company. The Company agrees that in the event of any registration of any Registrable Securities underthe Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, (i) each of the Holders and theirrespective Affiliates, (ii) each of the Holders’ and their Affiliates’ respective Affiliates, officers, directors, successors, assigns, members, partners, equityholders, employees, advisors, and agents, (iii) each other Person who participates as an underwriter or Qualified Independent Underwriter in the offering orsale of such Equity Interests and their respective directors, officers and Affiliates, (iv) each Person who controls (within the meaning of the Securities Act orthe Exchange Act) any of the Persons listed in clauses (i), (ii) or (iii), and (v) any representative (legal or otherwise) of any of the Persons listed in clauses (i),(ii), (iii) or (iv) (collectively, the “Indemnitees”), from and against any losses, penalties, fines, liens, judgments, suits, claims, damages, liabilities, costs andexpenses (including attorney’s fees and any amounts paid in any settlement effected in compliance with Section 2.6(e)) or liabilities, joint or several (oractions or proceedings, whether commenced or threatened, in respect thereof, and whether or not such Indemnitee is a party thereto) (“Losses”), to which suchIndemnitee has become or may become subject under the Securities Act or otherwise, insofar as such Losses arise out of, relate to or are based upon (A) anyuntrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Equity Interests were registeredunder the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, any amendment or supplement thereto, anydocuments incorporated by reference therein, or any free writing prospectus or road show utilized in connection therewith, (B) any omission or allegedomission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (C) any untrue statement oralleged untrue statement of a material fact in the information conveyed to any purchaser at the time of the sale to such purchaser, or the omission or allegedomission to state therein a material fact required to be stated therein, or (D) any violation by the Company of any federal, state or common law rule orregulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and theCompany shall reimburse such 21 Indemnitee for its legal and other fees and expenses incurred by it in connection with investigating or defending any such Loss; provided that the Companyshall not be liable to an Indemnitee to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omissionor alleged omission made in any such registration statement, any such preliminary prospectus, final prospectus or summary prospectus, any amendment orsupplement thereto or document incorporated by reference therein, or any such free writing prospectus or road show, in reliance upon and in conformity withwritten information furnished to the Company by or on behalf of such Indemnitee, which specifically states that it is for use in the preparation of suchregistration statement, preliminary prospectus, final prospectus, summary prospectus, amendment, supplement, document or free writing prospectus. (b) Indemnification by Participating Holders. As a condition to including any Registrable Securities in any registration statement, theCompany shall have received an undertaking reasonably satisfactory to it from each Participating Holder so including any Registrable Securities to, severallyand not jointly, indemnify and hold harmless, to the fullest extent permitted by law, (i) the Company, each director and officer of the Company, and eachother Person, if any, who controls the Company within the meaning of the Securities Act or Exchange Act and (ii) any underwriters of the RegistrableSecurities, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act or the Exchange Act) andtheir Affiliates, from and against any Losses to which such indemnified parties have become or may become subject under the Securities Act or otherwise,insofar as such Losses arise out of, relate to or are based upon any statement or alleged statement in or omission or alleged omission from such registrationstatement, any preliminary prospectus, final prospectus or summary prospectus contained therein, any amendment or supplement thereto, or any free writingprospectus or road show utilized in connection therewith, but only to the extent such statement or alleged statement or omission or alleged omission wasmade in reliance upon and in conformity with written information furnished by such Participating Holder to the Company which specifically states that it isfor use in the preparation of such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, anyamendment or supplement thereto, or any free writing prospectus or road show utilized in connection therewith, and such Participating Holder shallreimburse such indemnified party for any reasonable legal or any other fees or expenses reasonably incurred by them in connection with investigating ordefending any such Loss; provided that the aggregate liability of such indemnifying party under this Section 2.6(b) shall be limited to the amount ofproceeds (net of expenses and underwriting discounts and commissions) received by such indemnifying party in the offering giving rise to such liability,except in the case of willful fraud by such Participating Holder. Each Participating Holder shall also indemnify and hold harmless all other prospectivesellers and Participating Holders, their respective Affiliates, officers, directors, successors, assigns, members, partners, equity holders, employees, advisors,representatives (legal or otherwise), and agents, and each Person who controls (within the meaning of the Securities Act or the Exchange Act) any such selleror Participating Holder to the same extent as provided above with respect to indemnification of the Company and underwriters. (c) Notices of Claims. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceedinginvolving a claim referred to in 22 Section 2.6(a) or 2.6(b), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to suchindemnifying party of the commencement of such action or proceeding; provided that the failure of any indemnified party to give notice as provided hereinshall not relieve the indemnifying party of its obligations under Section 2.6(a) or 2.6(b), except to the extent that the indemnifying party is actually andmaterially prejudiced by such failure to give notice, and shall not relieve the indemnifying party from any liability which it may have to the indemnifiedparty otherwise than under this Section 2.6. (d) Defense of Claims. In case any such action or proceeding is brought against an indemnified party, except as provided for in thenext sentence, the indemnifying party shall be entitled to participate therein and assume the defense thereof, jointly with any other indemnifying party, withcounsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assumethe defense thereof and approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legalexpenses subsequently incurred by such indemnified party in connection with the defense thereof other than costs of investigation, and the indemnified partyshall be entitled to participate in such defense at its own expense. If (i) the indemnifying party fails to notify the indemnified party in writing, withinfifteen (15) days after the indemnified party has given notice of the action or proceeding, that the indemnifying party will indemnify the indemnified partyfrom and against all Losses the indemnified party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the claim, (ii) theindemnifying party fails to provide the indemnified party with evidence acceptable to the indemnified party that the indemnifying party will have thefinancial resources to defend against the claim or proceeding and fulfill its indemnification obligations hereunder, (iii) after electing to participate in andassume the defense of such action or proceeding, the indemnifying party fails to defend diligently the action or proceeding within ten (10) Business Daysafter receiving notice of such failure from such indemnified party; (iv) such indemnified party reasonably shall have concluded (upon advice of its counsel)that there may be one or more legal defenses available to such indemnified party or other indemnified parties which are not available to the indemnifyingparty; or (v) if such indemnified party reasonably shall have concluded (upon advice of its counsel) that, with respect to such claims, the indemnified partyand the indemnifying party may have different, conflicting, or adverse legal positions or interests then, in any such case, the indemnified party shall have theright to assume or continue its own defense and the indemnifying party shall be liable for any fees and expenses therefor. (e) Consent to Entry of Judgment and Settlements. No indemnifying party shall be liable for any settlement of any action orproceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned, provided that, in the case wherethe indemnifying party shall have failed to take any of the actions listed in clauses (i), (ii) or (iii) of the last sentence of Section 2.6(d), the indemnified partyshall have the right to compromise or settle such action on behalf of and for the account, expense, and risk of the indemnifying party and the indemnifyingparty will remain responsible for any Losses the indemnified party may suffer resulting from, arising out of, relating to, in the nature of, or caused by theaction or proceeding to the fullest extent provided in this Section 2.6. No indemnifying party shall, without the written consent of the indemnified party,effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or 23 threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual orpotential party to such action or claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party fromall liability arising out of such action or claim, (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf ofany indemnified party and (C) does not require any action other than the payment of money by the indemnifying party. (f) Contribution. If for any reason the indemnification provided for in Section 2.6(a), 2.6(b) or 2.6(g) is unavailable to an indemnifiedparty or insufficient in respect of any Losses referred to therein, then, in lieu of the amount paid or payable under Section 2.6(a), 2.6(b) or 2.6(g), theindemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss (i) in such proportion as is appropriate toreflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other hand, with respect to the statements or omissionswhich resulted in such Loss, as well as any other relevant equitable considerations, or (ii) if the allocation provided by clause (i) is not permitted byapplicable law or if the allocation provided in this clause (ii) provides a greater amount to the indemnified party than clause (i), in such proportion as shall beappropriate to reflect not only the relative fault but also the relative benefits received by the indemnifying party and the indemnified party from the offeringof the Equity Interests of the Company covered by such registration statement as well as any other relevant equitable considerations. The relative fault shallbe determined by a court of competent jurisdiction with reference to, among other things, whether the untrue or alleged untrue statement of a material fact orthe omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that itwould not be just and equitable if contributions pursuant to this Section 2.6(f) were to be determined by pro rata allocation or by any other method ofallocation which does not take into account the equitable considerations referred to in the preceding sentence of this Section 2.6(f). No Person guilty offraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guiltyof such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred to in Section 2.6(a), 2.6(b) or2.6(g) shall be deemed to include, subject to the limitations set forth in Sections 2.6(a), 2.6(b) and 2.6(g), any legal or other expenses reasonably incurred bysuch indemnified party in connection with investigating or defending any such action or claim. Notwithstanding anything in this Section 2.6(f) to thecontrary, no Participating Holder shall be required to contribute any amount in excess of the proceeds (net of expenses and underwriting discounts andcommissions) received by such Participating Holder from the sale of the Registrable Securities in the offering to which the Losses of the indemnified partiesrelate, except in the case of willful fraud by such Participating Holder. (g) Other Indemnification. Indemnification and contribution similar to that specified in the preceding subsections of this Section 2.6(with appropriate modifications) shall be given by the Company and the Participating Holders with respect to any required registration or other qualificationof Equity Interests of the Company under any state, federal or foreign securities or “blue sky” laws. The indemnification agreements contained in thisSection 2.6 24 shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remainoperative and in full force and effect regardless of any investigation made by or on behalf of any Indemnitee or other indemnified party and shall survive thetransfer of any of the Registrable Securities by any such party. (h) Indemnification Payments. The indemnification and contribution required by this Section 2.6 shall be made by periodic paymentsof the amount thereof during the course of the investigation or defense, as and when bills are received or a Loss is incurred. 2.7. Limitation on Sale of Equity Interests. (a) For the Company and Others. If the Company receives a request for registration pursuant to an underwritten offering of RegistrableSecurities pursuant to Section 2.1 or 2.2 or if a shelf take-down is being undertaken, and if such a request is being implemented or has not been withdrawn orabandoned, the Company agrees that (i) the Company shall not effect any public or private offer, sale, distribution or other disposition of any RegistrableSecurities or Convertible Securities or effect any registration of any of its Equity Interests under the Securities Act (in each case, other than (u) as part of suchregistration, (v) any Equity Interests issued by the Company upon the exercise of an option or warrant or the conversion of an Equity Interest, but only to theextent that (A) such option, warrant or Equity Interest was outstanding on the date hereof or (B) the grant or issuance of such option, warrant or EquityInterest received the Requisite Approval, (w) any Equity Interests issued or granted pursuant to equity incentive plans, including any non-employee directorstock plan, the adoption of which plan received the Requisite Approval and which issuance or grant received the Requisite Approval; (x) any Equity Interestsissued pursuant to any dividend reinvestment plan, the adoption of which plan received the Requisite Approval; (y) the filing by the Company of anyregistration statement on Form S-8 or a successor form thereto; and (z) any Equity Interests issued in connection with a transaction that includes a commercialrelationship (including joint ventures or other strategic acquisitions), which transaction received the Requisite Approval), whether or not for sale for its ownaccount, during the period beginning on the date the Company receives such request and ending one hundred eighty (180) days after the effective date ofsuch registration in the case of the Initial Public Offering or ninety (90) days after the effective date of such registration in the case of any other underwrittenPublic Offering, plus, in each case, any customary extension periods (or such shorter period as the managing underwriter(s) may require), and (ii) theCompany shall use its reasonable best efforts to obtain from each of its officers, directors and Persons who Beneficially Own five percent (5%) or more of theCompany’s Equity Interests, an agreement not to effect any public or private offer, sale, distribution or other disposition of Equity Interests of the Company,or any Equity Interests of the Company that are convertible into or exchangeable or exercisable for other Equity Interests of the Company, including a salepursuant to Rule 144, during the one hundred eighty (180) day period in the case of an Initial Public Offering (or such shorter period as the managingunderwriter(s) may require), or the ninety (90) day period in the case of any other underwritten Public Offering (or such shorter period as the managingunderwriter(s) may require), in each case beginning on the effective date of such registration statement. (b) For the Holders. If the Company receives a request for registration pursuant to an underwritten offering of Registrable Securitiespursuant to Section 2.1 or 2.2 or if 25 a shelf take-down is being undertaken (and if such a request is being implemented or has not been withdrawn or abandoned), each Holder agrees that, to theextent requested in writing by the managing underwriter(s), it will not effect any public or private offer, sale, distribution or other disposition of anyRegistrable Securities or Convertible Securities (other than as a part of such registration), including a sale pursuant to Rule 144, during the one hundredeighty (180) day period in the case of an Initial Public Offering (or such shorter period as the managing underwriter(s) may require), or the ninety (90) dayperiod in the case of any other underwritten Public Offering (or such shorter period as the managing underwriter(s) may require), in each case beginning onthe effective date of such registration statement or the closing of the shelf take-down plus any customary extension periods; provided that each Holder hasreceived the written notice required by Section 2.1(a) or 2.2(a), as applicable; and provided, further, that in connection with such underwritten offering eachofficer and director of the Company is subject to restrictions substantially equivalent to those imposed on the Holders. 2.8. No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any of the Holders to sellany Registrable Securities pursuant to any effective registration statement. 2.9. Rule 144; Rule 144A; Regulation S. The Company covenants that, at its own expense, it will file the reports required to be filed by it underthe Securities Act and the Exchange Act, and it will take such further action as any Holder may reasonably request, all to the extent required from time to timeto enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemptions provided by(a) Rule 144, Rule 144A or Regulation S under the Securities Act or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of aHolder, the Company, at its own expense, will promptly deliver to such Holder (i) a written statement as to whether it has complied with such requirements(and such Holder shall be entitled to rely upon the accuracy of such written statement), (ii) a copy of the most recent annual or quarterly report of theCompany and (iii) such other reports and documents as such Holder may reasonably request in order to avail itself of any rule or regulation of the SECallowing it to sell any Registrable Securities without registration. 2.10. Adjustments. At the request of Holders holding in the aggregate at least fifty percent (50%) of the outstanding Registrable Securities thenheld by the Holders, in the event of any change in the capitalization of the Company as a result of any stock split, stock dividend, reverse split, combination,conversion, recapitalization, merger, consolidation or otherwise, the provisions of this Section 2 shall be appropriately adjusted. The Company agrees that itshall not effect or permit to occur any combination or subdivision of its Equity Interests which would adversely affect the ability of the Holders to includeany Registrable Securities in any registration contemplated by this Agreement or the marketability of such Registrable Securities in any such registration. The Company agrees that it will take all steps necessary to effect a combination or subdivision of its Equity Interests if, in the judgment of Holders holding inthe aggregate at least fifty percent (50%) of the outstanding Registrable Securities then held by the Holders or the managing underwriter(s), such combinationor subdivision would enhance the marketability of the Registrable Securities. 26 SECTION. 3. Subsequent Registration Rights; No Inconsistent Agreements. 3.1. Limitations on Subsequent Registration Rights. From and after the date of this Agreement until the Holders and their respective PermittedAssignees shall no longer hold any Registrable Securities, without the prior written consent of Holders holding in the aggregate at least fifty percent (50%) ofthe outstanding Registrable Securities then held by the Holders, the Company shall not enter into an agreement that grants a holder or prospective holder ofany Equity Interests of the Company demand or incidental registration rights. Notwithstanding the foregoing, if, after the date of this Agreement, theCompany enters into any other agreement with respect to the registration of any of its Equity Interests, and the terms contained therein are more favorable to,or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement (insofar as they are applicable) with respect to theHolders, then, at the request of Holders holding in the aggregate at least fifty percent (50%) of the outstanding Registrable Securities then held by theHolders, the terms of this Agreement shall immediately be deemed to have been amended without further action by the Company or the Holders so that theHolders shall be entitled to the benefit of any such more favorable or less restrictive terms or conditions. 3.2. No Inconsistent Agreements. Without the prior written consent of Holders holding in the aggregate at least fifty percent (50%) of theoutstanding Registrable Securities then held by the Holders, the Company will not, on or after the date of this Agreement, enter into any agreement withrespect to its Equity Interests which is inconsistent with the rights granted to the Holders in Section 2 or otherwise conflicts with the provisions of Section 2,other than any customary lock-up agreement with the underwriters in connection with any offering effected hereunder, pursuant to which the Company shallagree not to register for sale, and the Company shall agree not to sell or otherwise dispose of, Equity Interests of the Company or any Convertible Securities,for a specified period (not to exceed one hundred eighty (180) days plus customary extension periods) following such offering. The Company represents andwarrants that the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with any other agreements to which theCompany is a party or by which it is bound. The Company is not bound by any agreement with respect to its Equity Interests granting any registration rightsto any Person. SECTION. 4. Miscellaneous. 4.1. Rules of Construction. (a) An accounting term not otherwise defined herein has the meaning assigned to it in accordance with U.S. GAAP; (b) References in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural or the feminine ormasculine or neutral reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine orfeminine or neutral reference, as the case may be; (c) References to Sections shall refer to sections of this Agreement, unless otherwise specified; 27 (d) The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define orlimit the scope, extent or intent of this Agreement or any provision hereof; (e) This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party thatdrafted and caused this Agreement to be drafted; (f) References to “days” shall refer to calendar days unless Business Days are specified. If any period expires on a day which is not aBusiness Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a Business Day, such periodshall expire or such event or condition shall occur or be fulfilled, as the case may be, on the next succeeding Business Day; (g) Any action required to be taken “within” a specified time period following the occurrence of an event shall be required to be takenno later than 5:00 PM, Eastern time, on the last day of the time period, which shall be calculated starting with the day immediately following the date of theevent; (h) All monetary figures shall be in United States dollars unless otherwise specified, and any monetary figure in United States dollarsshall be deemed to refer to the equivalent amount of foreign currency when used in a context which refers to or includes operations conducted principallyoutside of the United States; (i) References to “include,” “includes” and “including” in this Agreement shall be deemed to be followed by “, without limitation,”whether or not so specified; and (j) The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other theory extends, and such phraseshall not mean “if.” 4.2. Further Actions. Each party hereto shall cooperate with each other party, shall do and perform or cause to be done and performed all furtheracts and things, and shall execute and deliver all other agreements, certificates, instruments and documents as any other party hereto reasonably may requestin order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 4.3. Notices. (a) Unless otherwise expressly provided herein, all notices, requests, demands, claims and other communications provided for underthe provisions of this Agreement shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be sent by (i) personaldelivery (including receipted courier service) or overnight delivery service to the intended recipient at the address set forth below, (ii) facsimile or electronicmail, with confirmation of receipt, to the number or email address of the intended recipient set forth below (provided that a copy is also sent by anotherpermitted method; and provided, further, that delivery to the NMP Entities may not be sent by facsimile), (iii) internationally recognized overnight deliverycourier service to the intended recipient at the address set forth below, or 28 (iv) registered or certified mail, return receipt requested, postage prepaid, to the intended recipient at the address set forth below: (i) If to the Company, at the address indicated below, or at such other address as the Company may hereafter designateby written notice to the Holders: Bellerophon Therapeutics, Inc.53 Frontage Road, Suite 301Hampton, NJ 08827Attn: Chief Executive OfficerFax: 844-325-6587Email: jon.peacock@bellerophon.com with copies (which shall not constitute notice) to: Wilmer Cutler Pickering Hale and Dorr LLP60 State StreetBoston, MA 02109Attn: Lia Der Marderosian, Esq.Fax: +1-617-526-5000Email: lia.dermarderosian@wilmerhale.com and Fried, Frank, Harris, Shriver & Jacobson LLPOne New York PlazaNew York, NY 10004Attn: Aviva F. Diamant, Esq. and Abigail P. Bomba, Esq.Fax: +1-212-859-4000Email: aviva.diamant@friedfrank.com andabigail.bomba@friedfrank.com (ii) If to any Holder, to such Holder at the address set forth below such Holder’s name on its signature page hereto, or atsuch other address as such Holder may hereafter designate by written notice to the Company, in each case, with a copy (which shall not constitute notice) to: Fried, Frank, Harris, Shriver & Jacobson LLPOne New York PlazaNew York, NY 10004Attn: Aviva F. Diamant, Esq. and Abigail P. Bomba, Esq.Fax: +1-212-859-4000Email: aviva.diamant@friedfrank.com andabigail.bomba@friedfrank.com and 29 Wilmer Cutler Pickering Hale and Dorr LLP60 State StreetBoston, MA 02109Attn: Lia Der Marderosian, Esq.Fax: +1-617-526-5000Email: lia.dermarderosian@wilmerhale.com (iii) If to any Tag-Along Holder, to such Tag-Along Holder at its address set forth on the books and records of theCompany. (b) Notices shall be deemed to have been received: (i) If given by personal delivery or by facsimile or electronic transmission, on the day given, if given before 5:00 PMlocal time on a Business Day in the jurisdiction of the intended recipient; otherwise on the next Business Day, provided that receipt of any facsimile orelectronic transmission is confirmed by written evidence of delivery of facsimile, electronic confirmation of delivery or written acknowledgment of receiptthereof by the recipient; (ii) If given by internationally recognized overnight delivery courier service, on the date of delivery indicated in therecords of such courier service; and (iii) If given by registered or certified mail, return receipt requested, postage prepaid, on the date of delivery indicatedon the return receipt. 4.4. Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws (excluding conflict oflaws rules and principles) of the State of Delaware applicable to agreements made and to be performed entirely within such State, including all matters ofconstruction, validity and performance. 4.5. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement werenot performed in accordance with its specific terms or were otherwise breached and that money damages or other remedy at law would not be a sufficient oradequate remedy for any breach or violation of, or a default under, this Agreement. It is accordingly agreed that, subject to Section 4.8, each of the partiesshall be entitled, without any requirement for the securing or posting of any bond with respect to such remedy, to an injunction or injunctions to prevent orrestrain any breach, violation or default, or threatened breach, violation or default, of this Agreement and to enforce specifically the terms and provisionshereof in any court of the United States or any state having jurisdiction, such remedy being in addition to any other remedy to which any party may beentitled at law or in equity. 4.6. Entire Agreement. This Agreement, including, to the extent referred to herein, the Pre-IPO Certificate of Incorporation, the Certificate ofIncorporation and the Stockholders Agreement, constitutes the entire agreement of the parties relating to the subject matter hereof 30 and supersedes all prior agreements and undertakings, whether oral or written. For avoidance of doubt, this Agreement supersedes and replaces the OriginalRegistration Rights Agreement, which agreement shall no longer have any force or effect. There are no representations, agreements, arrangements orunderstandings, oral or written, between or among the parties relating to the subject matter of this Agreement which are not fully expressed in this Agreement. 4.7. Severability. Should any provision of this Agreement or the application thereof to any Person or circumstance be held invalid orunenforceable to any extent, (a) such provision shall be ineffective to the extent, and only to the extent, of such invalidity or unenforceability and shall beenforced to the greatest extent permitted by law; (b) such invalidity or unenforceability with respect to any Person or in any jurisdiction shall not invalidateor render unenforceable such provision as applied (i) to any other Persons or circumstances or (ii) in any other jurisdiction; and (c) such invalidity orunenforceability shall not affect or invalidate any other provision of this Agreement. 4.8. Amendments and Waivers. (a) Subject to Section 4.8(c), this Agreement and any of the provisions hereof may be amended, modified or supplemented, in whole orin part, only by written agreement of the Company (with the prior approval of the Board) and Holders holding in the aggregate at least fifty percent (50%) ofthe outstanding Registrable Securities then held by the Holders; provided that (i) any amendment or modification of, or supplement to, Section 2.6 thatrelates only to a particular offering shall require only the written agreement of the Company (with the prior approval of the Board) and the MajorityParticipating Holders for such offering, and (ii) any amendment or modification of, or supplement to, this Agreement the direct result of which is to materiallyadversely affect any Holder (or class or series of Holders) in a manner that is materially different from the manner in which the other Holders (or other classesor series of Holders) are affected (other than such materially different effects resulting from the express provisions of this Agreement in effect immediatelyprior to such amendment, modification or supplement) may be effected only with the prior written consent of such Holder (or a majority of such class or seriesof Holders measured by the number of shares of the class or series held) so differently affected. (b) The observance of any provision of this Agreement may be waived in writing by the Company (with the prior approval of theBoard) and Holders holding in the aggregate at least fifty percent (50%) of the outstanding Registrable Securities then held by the Holders; provided that anyprovision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Any waiver of any provision ofSection 2.6 that relates only to a particular offering shall require only the written agreement of the Company (with the prior approval of the Board) and theMajority Participating Holders for such offering. Any waiver by any party hereto of a breach by any party hereto of any provision of this Agreement shall notoperate or be construed as a waiver of such breach by any other party hereto, except as otherwise explicitly provided for in the writing evidencing suchwaiver. Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right, power or remedyhereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such 31 right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. (c) Other than in the case of a Permitted Assignee (which shall not require the consent of the Company or any Holder), the executionof a counterpart signature page or a joinder to this Agreement after the date hereof by any Person holding any Equity Interests of the Company shall requirethe consent of the Company (with the prior approval of the Board) and Holders holding in the aggregate at least fifty percent (50%) of the outstandingRegistrable Securities then held by the Holders and shall not be deemed an amendment to this Agreement so long as such Person agrees to be treated as a“Holder” hereunder. 4.9. No Third Party Beneficiaries. Other than Section 2.6, nothing in this Agreement, whether express or implied, shall be construed to give anyPerson (other than the parties hereto and their respective successors and permitted assigns who comply with the terms hereof and agree in writing to be boundby the provisions hereof) any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisionscontained herein, as a third party beneficiary or otherwise. Each Indemnitee shall be a third party beneficiary of the provisions of Section 2.6 and shall beentitled to enforce such provisions directly. The Tag-Along Holders (except as set forth in the immediately preceding sentence) shall not be third partybeneficiaries of this Agreement and shall not be entitled to enforce any of the provisions hereof, provided that nothing in this Agreement shall limit the rightsof the Tag-Along Holders under the Pre-IPO Certificate of Incorporation. 4.10. Assignments. The provisions of this Agreement shall be binding upon and inure to the benefit of the Company and the Holders and theirrespective successors and permitted assigns. The Company may not assign any of its rights or delegate any of its duties hereunder without the prior writtenconsent of Holders holding in the aggregate at least fifty percent (50%) of the outstanding Registrable Securities then held by the Holders. With respect tothe Holders, (a) prior to an Initial Public Offering, any Holder may, at its election and at any time or from time to time, assign its rights and delegate its dutieshereunder, in whole or in part, to any Person to whom such Holder transfers any of such Holder’s Equity Interests in compliance with the Pre-IPO Certificateof Incorporation and (b) at any time or from time to time following an Initial Public Offering, (i) any Holder may transfer its rights and delegate its dutieshereunder, in whole or in part, to an Affiliate of such Holder and (ii) any NMP Holder may additionally transfer its rights and delegate its duties hereunder, inwhole or in part, to any Person that acquires shares of Common Stock from an NMP Holder in a transaction other than a Public Offering or a sale pursuant toRule 144 (each of the assignees referenced in clauses (a), (b)(i) and (b)(ii) of this sentence is referred to as a “Permitted Assignee”), provided, that an NMPHolder may only transfer in a transaction described in clause (b)(ii) above its then remaining demand registration rights under Section 2.1 (in whole or in part)to a Person that, immediately following such transfer, will hold, together with its Affiliates, at least ten percent (10%) in the aggregate of the QuarterlyOutstanding Common Stock unless such transfer is of the balance of the Registrable Securities then held by all the NMP Holders in which case an NMPHolder may only transfer in such a transaction one or more of its then remaining demand registration rights under Section 2.1 to a Person that, immediatelyfollowing such transfer, will hold, together with its Affiliates, at least five percent (5%) in the aggregate of the Quarterly Outstanding Common Stock. For the 32 avoidance of doubt, there may be more than one transfer under any of clauses (a), (b)(i) and (b)(ii) of the preceding sentence. Notwithstanding the foregoing,no such assignment shall be binding upon or obligate the Company to any such Permitted Assignee unless and until such Permitted Assignee delivers to theCompany (i) a written notice stating the name and address of such Assignee and identifying the Equity Interests of the Company with respect to which suchrights are being assigned, if any, and (ii) a written instrument by which such Permitted Assignee agrees to be bound by the obligations imposed upon Holdersunder this Agreement to the same extent as if such Permitted Assignee were a party hereto (or executes and delivers to the Company a counterpart signaturepage or a joinder to this Agreement and agrees to be treated as a “Holder” for all purposes of this Agreement), whereupon such Permitted Assignee shall beentitled to all of the rights of a Holder under this Agreement, including under this Section 4.10. 4.11. Jurisdiction; Waiver of Jury Trial. (a) Jurisdiction. Subject to Section 4.5, any action, suit or proceeding against any party to this Agreement arising out of or relating tothis Agreement shall be brought in any federal or state court located in New York County in the State of New York, and each of the parties hereby submits tothe exclusive jurisdiction of such courts for the purpose of any such action, suit or proceeding. A final judgment in any such action, suit or proceeding shallbe conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. To the extent that service ofprocess by mail or by internationally recognized overnight delivery courier service is permitted by applicable law, each party irrevocably consents to theservice of process in any such action, suit or proceeding in such courts by the mailing of such process by registered or certified mail, postage prepaid, returnreceipt request or by internationally recognized overnight delivery courier service to such party at its address for notices provided for in Section 4.3. Eachparty irrevocably waives and agrees not to assert (i) any objection which it may ever have to the laying of venue of any such action, suit or proceeding in anyfederal or state court located in New York County in the State of New York, and (ii) any claim that any such action, suit or proceeding brought in any suchcourt has been brought in an inconvenient forum. (b) Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES, TO THE EXTENT LAWFUL, AND AGREES NOT TO ASSERTANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENT AND AGREES THATANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY ANDBARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT ORPROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENT. 4.12. Attorneys’ Fees. In the event that any action, suit or proceeding is brought for the purpose of determining or enforcing the right of anyparty or parties hereunder, the party or parties prevailing in such action, suit or proceeding shall be entitled to recover from the other party or parties allreasonable costs and expenses incurred by the prevailing party or parties in connection with such action, suit or proceeding, including reasonable attorneys’fees. 33 4.13. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed thesame document. All counterparts shall be construed together and shall constitute one and the same instrument. A signature delivered by facsimile orelectronic transmission shall be deemed to be an original signature for all purposes under this Agreement. 4.14. Effectiveness. Except for (a) Indemnitees and (b) as otherwise provided in the Pre-IPO Certificate of Incorporation and in this Agreementwith respect to Tag-Along Securities, no Person shall have any rights under this Agreement, and neither the Company nor any Holder shall have anyobligations under this Agreement to any other Person, unless and until such other Person has executed and delivered this Agreement or a counterpart heretoagreeing to be bound by this Agreement as a Holder. The failure of any one or more Persons to execute and deliver this Agreement or a counterpart heretoshall not invalidate this Agreement or any of the rights and obligations of the Company and of those Holders that have executed and delivered thisAgreement or a counterpart hereto as among such parties that have so executed and delivered this Agreement or a counterpart hereto. [Signature Page Follows] 34 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. COMPANY: BELLEROPHON THERAPEUTICS, INC. By:/s/ Jonathan M. PeacockName: Jonathan M. PeacockTitle: President and Chief Executive Officer Signature Page to Registration Rights Agreement IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. HOLDERS: NEW MOUNTAIN PARTNERS II (AIV-A), L.P. By:New Mountain Investments II, L.L.C.,Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member NEW MOUNTAIN PARTNERS II (AIV-B), L.P. By:New Mountain Investments II, L.L.C.,Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member NEW MOUNTAIN AFFILIATED INVESTORS II, L.P. By:New Mountain Investments II, L.L.C.,Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. By:New Mountain Investments II, L.L.C.,Its general partner By:/s/ Steven B. KlinskyName: Steven B. KlinskyTitle: Managing Member Signature Page to Registration Rights Agreement Address for notices: c/o New Mountain Capital, L.L.C.787 Seventh Avenue, 49 FloorNew York, NY 10019Attn: Matthew HoltEmail: mholt@newmountaincapital.com Signature Page to Registration Rights Agreement th IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. HOLDER: ARCH VENTURE FUND VI, L.P. By:ARCH Venture Partners VI, L.P.,Its general partner By:ARCH Venture Partners VI, LLC,Its general partner By:/s/ Robert T. NelsenName: Robert T. NelsenTitle: Managing Director Address for notices: c/o ARCH Venture Partners8725 West Higgins RoadSuite 290Chicago, IL 60631Attn: Mark McDonnellFax: +1-773-380-6606Email: mmcdonnell@archventure.com Signature Page to Registration Rights Agreement IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. HOLDERS: VENROCK PARTNERS, L.P. By:Venrock Partners Management, LLC,Its general partner By:/s/ Bryan E. RobertsName: Bryan E. RobertsTitle: General Partner VENROCK ASSOCIATES IV, L.P. By:Venrock Management IV, LLC,Its general partner By:/s/ Bryan E. RobertsName: Bryan E. RobertsTitle: General Partner VENROCK ENTREPRENEURS FUND IV, L.P. By:VEF Management IV, LLC,Its general partner By:/s/ Bryan E. RobertsName: Bryan E. RobertsTitle: General Partner Address for notices: c/o Venrock Associates3340 Hillview AvenuePalo Alto, CA 94304Attn: Bryan RobertsFax: +1-650-561-9180Email: broberts@venrock.com Signature Page to Registration Rights Agreement IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. HOLDER: LINDE NORTH AMERICA, INC. By:/s/ Jens LuehringName: Jens LuehringTitle: Head of Finance, Americas Address for notices: Linde North America, Inc.575 Mountain AvenueMurray Hill, NJ 07974Fax: +1.908.771.1852 Signature Page to Registration Rights Agreement IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. HOLDERS: 5AM VENTURES LLC By:5AM Partners LLC,Its manager By:/s/ Andrew J. SchwabName: Andrew J. SchwabTitle: Managing Director 5AM CO-INVESTORS LLC By:5AM Partners LLC,Its manager By:/s/ Andrew J. SchwabName: Andrew J. SchwabTitle: Managing Director Address for notices: c/o 5AM Ventures LLC2200 Sand Hill Road, Suite 110Menlo Park, CA 94025Attn: Andrew SchwabFax: +1-650-233-8923Email: andy@5amventures.com Signature Page to Registration Rights Agreement IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. HOLDER: ARAVIS VENTURE I, L.P. By:Aravis General Partner Ltd,Its general partner By:/s/ Jean-Philippe TripetName: Jean-Philippe TripetTitle: Chairman Address for notices: c/o Aravis General Partner LtdOne Capital PlaceP.O. Box 847Grand Cayman KY1-1103Cayman IslandsAttn: Gwen McLaughlin With a copy by email to: Email: andreas@aravis.ch Signature Page to Registration Rights Agreement Exhibit 23.1 Consent of Independent Registered Public Accounting Firm The Board of DirectorsBellerophon Therapeutics, Inc.: We consent to the incorporation by reference in the registration statement (No. 333-202069) on Form S-8 of Bellerophon Therapeutics, Inc. of our reportdated March 31, 2015, with respect to the consolidated balance sheets of Bellerophon Therapeutics LLC as of December 31, 2014 and 2013, and the relatedconsolidated statements of operations and comprehensive loss, changes in members’ equity and invested equity (deficit), and cash flows for each of the yearsin the three-year period ended December 31, 2014, which report appears in the December 31, 2014 annual report on Form 10-K of Bellerophon Therapeutics,Inc. /s/ KPMG LLP Short Hills, New JerseyMarch 31, 2015 Exhibit 31.1 CERTIFICATION I, Jonathan M. Peacock, certify that: 1. I have reviewed this Annual Report on Form 10-K of Bellerophon Therapeutics, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 31, 2015By:/s/ Jonathan M. PeacockJonathan M. PeacockChief Executive Officer(Principal Executive Officer) Exhibit 31.2 CERTIFICATION I, David Abrams, certify that: 1. I have reviewed this Annual Report on Form 10-K of Bellerophon Therapeutics, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 31, 2015By:/s/ David AbramsDavid AbramsTreasurer(Principal Financial Officer) Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of Bellerophon Therapeutics, Inc. (the “Company”) for the year ended December 31, 2014 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jonathan M. Peacock, Chief Executive Officer of the Company,hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 31, 2015By:/s/ Jonathan M. PeacockJonathan M. PeacockChief Executive Officer(Principal Executive Officer) Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of Bellerophon Therapeutics, Inc. (the “Company”) for the year ended December 31, 2014 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David Abrams, Treasurer of the Company, hereby certifies,pursuant to 18 U.S.C. Section 1350, that to his knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 31, 2015By:/s/ David AbramsDavid AbramsTreasurer(Principal Financial Officer)

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