Calithera Biosciences
Annual Report 2014

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2014OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 FOR THE TRANSITION PERIOD FROM TOCommission File Number 001-36644 CALITHERA BIOSCIENCES, INC.(Exact name of Registrant as specified in its Charter) Delaware 27-2366329( State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 343 Oyster Point Blvd., Suite 200South San Francisco, CA 94080(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (650) 870-1000 Securities registered pursuant to Section 12(b) of the Act:Common Stock, Par Value $0.0001 Per Share Common stock traded on the NASDAQ stock market(Title of Class) (Name of Exchange on Which Registered) Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO xIndicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ¨ NO xIndicate 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 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. 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 requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe Registrant was required to submit and post such files). YES x 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 becontained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. xIndicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨Non-accelerated filer x (Do not check if a small reporting company) Small reporting company ¨Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO xThe registrant was not a public company as of the last business day of its most recently completed second fiscal quarter and, therefore, cannot calculate theaggregate market value of its voting and non-voting common equity held by non-affiliates as of such date.The number of shares of Registrant’s Common Stock outstanding as of March 20, 2015 was 17,946,393.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrant’s Definitive Proxy Statement relating to the 2015 Annual Meeting of Shareholders will be filed with the Commission within 120days after the end of the fiscal year covered by this Annual Report on Form 10-K and are incorporated by reference into Part III of this Annual Report on Form10-K.  Table of Contents PagePART I Item 1. Business 2Item 1A. Risk Factors 24Item 1B. Unresolved Staff Comments 45Item 2. Properties 45Item 3. Legal Proceedings 45Item 4. Mine Safety Disclosures 45 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46Item 6. Selected Financial Data 48Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 49Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56Item 8. Financial Statements and Supplementary Data 57Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 75Item 9A. Controls and Procedures 75Item 9B. Other Information 75 PART III Item 10. Directors, Executive Officers and Corporate Governance 76Item 11. Executive Compensation 76Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 76Item 13. Certain Relationships and Related Transactions, and Director Independence 76Item 14. Principal Accounting Fees and Services 76 PART IV Item 15. Exhibits, Financial Statement Schedules 77 Signatures 78 i CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K for the year ended December 31, 2014, or the Form 10-K, contains forward-looking statements concerning ourbusiness, operations, and financial performance and condition as well as our plans, objectives, and expectations for business operations and financialperformance and condition. Any statements contained herein that are not of historical facts may be deemed to be forward-looking statements. You canidentify these statements by words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will,”“would,” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based oncurrent expectations, estimates, forecasts, and projections about our business and the industry in which we operate and management's beliefs andassumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties, and other factors that arein some cases beyond our control. As a result, any or all of our forward-looking statements in this Form 10-K may turn out to be inaccurate. Factors thatcould materially affect our business operations and financial performance and condition include, but are not limited to, those risks and uncertaintiesdescribed herein under “Item 1A - Risk Factors.” You are urged to consider these factors carefully in evaluating the forward-looking statements and arecautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as ofthe filing date of this Form 10-K. Unless required by law, we do not intend to publicly update or revise any forward-looking statements to reflect newinformation or future events or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with theSecurities and Exchange Commission, or the SEC, after the date of this Form 10-K.PART IItem 1. Business.OverviewWe are a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumormetabolism and tumor immunology targets for the treatment of cancer. Tumor metabolism and tumor immunology have emerged as promising new fields forcancer drug discovery, and recent clinical successes with therapeutic agents in each field have demonstrated the potential to create fundamentally newtherapies for cancer patients. Our lead product candidate, CB-839, is an internally discovered, first-in-class inhibitor of glutaminase, a critical enzyme intumor metabolism. We are currently evaluating CB-839 in three Phase 1 clinical trials in solid and hematological tumors. Our lead preclinical program intumor immunology is directed at developing inhibitors of the enzyme arginase and may provide a first-in-class therapeutic agent for this novel target. Ourongoing research efforts are focused on discovering additional product candidates against novel tumor metabolism and immunology targets.The field of tumor metabolism seeks to exploit the unique ways in which cancer cells take up and utilize nutrients in order to grow and survive. It isnow recognized that cancer cells rely on certain metabolic processes, or pathways, to a much greater extent than normal cells. The enhanced use of thesepathways by cancer cells often results in a dependence on, or “addiction” to, these pathways that is not observed in normal cells. This creates an opportunityto selectively suppress the growth of cancer cells with therapeutic agents that specifically target these metabolic pathways.Our lead product candidate in tumor metabolism, CB-839, takes advantage of the pronounced dependency many cancers have on the nutrientglutamine for growth and survival. CB-839 inhibits glutaminase, an enzyme required by cancer cells to utilize glutamine effectively. In preclinical studies,CB-839 demonstrated broad antitumor activity in tumor cell lines, inhibited the growth of human tumors in animal models and was well tolerated in toxicitystudies. CB-839 was also synergistic with several approved cancer therapeutics that are part of the current standard of care.We are currently conducting three Phase 1 clinical trials of CB-839 in the United States in patients with solid tumors, leukemias, lymphomas andmultiple myeloma. The purpose of these trials is to evaluate the safety of CB-839 both as a single agent and in combination with approved therapies and toseek preliminary evidence of efficacy. The dose escalation stage of these trials were conducted in 2014. Based on the dose identified during this stage, we arecurrently enrolling patient cohorts in select tumor types predicted to be sensitive to CB-839 based on results from our preclinical studies. CB-839 will betested in these tumor types either as a single agent or in combination with approved therapies. We expect data to be available from our single agent trials inmid-2015 and from our combination trials in late 2015. Pending input from the U.S. Food and Drug Administration, or the FDA, on the results of our Phase 1trials and our Phase 2 trial protocols, we plan to initiate one or more Phase 2 clinical trials in 2016 to study CB-839 as a single agent or in combination withapproved therapies.We believe CB-839 has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad rangeof cancers and is the only selective glutaminase inhibitor currently in clinical trials. Our clinical program seeks to identify cancers that will be most sensitiveto CB-839 to allow the greatest benefit for patients and to pursue the most efficient2 path to regulatory approval. We currently retain all commercial rights to CB-839 and have been granted a U.S. patent which includes composition of mattercoverage for CB-839 through 2032.Our second program in tumor metabolism is focused on the hexokinase II enzyme. A defining characteristic of most cancer cells is their increaseduptake of glucose. Cancer cells use glucose in a different manner than normal cells, but an obligate first step in all glucose utilizing pathways isphosphorylation of glucose by the enzyme hexokinase. Due to their higher glucose needs, cancer cells frequently increase the level of this critical enzyme,specifically the isoform hexokinase II. We believe inhibitors of hexokinase II will significantly impede the ability of cancer cells to survive and proliferatemay lead to new approaches in treating cancer. Our new program in hexokinase II inhibitors was in-licensed from TransTech Pharma and we seek to identifyand advance a drug candidate into clinical development as quickly as possible. We will provide additional details on our development plans and timelinesin the near future as we undertake pre-clinical studies to profile our portfolio of hexokinase II inhibitors.The field of tumor immunology seeks to activate the body’s own immune system to attack and kill cancer cells. Our preclinical program in tumorimmunology is focused on developing selective inhibitors of the enzyme arginase. Arginase depletes arginine, a nutrient that is critical for the activation,growth and survival of the body’s cancer-fighting immune cells, known as cytotoxic T cells. Secreted arginase is found in patients with certain cancers,including renal cancer, acute myeloid leukemia and other tumor types, and may play an immunosuppressive role by blocking T cell activation. We believethat inhibitors of arginase can promote an anti-tumor immune response by restoring arginine levels, thereby allowing activation of the body’s cytotoxic Tcells. In December of 2014 we entered into an exclusive global license agreement with Mars Symbioscience granting Calithera rights to research, developand commercialize Symbioscience’s portfolio of arginase inhibitors. Symbioscience’s preclinical arginase inhibitor program will enhance Calithera’s effortsto submit an Investigational New Drug application for an arginase inhibitor with the FDA for the treatment of cancer in early 2016.Our StrategyOur goal is to build a leading independent biopharmaceutical company. We intend to leverage our expertise to discover, develop andcommercialize cancer therapies targeting tumor metabolism and tumor immunology pathways to treat patients with unmet medical needs. We intend toachieve our goal by:Pursuing a broad clinical development program of CB-839 both as a single agent and in combination with approved therapies. CB-839 is aninhibitor of glutaminase, a tumor metabolism target that, based on our preclinical studies with cancer cell lines and animal tumor models, has been implicatedin the growth and survival in multiple tumor types. Due to CB-839’s novel mechanism of action, preclinical synergistic activity with existing cancer agentsand favorable preclinical safety profile to date, we believe CB-839 has the potential to treat various cancers both as a single agent and in combination withapproved therapies. We plan to pursue a broad development program for CB-839 focused on three distinct and significant opportunities:·CB-839 as a single agent in cancers with large patient populations and significant unmet medical needs, such as triple-negative breast cancer,renal cell cancer, non-small cell lung cancer, and multiple myeloma.·CB-839 in combination with standard of care drugs, including a cytotoxic agent for triple-negative breast cancer, an immunomodulatory agentfor multiple myeloma, and signal transduction pathway inhibitors for renal cell cancer and non-small cell lung cancer.·CB-839 as a single agent in rare tumors with identified driver mutations in metabolic enzymes where there is the potential for a rapiddevelopment pathway.We will select potential indications for further clinical development of CB-839 based on the results of our Phase 1 trials with the goal of obtaining regulatoryapprovals in the United States and the European Union. We believe this broad product development program provides the best opportunity to maximize thecommercial value of CB-839.Identifying and pursuing efficient clinical development programs to enable rapid regulatory approval of CB-839.We are currently conducting three Phase 1 trials of CB-839 in solid and hematological tumors. We are expanding these trials to evaluate CB-839 inspecific tumor types that we believe may be most sensitive to CB-839 based on the results of our preclinical studies. We expect to initiate one or more Phase2 trials of CB-839 in select tumor types, as a single agent or in combination with other therapies, in 2016. Some of these tumor types may offer the potentialfor rapid development pathways. In addition, we intend to utilize our expertise to identify relevant biomarkers for CB-839 that may predict which patientswill be sensitive to treatment with CB-839.Maximizing the commercial value of CB-839. We currently retain full global development, marketing and commercialization rights for CB-839and we expect to maintain those rights in the near future. As we further develop CB-839, we may seek partners to maximize the commercial opportunity ofCB-839 outside the United States.Advancing our first-in-class arginase inhibitor into clinical development. We are leveraging our core expertise in tumor biology and medicinalchemistry to develop small molecule selective arginase inhibitors. Arginase is an enzyme that depletes arginine,3 which is a naturally occurring amino acid that is critical for the activation, growth and survival of the body’s cancer-fighting cytotoxic T cells. By inhibitingarginase, we can potentially restore the tumor killing activity of cytotoxic T cells by preventing the depletion of arginine. We are currently optimizingarginase inhibitors with the aim of submitting an IND application to the FDA in early 2016.Advancing our first-in-class hexokinase II inhibitor into clinical development. We have expanded our portfolio of pre-clinical programs andfurther leveraged our expertise in tumor metabolism with the licensing of inhibitors of hexokinase II, which we believe is the first and rate-limiting enzyme inthe pathway that enables cancer cells to convert glucose to energy and building blocks that feed cancer cell growth. We believe we can rapidly advancehexokinase II inhibitors into the clinic to become our third potential first-in-class therapy for cancer patients.Further developing our pipeline by leveraging our expertise in tumor biology, drug discovery and clinical development. Our team has significantexpertise in the discovery, development and approval of small molecule oncology drugs. In addition, we have accumulated significant experience andunderstanding of tumor metabolism and tumor immunology and are applying our medicinal chemistry capabilities to identify small molecules that exploitthese pathways. We plan to continue to leverage our expertise to discover and develop additional product candidates, advance those product candidatesthrough clinical testing, and, if approved, ultimately commercialize meaningful therapies for patients with cancer.Our Research and Development ProgramsThe following table summarizes our ongoing and planned clinical trials through 2016 for our lead programs in tumor metabolism andtumor immunology. We also intend to develop additional product candidates from our research and discovery efforts in these fields. In December 2013, wesubmitted two INDs to the FDA for CB-839, one for solid tumors and one for hematological tumors, covering each of the indications set forth in the tablebelow.The Evolution of Cancer Therapeutic AgentsCancer is characterized by the uncontrolled growth of aberrant cells in the body, leading to the invasion of essential organs and often death. Unlikenormal cells, which grow only in response to carefully regulated signals from the body, cancer cells are able to proliferate largely without external signals.Cancer cells have gained this ability as the result of genetic alterations that change protein expression or function. Invasive tumors, also known as metastatictumors, which are the greatest threat to patients, typically have multiple mutations, deletions or amplifications of genes encoding key proteins that regulatecell growth. These alterations allow the cancer cell to grow, invade other tissues, and avoid recognition and destruction by the body’s immune system.4 Initially, the pharmacological treatment of cancer utilized non-specific cytotoxic agents that targeted all rapidly dividing cells, including normalcells. These non-specific cytotoxic agents have anti-tumor effects but their use is often limited by severe toxicities. As the understanding of the proteins andpathways that enable cancer cells to thrive has evolved, newer more targeted agents have been developed that block specific proteins that are activated incancer cells. Therapies such as imatinib (marketed as Gleevec) used to treat chronic myeloid leukemia are often highly effective for cancers that are driven bya single mutated protein, known as a driver mutation. However, use of targeted agents for tumors bearing multiple deleterious mutations has been lesssuccessful. Furthermore, certain proteins such as Ras and Myc, which are frequently mutated or activated in cancer and are clear driver mutations, are targetsfor which a drug has yet to be developed. This has created a need to identify additional fundamental differences between cancer cells and normal cells inorder to find new drugs that broadly affect critical growth and survival mechanisms in cancer cells that have multiple mutations.Tumor metabolism and tumor immunology represent two emerging fields for the development of therapeutics that can address the challengespresented in treating cancers with multiple mutations or with mutations that are difficult to inhibit. Certain fundamental changes in the metabolic pathwaysof cancer cells are observed in many cancer types with different mutational backgrounds. Therapeutic agents that can take advantage of these changes inmetabolism have the potential to act broadly against many cancers. Similarly, genetically diverse tumor types have developed mechanisms to escapedestruction by the body’s immune system. Pharmacological activation of the immune system with agents such as ipilimumab (marketed as Yervoy) hasresulted in favorable outcomes in melanoma, often with durable responses typically not observed with other chemotherapeutics. We believe additionalopportunities exist to develop novel therapeutics that can further enhance the cancer-fighting ability of the immune system, either as single agents or incombination with approved therapeutics.Rationale for Targeting Tumor MetabolismCancer cells acquire the ability to grow rapidly and spread to new sites in the body by accumulating genetic alterations in important genes thatcontrol growth and survival. These same genetic changes also result in altered metabolic pathways within the cancer cells that fuel the high demand forenergy and the production of new proteins, lipids, RNA and DNA needed for rapid proliferation. We and others have observed that many types of cancer cellsdevelop a unique dependence on specific metabolic pathways upon which normal cells are not reliant. Accordingly, when these metabolic pathways areblocked, cancer cells are essentially starved of critical nutrients and stop growing or die, whereas normal cells are largely unaffected.Alterations in the fundamental metabolic pathways of tumors often cause a dramatic rise in the uptake of the nutrients glucose and glutamine. Thishas been directly demonstrated in cancer patients by the use of glucose and glutamine-related tumor imaging agents. Uptake of these agents is oftensignificantly greater in tumor tissue than in surrounding normal tissue. We believe this enhanced uptake of glucose and glutamine by tumors occurs becauseof their greater need for these nutrients for growth and survival.The primary goal of drugs targeting tumor metabolism pathways is to take advantage of cancer-specific nutrient dependencies to block cancergrowth. Changes in cellular metabolism are remarkably consistent across many tumor types, yet fundamentally different from normal cells, providing thepotential to develop broadly applicable agents that target these altered pathways, but have less toxicity than standard cytotoxic agents.Glutaminase—A Key Tumor Metabolism TargetIt has been understood for more than 50 years that most cancer cells require glutamine to thrive. Removal of glutamine leads to a substantialreduction in cell growth or induces cell death in glutamine-dependent cancer cells. Normal cells do not show this pronounced dependence on glutamine.This contrast has prompted significant interest in discovering and developing novel anti-cancer agents that can inhibit glutamine utilization.Our preclinical studies, as well as those conducted by other researchers, have identified the enzyme glutaminase as a critical choke point in theutilization of glutamine by cancer cells. We have shown in our preclinical studies that the cell lines most sensitive to glutamine withdrawal are also the mostsensitive to glutaminase inhibitors. In glutamine-dependent cancer cells, the messenger RNA, or mRNA, that encodes glutaminase is often highly expressed.Furthermore, glutaminase mRNA levels are often increased in human tumors relative to the levels in corresponding normal tissue.Glutaminase converts glutamine to glutamate, an amino acid required by cells for several essential functions. Many cancer cells, unlike normalcells, are dependent upon the enzyme glutaminase to make sufficient amounts of glutamate to grow and survive. This higher dependency upon theglutaminase pathway is likely due to an alternate use of the tricarboxylic acid, or TCA, cycle in cancer cells. The TCA cycle, which is sometimes referred toas the Krebs Cycle, is a set of chemicals and chemical reactions that cells use to generate energy and building blocks. As shown in the diagram below, normalcells primarily use glucose to feed the TCA cycle, which in turn is used primarily for energy production. In contrast, cancer cells divert many glucose-derivedmetabolites and several of the chemicals of the TCA cycle to make cellular building blocks to fuel their rapid growth. This depletes chemicals in the TCAcycle and requires the cancer cell to supply more glutamate into the TCA cycle, through a molecule called alpha-ketoglutarate, or α-KG, to5 replenish these chemicals. We believe that inhibitors of glutaminase may be able to selectively target tumor cells by virtue of their increased dependence onglutaminase to convert glutamine to glutamate to resupply the TCA cycle. In addition, glutaminase inhibition may be effective in certain rare cancers that have mutations or deletions of TCA cycle enzymes includingfumarate hydratase, or FH, succinate dehydrogenase, or SDH, and isocitrate dehydrogenase, or IDH. Glutamate feeds into the TCA cycle upstream of wherethese mutations or deletions occur, and inhibitors of glutaminase may block the effect of these mutations or deletions by limiting the availability of upstreamstarting materials.Dysregulated growth factor receptors and associated downstream signaling pathways in tumor cells are known to act in part to increase glucoseutilization. Since these pathways are the targets of a number of approved targeted cancer therapeutic agents, we believe it is possible to rationally combinesuch agents with a glutaminase inhibitor to block the two main nutrients that promote cancer cell growth, thereby providing an enhanced therapeutic benefit.Hexokinase II- An essential pathway in the cellular utilization of glucoseA defining characteristic of most cancer cells is their increased uptake of glucose. As described above, cancer cells use glucose in a differentmanner than normal cells, but an obligate first step in all glucose utilizing pathways is phosphorylation of glucose by the enzyme hexokinase. Due to theirhigher glucose needs, cancer cells frequently increase the level of this critical enzyme, specifically the isoform hexokinase II. We believe inhibitors ofhexokinase II will significantly impede the ability of cancer cells to survive and proliferate.Our ProgramsOur Lead Program in Tumor Metabolism: CB-839CB-839 is a potent, selective, reversible and orally bioavailable inhibitor of human glutaminase. CB-839 binds to a unique site on glutaminasethat is distinct from the site that binds glutamine, thereby reducing the potential for undesirable side effects due to inhibition of other enzymes and receptorsthat bind glutamine. In our preclinical studies, CB-839 has been shown to halt the growth of or kill cancer cells across a range of tumor types. The compoundhas demonstrated antitumor activity in several different tumor models in animals. In addition, CB-839 has shown strong synergy with immunomodulatoryagents and several kinase inhibitors that target growth factor pathways. In preclinical toxicology studies, CB-839 was well tolerated in animals at dosesabove those shown to6 inhibit tumor growth. In December 2013, we submitted an IND application to the FDA to enable the initiation of three Phase 1 trials in patients with bothsolid and hematological tumors. We initiated these trials in February 2014. We believe that CB-839 is the only selective glutaminase inhibitor currently inclinical trials.Preclinical Activity of CB-839In our preclinical studies, CB-839 demonstrated antiproliferative and cell killing activity across a panel of tumor cell lines. The figure below showsthe extent of cell growth inhibition or induction of cell death across a panel of different cancer cell types treated with a concentration of CB-839 thatinhibited glutaminase by more than 90%. The cell growth measurement reflects the ability of CB-839 to slow cell growth over 72 hours relative to cellgrowth observed in untreated cells. The cell death measurement reflects the loss of cells over 72 hours relative to the starting number of cells. Most of thetriple-negative breast cancer, or TNBC, cell lines showed evidence of cell death in response to treatment with CB-839 or had growth reduced by more than50% as compared to growth in untreated cells. In contrast, most hormone receptor-positive breast cancer cell lines were not severely affected by treatmentwith CB-839. Significant cell killing was seen in about half of non-small cell lung cancer, or NSCLC, cell lines, most lymphoma cell lines, about one-third ofmultiple myeloma cell lines and two of four acute lymphocytic leukemia cell lines tested. This same panel of cell lines was also tested for growth or celldeath when glutamine was removed from the incubation medium. There was a strong correlation between the response to CB-839 and the effect of glutaminewithdrawal. We believe that these results provide evidence for the critical role of glutaminase in the utilization of glutamine to drive tumor cell growth andsurvival. We also evaluated the metabolic changes that resulted from inhibition of glutaminase in the same panel of cell lines shown above. In theglutamine-dependent cancer cells treated with CB-839, the conversion of glutamine to glutamate was blocked, leading to the accumulation of glutamine andthe depletion of glutamate. As shown in a TNBC cell line in the figure below, the loss of cellular glutamate further results in a reduction in downstreammetabolites that provide energy and building blocks for the cell, including TCA cycle intermediates, amino acids, and the antioxidant glutathione. Webelieve that the reduction of the level of these and other metabolites is responsible for the anti-tumor activity observed with CB-839. 7 In mice implanted with human tumors, CB-839 treatment caused glutamine to accumulate and glutamate to be depleted in the tumors, which wassimilar to the effects seen in the cell lines we tested. At plasma concentrations of CB-839 of 300 nM or above, maximal effects on glutamine and glutamatelevels in tumors were observed. In contrast, normal tissues in the same animals showed only small changes in the levels of glutamine and glutamate, despiteexposure to high levels of CB-839. We believe that normal cells and tissues can utilize other pathways to produce glutamate, whereas most tumor cells havebeen genetically re-wired to be highly reliant on glutaminase as their principal source of glutamate. This provides a potential explanation for why high dosesof CB-839 are well-tolerated in animals.In addition to showing single agent activity across a wide range of cells from different tumor types, CB-839 also acted synergistically whencombined with drugs that target the Ras/Raf and PI3K/mTOR branches of growth factor signaling pathways. This means that these two agents acting togetherhave a greater effect on the growth and survival of tumor cells than either agent used separately. CB-839 was synergistic with the epidermal growth factorreceptor, or EGFR, inhibitor erlotinib (marketed as Tarceva) in NSCLC cells, with the multikinase inhibitors sunitinib (marketed as Sutent), sorafenib(marketed as Nexavar), trametinib (marketed as Mekinist), selumetinib (in development) and pazopanib (marketed as Votrient) and the mTOR inhibitorseverolimus (marketed as Afinitor) and temsirolimus (marketed as Toricel) in renal cell carcinoma, or RCC, cells, and with the MEK inhibitor trametinib(marketed as Mekinist) and the AKT inhibitor MK-2206 (in development by Merck) in multiple cancer cell types. We believe these synergistic activitieslikely result from the fact that, as depicted in the diagram below, growth factor pathways control tumor metabolism and ultimately tumor cell dependence onglutamine and glucose.8 When administered to animals at high doses in IND-enabling toxicity studies in rats and monkeys, CB-839 was well tolerated in both species, withno dose limiting toxicities observed in either study. The plasma concentration of CB-839 measured at the highest dose in rats in these studies was greaterthan ten-fold above the 300 nM concentration required in mice to achieve maximal effects on glutamine and glutamate levels in tumors and suppress tumorgrowth. In independent studies, CB-839 was shown to distribute broadly to all tissues except the brain, indicating that glutaminase could be stronglyinhibited in normal tissues without causing any major toxicological effects.Phase 1 Clinical Trials with CB-839Trial DesignIn February 2014, we initiated three Phase 1 clinical trials of CB-839 in patients with solid and hematological tumors. The favorable preclinicalsafety profile of CB-839 enabled a starting dose in these trials of 100 mg given orally three times daily, or TID. As shown in the table below, CX-839-001 isenrolling patients with solid tumors, CX-839-002 is enrolling patients with multiple myeloma or non-Hodgkin’s lymphoma, and CX-839-003 is enrollingpatients with acute myeloid or acute lymphocytic leukemia. The objectives of the Phase 1 clinical trials are to assess the safety and tolerability of CB-839.Each trial includes a dose escalation stage to identify the optimal dose for future clinical trials. This dose will be determined by the extent of glutaminaseinhibition in blood and tumors, or by identifying a maximum tolerated dose. Each trial will also have an expansion stage in which additional patients withspecific tumor types will be enrolled to further evaluate the safety of CB-839 and to seek preliminary evidence of efficacy. In addition to evaluating CB-839as a single agent, we plan to enroll four Phase 1b combination cohorts, one in which CB-839 will be combined with paclitaxel in patients with triple-negativebreast cancer, a second in which CB-839 will be combined with everolimus in renal cell cancer (RCC), a third in which CB-839 will be combined withdexamethasone in patients with multiple myeloma, and a fourth in which CB-839 will be combined with pomalidomide (marketed as Pomalyst) anddexamethasone in patients with multiple myeloma, to evaluate the safety and potential utility of CB-839 when used in combination with these drugs. Weexpect initial data to be available from our single agent trials in mid-2015 and from our combination trials in late 2015. In December 2013, we submitted twoINDs to the FDA for CB-839, one for solid tumors and one for hematological tumors, covering each of the indications set forth in the table below.The trial protocols are flexible and allow us to increase or decrease the number of patients enrolled during the dose expansion stage of each trial.We may decide to add additional cohorts testing CB-839 in combination with other agents.9 Phase 1 Clinical Trials with CB-839Trial Tumor Types Trial Design CX-839-001 Solid Tumors(including Triple-negativeBreast Cancer (TNBC)) • Dose escalation in all solid tumors• Dose expansion cohorts in selected tumor types• Phase 1b in TNBC in combination with paclitaxel• Phase 1b in RCC in combination with everolimus CX-839-002 Multiple Myeloma (MM)Non-Hodgkin’s Lymphoma (NHL) • Dose escalation in MM and NHL• Dose expansion cohorts in MM and selected subtypes of NHL• Phase 1b in MM in combination with dexamethasone• Phase 1b in MM in combination with pomalidomide and dexamethasone CX-839-003 Acute Lymphocytic Leukemia (ALL)Acute Myeloid Leukemia (AML) • Dose escalation in ALL and AML• Dose expansion cohorts in ALL and AMLPhase 1 Trial StatusWe have completed enrolling patients in the dose escalation stage in all three trials. As of January 19, 2015, we enrolled a total of 61 patientsacross the three ongoing trials. All patients in these trials were relapsed and refractory to approved therapies. On average, patients had received five prior linesof drug treatment in the CX-839-001 and CX-839-002 trials and had received two prior lines of drug treatment in the CX-839-003 trial. During the doseescalation stage of these trials, we are monitoring the blood levels of CB-839 and the extent of glutaminase inhibition in platelets isolated from blood usingan assay we have developed. Patients at the starting dose of 100 mg TID had measurable drug concentration of CB-839 in blood, and the drug concentrationgenerally has increased with dose. The half-life of CB-839 in blood is approximately four hours. The majority of patients during dose escalation receivedCB-839 three times daily. Based upon the successful evaluation of twice-daily dosing in the solid tumor trial, this regimen is now being tested in all threestudies. In the patients evaluated to date, increasing concentrations of CB-839 in blood are correlated with increasing inhibition of glutaminase in bloodplatelets. Our goal is to achieve a plasma concentration of CB-839 that maintains inhibition of glutaminase at greater than 90% continuously in tumors,which was the inhibition level required for maximal inhibition of tumor growth in animal models. Inhibition of glutaminase activity in tumor biopsy samplesfrom patients in early dose cohorts during dose escalation has demonstrated >75% glutaminase inhibition in tumors.CB-839 has been generally well tolerated across all three studies using doses up to 1000 mg TID and 800 mg BID. As of January 19, 2015, the dateof our most recent data safety cutoff, and based on 57 patients treated with CB-839, the majority of treatment-emergent adverse events have been mild tomoderate (Grade 1/2). Treatment-emergent Grade ≥ 3 adverse events occurring in >5% of patients included febrile neutropenia, thrombocytopenia,hyponatremia, and increases in liver enzymes aspartate aminotransferase (AST), alanine aminotransferase (ALT) and alkaline phosphatase. The only doselimiting toxicity event that has been reported to date was an instance of elevated creatinine (at the 250mg TID dose), however renal dysfunction has not beena significant toxicity signal for the program, even at doses up to 1000mg TID. A maximum tolerated dose has not been defined to date.Indications to be Evaluated in our Phase 1b Dose Expansion TrialsWe believe several specific tumor types will be sensitive to glutaminase inhibition and benefit from treatment with CB-839. These tumor typesinclude triple-negative breast cancer, non-small cell lung cancer, multiple myeloma, renal cell carcinoma, and several rare cancers with metabolic enzymemutations or deletions. These tumor types represent areas with significant unmet medical needs, and we believe that they may be particularly attractiveindications for further development of CB-839.Triple-Negative Breast CancerAccording to the American Cancer Society, over 230,000 new cases of invasive breast cancer will be diagnosed in the United States andapproximately 40,000 women will die from the disease in 2015. It is estimated that between 10% to 20% of newly diagnosed cases of breast cancer areclassified as triple-negative breast cancer. TNBC is a subset of breast cancer that lacks the estrogen receptor, or ER, the progesterone receptor, or PR, and thehuman epidermal growth factor receptor known as HER2. In comparison with other breast cancers, TNBC tends to grow faster and has a higher rate ofmetastasis. Furthermore, TNBC tends to recur more often and sooner following first line treatment than other subtypes of breast cancer. Patients with TNBCgenerally have a poorer prognosis and a lower overall survival rate than patients with breast cancers that express ER, PR and HER2. In addition, TNBCpatients have relatively few treatment options since they lack expression of the targets for hormone- and HER2-based therapeutics.Our preclinical data support the development of CB-839 in TNBC either as a single agent or in combination with standard of care therapies. Themajority of TNBC tumor cell lines we have tested to date were sensitive to CB-839 and underwent cell death in10 response to exposure to CB-839. In contrast, ER and HER2 positive breast cancer cell lines were relatively resistant to CB-839. Sensitivity to CB-839 inTNBC cells was directly correlated with the level of glutaminase expression, making glutaminase expression a potential companion diagnostic foridentifying tumors sensitive to CB-839 for further clinical study. CB-839 had single agent anti-tumor activity in mice bearing a patient-derived TNBC tumoras shown in the figure below. When CB-839 was used to treat a breast cancer cell line implanted in animals, it showed activity both as a single agent and incombination with paclitaxel, a standard drug used in the treatment of TNBC. In the combination arm of the study, CB-839 prevented the re-growth of thetumor following discontinuation of paclitaxel dosing.In the Phase 1 trial CX-839-001, we plan to include an expansion cohort of refractory TNBC patients treated with CB-839 as a single agent and aPhase 1b cohort of earlier stage TNBC patients who will receive CB-839 in combination with paclitaxel.Multiple MyelomaMultiple myeloma, or myeloma, is a hematological malignancy characterized by the proliferation of monoclonal plasma cells in the bone marrow,the presence of monoclonal immunoglobulin, or M protein, in the blood and/or urine, as well as bone disease, kidney disease, and immunodeficiency. It ismore common in elderly patients, with a median age at diagnosis of 65 to 74 years. The American Cancer Society estimates that there will be approximately26,850 new cases of myeloma diagnosed in the United States in 2015.Our preclinical data support the development of CB-839 in myeloma either as a single agent or in combination with standard of care therapies. CB-839 had anti-tumor activity and induced cell death in a subset of myeloma cell lines. We have identified a biomarker that correlates with CB-839 sensitivityand that we believe can be used to identify myeloma patients whose tumors may have enhanced sensitivity to CB-839 treatment. CB-839 demonstratedsingle agent anti-tumor activity in mice bearing myeloma tumors. In myeloma cells in culture, CB-839 was synergistic with lenalidomide (marketed asRevlimid) and pomalidomide, two approved immunomodulatory drugs used to treat myeloma. In addition, treatment of myeloma tumors in animals withB-839 in combination with either lenalidomide or pomalidomide led to long-lasting and complete suppression of tumor growth. The results of thepomalidomide study are shown in the figure below.11 Patients with myeloma are being evaluated in the dose escalation stage of CX-839-002. In the expansion stage of this trial, we are evaluating twocohorts of myeloma patients treated with CB-839, one in combination with dexamethasone and a second in combination with pomalidomide anddexamethasone.Non-Small Cell Lung Cancer (NSCLC)According to the American Cancer Society, an estimated 221,200 new cases of lung cancer will be diagnosed in the United States in 2015. Lungcancer typically presents relatively late in its clinical course, when locally directed therapy, such as surgery and radiation, is not curative. The treatment oflocally advanced and metastatic lung cancer is a significant unmet medical need.Most primary NSCLC tumors have been shown to have elevated glutaminase expression and the majority of NSCLC cell lines that we haveevaluated were sensitive to the antiproliferative or cell-killing effects of CB-839. We also observed marked synergistic activity with erlotinib in NSCLC celllines. We plan to evaluate single agent CB-839 in an NSCLC cohort in the dose expansion stage of our solid tumor Phase 1 clinical trial. We may alsoevaluate CB-839 in combination with approved tyrosine kinase inhibitors in NSCLC patients in future clinical trials.Renal Cell Carcinoma (RCC)According to the National Cancer Institute, renal cell carcinoma is diagnosed in approximately 61,560 people each year in the United States.Approximately 50% of renal cell carcinoma patients will require chemotherapy at some point to treat their metastatic disease.Most patients with RCC lack the tumor suppressor gene VHL. In preclinical studies by academic researchers, VHL-deficient cell lines have beenshown to have an increased requirement for glutamine due to a loss of ability to make fatty acids from glucose. Accordingly, we believe that most patientswith RCC tumors will have increased susceptibility to inhibition of glutaminase with CB-839. In RCC cell lines, we have demonstrated both single agentactivity of CB-839 and synergistic activity in combination with approved multi-kinase inhibitors and mTOR inhibitors. We have also observed suppressionof the mTOR pathway in cells treated with CB-839, likely due to a reduction in cellular amino acids and/or other nutrients. We are currently evaluatingsingle agent CB-839 in an RCC cohort in the dose expansion stage of our solid tumor Phase 1 clinical trial. We also plan to evaluate CB-839 in a separatecohort of patients who will receive CB-839 in combination with the mTOR inhibitor everolimus.12 Tumors with TCA Cycle Driver MutationsThere are rare tumors with driver mutations in two different TCA cycle enzymes, fumarate hydratase and succinate dehydrogenase, in which theenzymes are inactive, leading to abnormally high levels of fumarate and succinate and driving tumor formation. Published third-party studies indicate thatglutamine metabolism is important in the synthesis of fumarate and succinate. In addition to FH and SDH, there is evidence that glutamine contributes to theproduction of 2-hydroxyglutarate, another driver of tumor formation that accumulates in patients with tumors harboring mutations in the enzyme isocitratedehydrogenase. Therefore, we believe that CB-839 has the potential to be efficacious in treating tumors in these well-defined patient populations. Fumarate hydratase: Rare mutations in FH lead to the development of hereditary leiomyomatosis and renal cell cancer, or HLRCC, where patientscan develop tumors of the skin, uterus and kidneys. This is a hereditary disease with early onset and limited treatment options for patients.Succinate dehydrogenase: Approximately 15% of gastrointestinal stromal tumors, or GIST, are resistant to imatinib (marketed as Gleevec), thecurrent standard of care. This form of GIST is often hereditary and the tumor arises from the lack of expression of SDH. Other SDH loss-of-function mutationsare found in patients harboring a rare head and neck cancer, known as paraganglioma, a rare adrenal or extra-adrenal cancer, known as pheochromocytoma,and a rare subset of renal cell carcinoma. These patients also have early disease onset and limited treatment options.Isocitrate dehydrogenase: Some patients with glioma, a form of brain cancer, chondrosarcoma, a rare bone cancer, cholangiocarcinoma, a rare bileduct tumor, AML, high-risk myelodysplasia/myeloproliferative disorders, a group of blood disorders, have IDH1 or IDH2 driver mutations.We are currently evaluating CB-839 in patients with FH, SDH or IDH mutations in our ongoing Phase 1 clinical trials.Our Lead Program in Tumor Immunology: Arginase InhibitorsTumors have developed several strategies to avoid recognition and destruction by the immune system. One key mechanism is through suppressionof cytotoxic T cells that would otherwise attack and kill the cancer cells. Arginine is an amino acid that is fundamental to the function of cytotoxic T cells.Without arginine, tumor specific cytotoxic T cells fail to express a functional T cell receptor on their surface and as a result are unable to activate, proliferate,or mount an effective anti-tumor response.In response to tumor-secreted factors, myeloid-derived suppressor cells, or MDSCs, accumulate around the tumor and secrete the enzyme arginase,resulting in depletion of arginine from the tumor microenvironment. Depletion of arginine due to elevated levels of arginase has been observed in renal cellcarcinoma and acute myeloid leukemia. In addition, significant MDSC infiltrates have been observed in pancreatic, breast and other tumor types. We believethat inhibitors of arginase can promote an anti-tumor immune response by restoring arginine levels, thereby allowing activation of the body’s cytotoxic Tcells.13 A similar process exists whereby cytotoxic T cells are blocked from activation through depletion of the amino acid tryptophan. Indoleamine 2, 3-dioxygenase, or IDO, a tryptophan metabolizing enzyme, depletes tryptophan from the tumor microenvironment resulting in suppression of T cell function.Both Incyte Corporation and NewLink Genetics Corporation have commenced clinical trials of IDO inhibitors and Incyte has announced early clinical resultsdemonstrating combination activity of their IDO inhibitor with ipilimumab in metastatic melanoma.Arginase License AgreementIn December 2014, we entered into an exclusive license agreement, or the Arginase License Agreement, with Mars, Inc., by and through its MarsSymbioscience division, or Symbioscience, under which we have been granted the exclusive, worldwide license rights to develop and commercializeSymbioscience’s portfolio of arginase inhibitors for use in human healthcare. Under the terms of the Arginase License Agreement, we paid Symbioscience anupfront license fee of $0.3 million and may pay potential development and regulatory milestone payments totaling up to $24.4 million for the first licensedproduct. Symbioscience is eligible for an additional $95.0 million in potential sales-based milestones, as well as royalty payments, at a mid-single digitroyalty rate, based on sales of the first commercialized licensed product. If we develop additional licensed products, after achieving regulatory approval ofthe first licensed product, we would owe additional regulatory milestone payments and additional royalty payments based on sales of such additionallicensed products. The Arginase License Agreement does not alter our ability to fund operating expenses and capital expenditure requirements for at leastthe next twelve months.Under the Arginase License Agreement, we are responsible for the worldwide development and commercialization of the licensed products at ourcost, are required to use commercially reasonable efforts with respect to such development and commercialization activities, and must meet certain generaldiligence obligations. We hold the first right to prosecute and to enforce all licensed rights under the Arginase Licenses Agreement throughout the world, andSymbioscience will retain certain step-in enforcement rights. Under the exclusivity provisions of the Arginase License Agreement, each party agrees not todevelop any other arginase inhibitors for use in human healthcare outside of the scope of the Arginase License Agreement. The Arginase License Agreement, unless terminated earlier, will continue until expiration upon the last to expire of all royalty obligationsCalithera owes to Symbioscience. Upon expiration of the Arginase License Agreement, we will retain non-exclusive, royalty-free license rights to therelevant licensed Symbioscience intellectual property for use in human healthcare. Symbioscience may terminate the Arginase License Agreement early ifwe materially breach the agreement and do not cure such breach in a specified notice period. We may terminate the Arginase License Agreement forSymbioscience’s uncured material breach, or at will for any or no reason. We are developing small molecule selective inhibitors of arginase and are in the process of optimizing these compounds with the aim to submit anIND to the FDA in early 2016.Our Second Program in Tumor Metabolism: Hexokinase IIMost cancer cells have increased uptake of the sugar glucose relative to surrounding normal cells. This phenomenon forms the basis for the widelyused tumor imaging procedure known as 18F-2-deoxyglucose (FDG)/PET. Tumors take up more FDG, a radioactive glucose analog, than the surroundingnormal tissue and this differential can be visualized with PET imaging. Not only do tumors take up more glucose, but they also utilize the nutrient in aunique way. Tumors convert glucose into lactic acid in a process known as aerobic glycolysis, or the “Warburg effect”, a route rarely utilized in normalcells. This unique uptake and processing of14 glucose by tumors relative to normal tissue creates an opportunity to selectively target tumors by cutting off their ability to use this fuel.Hexokinase is the first enzyme in the pathway that enables cancer cells to convert glucose to energy and building blocks that feed cancer cellgrowth. In many cancers, the isoform hexokinase II is over expressed and has been linked to more aggressive and invasive tumors. Pre-clinical studies inmice have confirmed that the reduction of hexokinase II activity through genetic deactivation (siRNA knockdown studies) results in a significant reductionof tumor growth. The hexokinase II inhibitors in-licensed from TransTech may provide an opportunity to inhibit the unique way cancer cells utilize glucose,and the overall Warburg effect, which could result in new treatments for cancer.Hexokinase License AgreementIn March 2015, we entered into a License and Research agreement, or the Hexokinase License Agreement, with High Point Pharmaceuticals, LLCand TransTech Pharma LLC, or collectively, TransTech, under which we obtained an exclusive, worldwide license to develop and commercializeTransTech’s hexokinase II inhibitors. Under the terms of the Hexokinase License Agreement, we paid TransTech an initial license fee of $0.6 million, and will pay potentialdevelopment and regulatory milestone payments totaling up to $30.5 million for the first licensed product. TransTech is eligible for an additional $77.0million in potential sales-based milestones, as well as royalty payments, at mid-single digit royalty rates, based on tiered sales of the first commercializedlicensed product. In addition, we will fund up to $1.1 million during the first 12 months of the Hexokinase License Agreement for the costs associated withup to four full-time employees for TransTech to develop additional hexokinase inhibitors. If we develop additional licensed products, after achievingregulatory approval of the first licensed product, we would owe additional regulatory milestone payments and additional royalty payments based on sales ofsuch additional licensed products. The Hexokinase License Agreement will not impact our ability to fund operating expenses and capital expenditurerequirements for at least the next twelve months.Except for the research program funded by us at TransTech, we are responsible for the worldwide development and commercialization of thelicensed products at our cost, are required to use commercially reasonable efforts with respect to such development and commercialization activities, andmust meet certain specified diligence obligations. We hold the first right to prosecute and to enforce all licensed patents under the Hexokinase LicenseAgreement throughout the world, and TransTech will retain certain step-in enforcement rights.The Hexokinase License Agreement, unless terminated earlier, will continue on a product-by-product and country-by-country basis untilexpiration of the royalty obligations we owe to TransTech on such product in such country. TransTech may terminate the Hexokinase License Agreementearly if we materially breach the agreement and do not cure such breach in a specified notice period or upon our insolvency. We may terminate theHexokinase License Agreement for TransTech’s uncured material breach or insolvency, or at will for any or no reason.Intellectual PropertyOur commercial success depends in large part on our ability to obtain and maintain intellectual property protection for our product candidates,including CB-839 and our preclinical compounds, and our core technologies. Our policy is to seek to protect our intellectual property position by, amongother methods, filing U.S. and foreign patent applications related to the technology, inventions and improvements that are important to the development andimplementation of our business strategy. We also rely on trade secrets, know-how and continuing technological innovation to develop and maintain ourproprietary position.We file patent applications directed to our product candidates, preclinical compounds and related technologies to establish intellectual propertypositions on these compounds and their uses in disease. We are seeking patent protection for the use of biomarkers to identify patients most likely to benefitfrom treatment with our product candidates. As of December 31, 2014, we own two issued U.S. patents and approximately 26 pending U.S. and foreign patentapplications in the following foreign jurisdictions: Argentina, Australia, Brazil, Canada, China, the Eurasian Patent Organization, Europe, India, Israel, Japan,Mexico, New Zealand, Singapore, South Africa, South Korea and Taiwan.As of December 31, 2014, the intellectual property portfolio for our glutaminase inhibitor program, which includes CB-839, consisted of twoissued U.S. patents directed to compositions of matter and methods of treating cancer with for CB-839, both of which expire in 2032. We also have sevenpending U.S. patent applications and 19 corresponding pending PCT and foreign patent applications directed to compositions of matter for CB-839 andrelated chemical compounds, as well as methods of using these compounds. These pending patent applications also include one pending U.S. patentapplication relating to methods for measuring various biomarkers in cancer patients to identify patients suitable for treatment with glutaminase inhibitors.The intellectual property portfolio for our arginase inhibitor program, which we have exclusively licensed from Symbioscience, includes bothissued patents and pending patent applications. This portfolio includes 5 pending U.S. patent15 applications, 43 corresponding pending foreign patent applications, and one issued foreign patent directed to various arginase inhibitors and therapeuticmethods of using the compounds.In March 2015, we exclusively licensed from TransTech the intellectual property portfolio for our hexokinase II inhibitor program. This portfoliocomprises four pending PCT patent applications directed to compositions of matter for hexokinase II inhibitors, potential combination therapy and assaymethods, and three pending U.S. Provisional patent applications directed to additional compositions of matter.The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries, includingthe United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a patent’s term may belengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office, or the USPTO, inexamining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a U.S. patent that covers adrug or biological product may also be eligible for patent term extension when FDA approval is granted, provided statutory and regulatory requirements aremet. In the future, if and when our product candidates receive approval from the FDA or foreign regulatory authorities, we expect to apply for patent termextensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and other factors. There can be noassurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or other favorable adjustment to theterm of any of our patents.As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual property positionfor our product candidates, including CB-839 and our preclinical compounds, and our core technologies will depend on our success in obtaining effectivepatent claims and enforcing those claims if granted. However, patent applications that we may file or license from third parties may not result in the issuanceof patents. We also cannot predict the breadth of claims that may be allowed or enforced in our patents. Any issued patents that we may receive in the futuremay be challenged, invalidated or circumvented. For example, prior to March 16, 2013, in the United States, patent applications were subject to a “first toinvent” rule of law. Applications filed subsequent to March 16, 2013 (with the exception of certain applications claiming the benefit of earlier-filedapplications) are subject to a “first to file” rule of law.Discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictionsare typically not published until 18 months after filing, or in some cases not at all. We cannot be certain that any existing or future application will be subjectto the “first to file” or “first to invent” rule of law, that we were the first to make the inventions claimed in our existing patents or pending patent applicationssubject to the prior laws, or that we were the first to file for patent protection of such inventions subject to the new laws. If third parties prepare and file patentapplications in the United States that also claim technology we have claimed in our patents or patent applications, we may have to participate in interferenceproceedings in the USPTO to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us. Inaddition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that,before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period followingcommercialization, thereby reducing any advantage of any such patent.In addition to patents, we rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitiveposition. We seek to protect our proprietary information, in part, by using confidentiality agreements with our collaborators, scientific advisors, employeesand consultants, and invention assignment agreements with our employees. We also have agreements requiring assignment of inventions with selectedconsultants, scientific advisors and collaborators. The confidentiality agreements are designed to protect our proprietary information and, in the case ofagreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed under those agreements.ManufacturingWe do not own or operate, and currently have no plans to establish, any manufacturing facilities. We currently rely, and expect to continue to rely,on third parties to manufacture clinical supplies of CB-839. CB-839 is an organic compound of low molecular weight. Our third-party contract manufacturersare currently producing CB-839 for use in our clinical trials utilizing reliable and reproducible synthetic processes and common manufacturing techniques.We obtain our supplies from manufacturers on a purchase order basis and do not have any long-term arrangements. In addition, we do not currently havearrangements in place for bulk drug substance or drug product services of CB-839. We intend to identify and qualify additional manufacturers to providebulk drug substance and drug product services prior to submission of a new drug application to the FDA if necessary to ensure sufficient commercialquantities of CB-839. We also intend to rely upon third-party contract manufacturers to provide us with clinical supplies for our arginase and hexokinase IIinhibitor programs and for our other research and discovery programs.Research and DevelopmentWe have and will continue to make substantial investments in research and development. Our research and development expenses totaled $16.4million, $9.9 million and $6.6 million in 2014, 2013 and 2012, respectively.16 In the ordinary course of business, we enter into agreements with third parties, such as contract research organizations, medical institutions, clinicalinvestigators and contract laboratories, to conduct our clinical trials and aspects of our research and preclinical testing. These third parties provide projectmanagement and monitoring services and regulatory consulting and investigative services.CompetitionThe pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and a strong emphasison proprietary products. While we believe that our technology, development experience and scientific knowledge provide us with competitive advantages,we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies,academic institutions and governmental agencies and public and private research institutions. Any product candidates that we successfully develop andcommercialize will compete with existing therapies and new therapies that may become available in the future.Our principal competitors in the field of tumor metabolism include Advanced Cancer Therapeutics, LLC, Agios Pharmaceuticals, Inc., AstraZenecaplc, Bayer Pharma AG, Celgene Pharmaceuticals, Cornerstone Pharmaceuticals, Inc., Eli Lilly and Company, Forma Therapeutics Holdings, LLC,GlaxoSmithKline plc, Novartis International AG, Pfizer Inc., Quantum Pharmaceuticals, 3-V Biosciences, Inc., Roche Holdings, and its subsidiary GenentechInc. and Takeda Pharmaceutical Co. Ltd. Our principal competitors in the field of tumor immunology include AstraZeneca plc, Boehringer Ingelheim GmbH,Bristol-Myers Squibb Company, Coronado Biosciences, CureTech Ltd., EMD Serono, Inc., Flexus Biosciences, Incyte Corporation, iTeos Therapeutics,Merck & Co., NewLink Genetics Corporation, Ono Pharmaceuticals, Co., Ltd, Pfizer Inc., Roche Holdings and TG Therapeutics, Inc.The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, hormone therapy andtargeted drug therapy. There are a variety of available drug therapies marketed for cancer. In many cases, these drugs are administered in combination toenhance efficacy. Any product candidates we develop will compete with many existing drug and other therapies. To the extent they are ultimately used incombination with or as an adjunct to these therapies, our product candidates will not be competitive with them. Some of the currently approved drugtherapies are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well establishedtherapies and are widely accepted by physicians, patients and third-party payors. In general, although there has been considerable progress over the past fewdecades in the treatment of cancer and the currently marketed therapies provide benefits to many patients, these therapies all are limited to some extent intheir efficacy and frequency of adverse events, and none are successful in treating all patients. As a result, the level of morbidity and mortality from cancerremains high.In addition to currently marketed therapies, there are also a number of therapeutics in late stage clinical development to treat cancer. Thesetherapeutics in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies. As a result,they may provide significant competition for any product candidate for which we may obtain market approval.Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinicaltesting, conducting clinical trials, obtaining regulatory approvals and marketing approved therapeutics than we do. Mergers and acquisitions in thepharmaceutical, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors.These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites andpatient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early stage companiesmay also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.The key competitive factors affecting the success of CB-839 and any future product candidates we develop, if approved, are likely to be theirefficacy, safety, synergy with other approved therapies, convenience, price and the availability of reimbursement from government and other third-partypayors.Our competitors may develop and commercialize therapeutics that are safer, more effective, have fewer or less severe side effects, are moreconvenient or are less expensive than any therapeutics that we may develop. Our competitors also may obtain FDA or other regulatory approval for theirtherapeutics more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we areable to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party and government programs seekingto control healthcare costs.Government RegulationGovernment authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things,the research, development, testing, manufacture, including any manufacturing changes, packaging, storage, recordkeeping, labeling, advertising, promotion,distribution, marketing, post-approval monitoring and reporting, import and export of pharmaceutical products, such as those we are developing.17 United States Drug Approval ProcessIn the United States, the FDA regulates drugs under the Federal 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 United States requirements at any time during the productdevelopment process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’srefusal to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and untitled letters, productrecalls, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution,disgorgement of profits or civil or criminal penalties.The process required by the FDA before a drug may be marketed in the United States generally involves the following:·contract manufacturing expenses, primarily for the production of clinical supplies;·completion of preclinical 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 become effective before human clinical trials may begin;·approval by an independent institutional review board, or IRB, at each clinical site before each 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 for each indication;·submission to the FDA of a new drug application, or NDA;·satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliancewith current good manufacturing practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate topreserve the drug’s identity, strength, quality and purity; and·FDA review and approval of the NDA.Preclinical Studies and INDPreclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the potentialfor adverse events, and in some cases, to establish a rationale for therapeutic use. The conduct of preclinical studies is subject to federal regulations andrequirements, including GLP regulations for safety/toxicology studies. An IND sponsor must submit the results of the preclinical tests, together withmanufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other things, to the FDA as part of anIND. Some long-term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, may continue after the IND is submitted. AnIND automatically becomes effective 30 days after receipt by the FDA, unless before that time, the FDA raises concerns or questions related to one or moreproposed clinical trials and places the trial on clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before theclinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.Clinical TrialsClinical trials involve the administration of the investigational new drug 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. In addition, an IRB at each institution participating in the clinical trial must reviewand approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review. The IRB must review andapprove, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance withFDA regulations. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for publicdissemination at www.clinicaltrials.gov. Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:·Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety,dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.18 ·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: The drug is administered to an expanded patient population in adequate and well-controlled clinical trials to generate sufficient datato statistically confirm the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product and toprovide 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 trial at its institution if the clinical trial is not being conducted inaccordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.Marketing ApprovalAssuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, together with detailedinformation relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDArequesting approval to market the product for one or more indications. Under federal law, the submission of most NDAs is additionally subject to asubstantial application user fee, and the sponsor of an approved NDA is also subject to annual product and establishment user fees, which fees are typicallyincreased annually.The FDA conducts a preliminary review of all NDAs within the first 60 days after submission before accepting them for filing to determine whetherthey are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event,the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it forfiling. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA has agreed to specified performance goals in thereview of NDAs. Under these goals, the FDA has committed to review most such applications for non-priority products within 10 months, and mostapplications for priority review products, that is, drugs that the FDA determines represent a significant improvement over existing therapy, within six months.The review process may be extended by the FDA for three additional months to consider certain information or clarification regarding information alreadyprovided in the submission. The FDA may also refer applications for novel drugs or products that present difficult questions of safety or efficacy to anadvisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the applicationshould be approved. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully whenmaking decisions.Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve anapplication unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistentproduction of the product within required specifications. In addition, before approving an NDA, the FDA will typically inspect one or more clinical sites toassure compliance with GCP and integrity of the clinical data submitted.The testing and approval process requires substantial time, effort and financial resources, and each may take many years to complete. Data obtainedfrom clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to develop our productcandidates and secure necessary governmental approvals, which could delay or preclude us from marketing our products.After the FDA’s evaluation of the NDA and inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete responseletter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A complete responseletter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsiderthe application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approvalletter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submissionof this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval and refuse to approvethe NDA. Even if the FDA approves a product, it may limit the approved indications for use for the product, require that contraindications, warnings orprecautions be included in the product labeling, require that post-approval studies, including phase 4 clinical trials, be conducted to further assess a drug’ssafety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, includingdistribution restrictions or other risk management mechanisms, including Risk Evaluation and Mitigation Strategies, or REMs, which can materially affectthe potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-market studiesor surveillance19 programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labelingclaims, are subject to further testing requirements and FDA review and approval.Fast Track DesignationThe FDA is required to facilitate the development and expedite the review of drugs that are intended for the treatment of a serious or life-threatening condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition. Underthe fast track program, the sponsor of a new product candidate may request the FDA to designate the product for a specific indication as a fast track productconcurrent with or after the submission of the IND for the product candidate. The FDA must determine if the product candidate qualifies for fast trackdesignation within 60 days after receipt of the sponsor’s request.In addition to other benefits, such as the ability of the sponsor to use surrogate endpoints in the evaluation of the pivotal clinical trials and havemore frequent interactions with the FDA, the FDA may initiate review of sections of a fast track product’s NDA before the application is complete. Thisrolling review is available if the applicant provides and the FDA approves a schedule for the submission of the remaining information and the applicant paysapplicable user fees. However, the FDA’s time period goal for reviewing a fast track application does not begin until the last section of the NDA is submitted.In addition, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in theclinical trial process.Priority ReviewUnder FDA policies, a product candidate may be eligible for priority review, or review generally within a six-month time frame from the time acomplete application is received. Products regulated by the FDA’s Center for Drug Evaluation and Research, or CDER, are eligible for priority review if theyprovide a significant improvement compared to marketed products in the treatment, diagnosis or prevention of a disease. A fast track designated productcandidate would ordinarily meet the FDA’s criteria for priority review.Accelerated ApprovalUnder the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningfultherapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. In clinical trials, asurrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels,functions or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A product candidate approved on thisbasis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effecton the clinical endpoint. Failure to conduct required post-approval trials, or confirm a clinical benefit during post-marketing studies, would allow the FDA towithdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject toprior review by the FDA.Breakthrough Therapy DesignationUnder the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, a sponsor can requestdesignation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination withone or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product candidate maydemonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observedearly in clinical development. Drugs designated as breakthrough therapies are also eligible for accelerated approval. The FDA must take certain actions, suchas holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditionsfor qualification or decide that the time period for FDA review or approval will not be shortened.Orphan DrugsUnder the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition, which is generallydefined as a disease or condition that affects fewer than 200,000 individuals in the United States. Orphan drug designation must be requested beforesubmitting an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by theFDA. Orphan drug designation does not convey any advantage in,20 or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular active ingredient totreat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the United States for that product, forthat indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same orphanindication, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity in that it is shown to besafer, more effective or makes a major contribution to patient care. Orphan drug exclusivity does not prevent the FDA from approving a different drug for thesame disease or condition, or the same drug for a different disease or condition. Among the other benefits of orphan drug designation are tax credits forcertain research and a waiver of the NDA application user fee.Pediatric Exclusivity and Pediatric UseUnder the Best Pharmaceuticals for Children Act (BPCA) certain drugs may obtain an additional six months of exclusivity, if the sponsor submitsinformation requested in writing by the FDA (a Written Request) relating to the use of the active moiety of the drug in children. The FDA may not issue aWritten Request for studies on unapproved or approved indications or where it determines that information relating to the use of a drug in a pediatricpopulation, or part of the pediatric population, may not produce health benefits in that population.In addition, the Pediatric Research Equity Act (PREA) requires a sponsor to conduct pediatric studies for most drugs and biologics, for a new activeingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs, biologics license applicationand supplements thereto, must contain a pediatric assessment unless the sponsor has received a deferral or waiver. Unless otherwise required by regulation,PREA does not apply to any drug for an indication where orphan designation has been granted. The required assessment must assess the safety andeffectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatricsubpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatricsubpopulations. A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults beforepediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin. After April 2013, theFDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request forapproval of a pediatric formulation.As part of the FDASIA, the U.S. Congress made a few revisions to BPCA and PREA, which were slated to expire on September 30, 2012, and madeboth laws permanent.Overview of FDA Regulation of Companion DiagnosticsWe may seek to develop in vitro companion diagnostics for use in selecting the patients that we believe will respond to our therapeutics. In July2011, the FDA issued a draft guidance that states that if safe and effective use of a therapeutic product depends on an in vitro diagnostic, then the FDAgenerally will require approval or clearance of the diagnostic at the same time that the FDA approves the therapeutic product. When finalized, the guidancewould address issues critical to developing and obtaining approval or clearance for companion diagnostics and provide guidance as to when the FDA willrequire that the in vitro diagnostic, which is regulated as a medical device, and the drug be approved simultaneously. The FDA has yet to issue furtherguidance, and it is unclear whether it will do so, or what the scope would be. Nevertheless, although the draft guidance is not finalized, the FDA has alreadyrequired in vitro companion diagnostics intended to select the patients who will respond to cancer treatment to obtain approval simultaneously withapproval of the drug.Other Regulatory RequirementsAny drug manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including,among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reportingof adverse 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.The FDA may impose a number of post-approval requirements, including REMs, as a condition of approval of an NDA. For example, the FDA mayrequire post-marketing testing, including phase four clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness aftercommercialization. Regulatory approval of oncology products often requires that patients in clinical trials be followed for long periods to determine theoverall survival benefit of the drug.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 us and anythird-party manufacturers that we may21 decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain cGMPcompliance.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 distribution orother restrictions under a Risk Evaluation andMitigation Strategy program. Other potential consequences include, among other things:• 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 applications or supplements to approved applications, orsuspension or revocation of product license approvals;• product seizure or detention, or refusal to permit the import or export of products; or• consent decrees, 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.Additional ProvisionsIn addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrictcertain marketing practices in the pharmaceutical industry in recent years. These laws include anti-kickback statutes and false claims statutes. The federalhealthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration toinduce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable underMedicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceuticalmanufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Violations of the anti-kickback statute are punishable byimprisonment, criminal fines, civil monetary penalties and exclusion from participation in federal healthcare programs. Although there are a number ofstatutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exemptions andsafe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject toscrutiny if they do not qualify for an exemption or safe harbor.Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federalgovernment, or knowingly making, or causing to be made, a false statement to have a false claim paid. Recently, several pharmaceutical and other healthcarecompanies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by thegovernment to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customerswould bill federal programs for the product. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. Themajority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursedunder Medicaid and other state programs, or, in several states, apply regardless of the payor.Foreign RegulationIn order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of othercountries regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of ourproducts. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable regulatory authorities offoreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to countryand can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differfrom and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but afailure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.22 New Legislation and RegulationsFrom time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing thetesting, approval, manufacturing and marketing of products regulated by the FDA. In addition to new legislation, FDA regulations and policies are oftenrevised or interpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether further legislativechanges will be enacted or whether FDA regulations, guidance, policies or interpretations changed or what the effect of such changes, if any, may be.EmployeesAs of December 31, 2014, we had 37 full-time employees, including 16 employees with Ph.D. or M.D. degrees. Of these full-time employees, 28employees are engaged in research and development activities. None of our employees is represented by a labor union or covered by a collective bargainingagreement.FacilitiesWe occupy approximately 29,000 square feet of office and laboratory space in South San Francisco, California under a lease that expires inNovember 2017 with an option to extend another two years to November 2019. Approximately 4,500 square feet of laboratory space have been leased toanother biotechnology company under a two-year sublease agreement. We believe that our facility is sufficient to meet our current needs and that suitableadditional space will be available as and when needed.Legal ProceedingsFrom time to time, we may become involved in litigation relating to claims arising from the ordinary course of business. Our management believesthat there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results ofoperations, financial condition or cash flows.23 Item 1A.Risk Factors.Our business involves significant risks, some of which are described below. You should carefully consider these risks, as well as other information in thisAnnual Report on Form 10-K, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Conditionand Results of Operations.” The occurrence of any of the events or developments described below could harm our business, financial condition, results ofoperations, cash flows, the trading price of our common stock and our growth prospects. Additional risks and uncertainties not presently known to us orthat we currently deem immaterial may also impair our business operations.Risks Related to Our Financial Position and Need For Additional CapitalWe have incurred significant operating losses since our inception and anticipate that we will continue to incur substantial operating losses for theforeseeable future. We may never achieve or maintain profitability.Since our inception, we have incurred significant operating losses. Our net loss was $21.7 million, $12.4 million and $8.0 million for 2014, 2013 and2012, respectively. As of December 31, 2014, we had an accumulated deficit of $51.9 million. To date, we have financed our operations primarily throughprivate placements of our preferred stock and our initial public offering in October 2014. We have devoted substantially all of our financial resources andefforts to research and development. We began Phase 1 clinical trials on our lead product candidate, CB-839, in early 2014 and expect that it will be manyyears, if ever, before we receive regulatory approval and have a product candidate ready for commercialization. We expect to continue to incur significantexpenses and increasing operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year. Weanticipate that our expenses will increase substantially if and as we:·advance further into clinical trials our existing clinical product candidate, CB-839, a glutaminase inhibitor for the treatment of solid andhematological tumors;·continue the preclinical development of our arginase and hexokinase II inhibitor programs and advance candidates into clinical trials;·identify additional product candidates and advance them into preclinical development;·seek marketing approvals for our product candidates that successfully complete clinical trials;·establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval;·maintain, expand and protect our intellectual property portfolio;·hire additional clinical, regulatory and scientific personnel;·add operational, financial and management information systems and personnel, including personnel to support product development; and·acquire or in-license other product candidates and technologies.To become and remain profitable, we must develop and eventually commercialize one or more products with significant market potential. This willrequire us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates,obtaining marketing approval for these product candidates, manufacturing, marketing and selling those product candidates for which we may obtainmarketing approval, and satisfying any post-marketing requirements. We may never succeed in these activities and, even if we do, may never generaterevenue that are significant or large enough to achieve profitability. We are currently only in Phase 1 clinical trials for CB-839 and in preclinical studies forour arginase and hexokinase II inhibitor programs. Our failure to become and remain profitable would decrease the value of the company and could impairour ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of ourcompany could also cause you to lose all or part of your investment.We will need substantial additional funding. If we are unable to raise capital when needed, we would 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 continue the research and development of, continueand initiate clinical trials of and seek marketing approval for our product candidates, specifically CB-839 and as we become obligated to make milestonepayments pursuant to our outstanding license agreements. In addition, if we obtain marketing approval for any of our product candidates, we expect to incursignificant commercialization expenses related to product sales, marketing, manufacturing and distribution of the approved product.24 Our future capital requirements will depend on many factors, including:·the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our productcandidates, in particular CB-839;·the costs, timing and outcome of any regulatory review of our product candidate, CB-839;·the cost of our arginase and hexokinase II inhibitor programs, and any other product programs we pursue;·the costs and timing of commercialization activities, including manufacturing, marketing, sales and distribution, for any product candidatesthat receive marketing approval;·the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defendingintellectual property-related claims;·our ability to establish and maintain collaborations on favorable terms, if at all; and·the extent to which we acquire or in-license other product candidates and technologies.Identifying potential product candidates and conducting preclinical studies and clinical trials are time consuming, expensive and uncertain processthat takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales for anyof our current or future product candidates. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenue, ifany, will be derived from sales of products that we do not expect to be commercially available for many years, if at all.Accordingly, we will need substantial additional funding in connection with our continuing operations and to achieve our goals. As of December 31,2014, we had cash and cash equivalents of $102.0 million. We expect that our existing cash and cash equivalents will be sufficient to enable us to meet ourcurrent operating plan for at least the next 12 months. However, our existing cash and cash equivalents may prove to be insufficient for these activities. If weare unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs orfuture commercialization efforts. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additionalfinancing due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our operating plans.Raising additional capital may cause dilution to our stockholders restrict our operations or require us to relinquish rights to our technologies or productcandidates.Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debtfinancings, as well as entering into collaborations, strategic alliances and licensing arrangements. We do not currently have any committed external source offunds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and theterms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available,may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capitalexpenditures or declaring dividends, and may be secured by all or a portion of our assets. If we raise funds by entering into collaborations, strategic alliancesor licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs orproduct candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financingsor through collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our productdevelopment or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop andmarket ourselves.Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.We were founded in March 2010 and our operations to date have been limited to organizing and staffing our company, business planning, raisingcapital, developing our technology, identifying potential product candidates, undertaking preclinical studies and commencing Phase 1 clinical trials of ourproduct candidate. We have one product candidate in Phase 1 clinical trials, and all of our other programs are in research and preclinical development. Wehave not yet demonstrated our ability to successfully complete any clinical trials, including large-scale, pivotal clinical trials required for regulatoryapproval of our product candidates, obtain marketing approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf,or conduct sales and marketing activities necessary for successful commercialization. Typically, it takes many years to develop one new product from thetime it is discovered to when it is commercially available. Consequently, any predictions made about our future success or viability may not be as accurate asthey could be if we had a longer operating history or if we had product candidates in advanced clinical trials.25 In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors thatmay alter or delay our plans. We will need to transition from a company with a research focus to a company capable of supporting development activitiesand, if a product candidate is approved, a company with commercial activities. We may not be successful in any step in such a transition.Risks Related to Drug Discovery, Development and CommercializationOur approach to the discovery and development of product candidates that target tumor metabolism and tumor immunology is unproven and may neverlead to marketable products.Our scientific approach focuses on using our understanding of cellular metabolic pathways and the role of glutaminase and hexokinase in thesepathways, as well as the role of arginase in the anti-tumor immune response, to identify molecules that are potentially promising as therapies for cancerindications. Any product candidates we develop may not effectively modulate metabolic or immunology pathways. The scientific evidence to support thefeasibility of developing product candidates based on inhibiting tumor metabolism or impacting the anti-tumor immune response are both preliminary andlimited. Although preclinical studies suggest that inhibiting glutaminase and hexokinase can suppress the growth of certain cancer cells, to date no companyhas translated this mechanism into a drug that has received marketing approval. Even if we are able to develop a product candidate in preclinical studies, wemay not succeed in demonstrating the safety and efficacy of the product candidate in human clinical trials. Our expertise in cellular metabolic pathways, therole of glutaminase and hexokinase in these pathways, and the role of arginase in the anti-tumor immune response may not result in the discovery anddevelopment of commercially viable products to treat cancer.We are very early in our development efforts, which may not be successful.We have invested a significant portion of our efforts and financial resources in the identification of our most advanced product candidate, CB-839,which is being evaluated in three Phase 1 clinical trials. Our arginase inhibitor and hexokinase II inhibitor programs are in preclinical development. Becauseof the early stage of our development efforts and our unproven and novel approach to discovery and development of product candidates, we do not have aclearly defined clinical development path. It is also too early in our development efforts to determine whether our product candidates will demonstratesingle-agent activity or will be developed for use in combination with other approved therapies, or both. As a result, the timing and costs of the regulatorypaths we will follow and marketing approvals remain uncertain. Our ability to generate product revenue, which we do not expect will occur for many years, ifever, will depend heavily on the successful development and eventual commercialization of CB-839. The success of CB-839, our arginase and hexokinase IIinhibitor programs and any other product candidates we may develop will depend on many factors, including the following:·successful enrollment in, and completion of, clinical trials;·demonstrating safety and efficacy;·receipt of marketing approvals from applicable regulatory authorities;·establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;·obtaining and maintaining patent and trade secret protection and non-patent exclusivity for our product candidates;·launching commercial sales of the product candidates, if and when approved, whether alone or selectively in collaboration with others;·acceptance of the product candidates, if and when approved, by patients, the medical community and third-party payors;·effectively competing with other therapies;·a continued acceptable safety profile of the products following approval; and·enforcing and defending intellectual property rights and claims.If we do not accomplish one or more of these goals in a timely manner, or at all, we could experience significant delays or an inability to successfullycommercialize our product candidates, which would harm our business.We may not be successful in our efforts to identify or discover potential product candidates.Our drug discovery efforts may not be successful in identifying compounds that are useful in treating cancer. Our research programs may initially showpromise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons. In particular, ourresearch methodology used may not be successful in identifying compounds26 with sufficient potency or bioavailability to be potential product candidates. In addition, our potential product candidates may, on further study, be shown tohave harmful side effects or other negative characteristics.Research programs to identify new product candidates require substantial technical, financial and human resources. We may choose to focus ourefforts and resources on potential product candidates that ultimately prove to be unsuccessful. If we are unable to identify suitable compounds for preclinicaland clinical development, we will not be able to generate product revenue, which would harm our financial position and adversely impact our stock price.If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise producepositive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development andcommercialization of our product candidates.Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must complete preclinical developmentand then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficultto design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials could occur at any stage oftesting. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of aparticular clinical trial do not necessarily predict final results of that trial.Moreover, preclinical and clinical data are often susceptible to multiple interpretations and analyses. Many companies that have believed theirproduct candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketingapproval or commercialize our product candidates, including that:·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 have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trialsites;·clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, toconduct additional clinical trials or abandon product development programs;·the number of patients required for clinical trials of our product candidates may be larger than we anticipate; enrollment in these clinical trialsmay 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 may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or atall;·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 a finding that the participants are being exposed to unacceptable health risks;·the cost of clinical trials of our product candidates may be greater than we anticipate; and·the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may beinsufficient or inadequate.If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we areunable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are onlymodestly positive or if there are safety concerns, we 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 intended or desired;·obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;27 ·be subject to additional post-marketing testing requirements; or·have the product removed from the market after obtaining marketing approval.Product development costs will also increase if we experience delays in testing or in receiving marketing approvals. We do not know whether anyclinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could shortenany periods during which we may have the exclusive right to commercialize our product candidates, could allow our competitors to bring products to marketbefore we do, and could impair our ability to successfully commercialize our product candidates, any of which may harm our business and results ofoperations.If we experience delays or difficulties in enrolling patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.We may not be able to initiate or continue clinical trials for our product candidates if we are unable to identify and enroll a sufficient number ofeligible patients to participate in these trials as required by the U.S. Food and Drug Administration, or FDA, or analogous regulatory authorities outside theUnited States. In addition, some of our competitors may have ongoing clinical trials for product candidates that would treat the same indications as ourproduct candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ productcandidates. Patient enrollment is also affected by other factors, including:·severity of the disease under investigation;·availability and efficacy of approved medications for the disease under investigation;·eligibility criteria for the trial in question;·perceived risks and benefits of the product candidate under study;·efforts to facilitate timely enrollment in clinical trials;·patient referral practices of physicians;·the ability to monitor patients adequately during and after treatment; and·proximity and availability of clinical trial sites for prospective patients.Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or moreclinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause thevalue of our company to decline and limit our ability to obtain additional financing.If serious adverse effects or unexpected characteristics of our product candidates are identified during development, we may need to abandon or limit ourdevelopment of some or all of our product candidates.CB-839 is our only product candidate in Phase 1 clinical trials, all our other programs are in preclinical development and their risk of failure is high. Itis impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval. If our productcandidates are associated with undesirable side effects or have characteristics that are unexpected, we may need to abandon their development or limitdevelopment to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptablefrom a risk-benefit perspective. Many agents that initially showed promise in early stage testing for treating cancer or other diseases have later been found tocause side effects that prevented further development of the agent.We are in early clinical trials with CB-839 and we have seen several adverse events deemed possibly or probably related to CB-839. As of January 19,2015, a variety of adverse events, or AEs, have been reported. Treatment-emergent Grade ≥ 3 AEs occurring in >5% of patients included febrile neutropenia,thrombocytopenia , hyponatremia, and increases in liver enzymes aspartate aminotransferase (AST), alanine aminotransferase (ALT) and alkalinephosphatase. We have treated an insufficient number of patients to assess the safety of CB-839 and, as our trials progress, we may experience more frequent ormore severe adverse events. Our ongoing trials for CB-839 may fail due to safety issues, and we may need to abandon development of CB-839. Our arginaseand hexokinase II inhibitor programs may also fail due to preclinical safety issues, causing us to abandon or delay the development of a product candidatefrom this program.28 We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indicationsthat may be more profitable or for which there is a greater likelihood of success.We have limited financial and managerial resources. As a result, we may forego or delay pursuit of opportunities with other product candidates or forother indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viablecommercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates forspecific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for aparticular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements incases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.Even if any of our product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, thirdparty payors and others in the medical community necessary for commercial success.If any of our product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients,third party payors and others in the medical community for us to achieve commercial success. For example, current cancer treatments like chemotherapy andradiation therapy for certain diseases and conditions are well established in the medical community, and doctors may continue to rely on these treatments. Ifour product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenue to become profitable. The degree ofmarket acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:·the efficacy and potential advantages compared to alternative treatments;·our ability to offer any approved products for sale at competitive prices;·convenience and ease of administration compared to alternative treatments;·the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;·the strength of marketing and distribution support;·sufficient third-party coverage or reimbursement; and·the prevalence and severity of any side effects.If, in the future, we are unable to establish sales and marketing capabilities or to selectively enter into agreements with third parties to sell and market ourproduct candidates, we may not be successful in commercializing our product candidates if and when they are approved.We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical products. Toachieve commercial success for any approved product for which we retain sales and marketing responsibilities, we must either develop a sales and marketingorganization or outsource these functions to other third parties. In the future, we may choose to build a focused sales and marketing infrastructure to sell someof our product candidates if and when they are approved.There are risks involved both with establishing our own sales and marketing capabilities and with entering into arrangements with third parties toperform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If thecommercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason,we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannotretain or reposition our sales and marketing personnel.Factors that may inhibit our efforts to commercialize our product candidates on our own include:·our inability to recruit and retain adequate numbers of effective sales and marketing personnel;·the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future products; and·unforeseen costs and expenses associated with creating an independent sales and marketing organization.If we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenue or the profitability of theseproduct revenue to us may be lower than if we were to market and sell any products that we develop ourselves. In29 addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so onterms that are favorable to us. We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention tosell and market our products effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with thirdparties, we will not be successful in commercializing our product candidates.We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully thanwe do.The development and commercialization of new drug products is highly competitive. We face competition with respect to our current productcandidates, and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from majorpharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical andbiotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the cancer indications forwhich we are focusing our product development efforts. Some of these competitive products and therapies are based on scientific approaches that are thesame as or similar to our approach and others are based on entirely different approaches. Potential competitors also include academic institutions,government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborativearrangements for research, development, manufacturing and commercialization.We are developing our product candidates for the treatment of various cancers. There are a variety of available drug therapies marketed for cancer. Inmany cases, these drugs are administered in combination to enhance efficacy. Some of the currently approved drug therapies are branded and subject topatent protection, and others are available on a generic basis. Many of these approved drugs are well-established therapies and are widely accepted byphysicians, patients and third-party payors. Insurers and other third-party payors may also encourage the use of generic products. We expect that if ourproduct candidates are approved, they will be priced at a significant premium over competitive generic products. This may make it difficult for us to achieveour business strategy of using our product candidates in combination with existing therapies or replacing existing therapies with our product candidates.There are also a number of product candidates in preclinical and clinical development by third parties to treat cancer by targeting cellularmetabolism. Our principal competitors in the field of tumor metabolism include Advanced Cancer Therapeutics, LLC, Agios Pharmaceuticals, Inc.,AstraZeneca plc, Bayer Pharma AG, Celgene Pharmaceuticals, Cornerstone Pharmaceuticals, Inc., Eli Lilly and Company, Forma Therapeutics Holdings,LLC, GlaxoSmithKline plc, Novartis International AG, Pfizer Inc., Quantum Pharmaceuticals, 3-V Biosciences, Inc., Roche Holdings, and its subsidiaryGenentech Inc and Takeda Pharmaceutical Co. Ltd. Our principal competitors in the field of tumor immunology include AstraZeneca plc, BoehringerIngelheim GmbH, Bristol-Myers Squibb Company, Coronado Biosciences, CureTech Ltd., EMD Serono, Inc., Flexus Biosciences, Incyte Corporation, iTeosTherapeutics, Merck & Co., NewLink Genetics Corporation, Ono Pharmaceuticals, Co., Ltd, Pfizer Inc., Roche Holdings and TG Therapeutics, Inc.Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing or that wouldrender our product candidates obsolete or non-competitive. In addition, our competitors may discover biomarkers that more efficiently measure metabolicpathways than our methods, which may give them a competitive advantage in developing potential products. Our competitors may also obtain marketingapproval from the FDA or other regulatory authorities for their products sooner than we may obtain approval for ours, which could result in our competitorsestablishing a strong market position before we are able to enter the market. Many of our competitors have significantly greater financial resources andexpertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approvedproducts than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentratedamong a smaller number of our competitors. Smaller and other early stage companies may also prove to be significant competitors, particularly throughcollaborative arrangements with large and established companies. These third parties may compete with us in recruiting and retaining qualified scientific andmanagement personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, ornecessary for, our programs.Even if we are able to commercialize any product candidates, these products may become subject to unfavorable pricing regulations, third-partyreimbursement practices or healthcare reform initiatives, which would harm our business.The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. In the United States,new and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtainingapprovals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins aftermarketing or product-licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuinggovernmental control even after initial marketing approval is granted. As a result, we might obtain marketing approval for a drug in a particular country, butthen be subject to price regulations that delay its commercial launch, possibly for lengthy time periods, and negatively impact the revenue we are able to30 generate from the sale of the drug in that country. Adverse pricing limitations may hinder our ability to commercialize and generate revenue from one or moreproduct candidates, even if our product candidates obtain marketing approval.Our ability to commercialize any product candidates successfully also will depend in part on the extent to which reimbursement for these products andrelated treatments will be available from government health programs, private health insurers and other organizations. Government authorities and third-partypayors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.A significant trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted tocontrol costs by limiting coverage and the amount of payment for particular medications. Increasingly, third-party payors are requiring that drug companiesprovide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Reimbursement may not be availablefor any product that we commercialize and, if reimbursement is available, the level of reimbursement may not be sufficient. Reimbursement may impact thedemand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not available or is available only to limitedlevels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.There may be significant delays in obtaining reimbursement for newly approved products, and coverage may be more limited than the purposes forwhich the product is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for reimbursement does not implythat any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interimreimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates mayvary according to the use of the drug and the medical circumstances under which it is used, may be based on reimbursement levels already set for lower costproducts or procedures or may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts orrebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs fromcountries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policies and paymentlimitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from both government-funded programs and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability toraise capital needed to commercialize our approved products and our overall financial condition.Product liability lawsuits against us could cause us to incur substantial liabilities and could limit the commercialization of any product candidates we maydevelop.We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an evengreater risk if we commercially sell any products that we may develop after approval. If we cannot successfully defend ourselves against claims that ourproduct candidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:·decreased demand for any product candidates that we may develop;·injury to our reputation and significant negative media attention;·withdrawal of clinical trial participants;·significant costs to defend any related litigation;·substantial monetary awards to trial participants or patients;·loss of revenue; and·the inability to commercialize any products we may develop.Although we maintain product liability insurance coverage in the amount of up to $10.0 million per claim and in the aggregate, it may not beadequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage as we continue clinical trials and if wesuccessfully commercialize any products. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonablecost or in an amount adequate to satisfy any liability that may arise.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.We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling,use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, includingchemicals and biological and radioactive materials. Our operations also produce31 hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk ofcontamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liablefor any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines andpenalties.Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees in ourworkplace, including those resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. Wedo not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal ofbiological, chemical, 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. Failure to comply with these laws and regulations also mayresult in substantial fines, penalties or other sanctions.Risks Related to Our Dependence on Third PartiesWe rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not performsatisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.We currently rely and expect to continue to rely on third parties, such as contract research organizations, clinical data management organizations,medical institutions and clinical investigators, to conduct our clinical trials and to conduct some aspects of our research and preclinical testing. Any of thesethird parties may terminate their engagements with us at any time. If these third parties do not successfully carry out their contractual duties, meet expecteddeadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed inobtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our productcandidates. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If we need to enter intoalternative arrangements, it would delay our product development activities.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 will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the generalinvestigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, forconducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrityand confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trialson a government sponsored database, available at www.clinicaltrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity andcivil and criminal sanctions.We also rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributorscould delay clinical development or marketing approval of our product candidates or commercialization of our product candidates, producing additionallosses and depriving us of potential product revenue.We do not have any manufacturing facilities. We currently rely, and expect to continue to rely, on third party manufacturers for the manufacture of ourproduct candidates for preclinical studies and clinical trials and for commercial supply of any of these product candidates for which we obtain marketingapproval. To date, we have obtained materials for CB-839 for our Phase 1 trial from third-party manufacturers. We have engaged third party manufacturers toobtain the active ingredient for CB-839 for pre-clinical testing and clinical trials. We do not have a long-term supply agreement with any third-partymanufacturers, and we purchase our required drug supply on a purchase order basis.We may be unable to establish agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreementswith third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:reliance on the third party for regulatory compliance and quality assurance;the possible breach of the manufacturing agreement by the third party; andthe possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.Third-party manufacturers may not be able to comply with current U.S. Good Manufacturing Practice requirements, or cGMPs, or similar regulatoryrequirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result insanctions being imposed on us, including fines, injunctions, civil penalties, delays,32 suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any ofwhich could adversely affect supplies of our product candidates and harm our business and results of operations.Any product that we may develop may compete with other product candidates and products for access to these manufacturing facilities. There are alimited number of manufacturers that operate under cGMPs and that might be capable of manufacturing for us.Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do notcurrently have arrangements in place for redundant supply for bulk drug substances. If any one of our current contract manufacturers cannot perform asagreed, we may be required to replace that manufacturer. Although we believe that there are several potential alternative manufacturers who couldmanufacture our product candidates, we may incur added costs and delays in identifying and qualifying any such replacement.Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our futureprofit margins and our ability to commercialize any product candidates that receive marketing approval on a timely and competitive basis.We also currently rely, and expect to continue to rely, on third parties to store and distribute drug supplies for our clinical trials. Any performancefailure on the part of these third parties could delay clinical development or marketing approval of our product candidates or commercialization of our drugs,producing additional losses and depriving us of potential revenue. Although we believe that there are several potential alternative third parties who couldstore and distribute drug supplies for our clinical trials, we may incur added costs and delays in identifying and qualifying any such replacement.We may seek to selectively establish collaborations, and, if we are unable to establish them on commercially reasonable terms, we may have to alter ourdevelopment and commercialization plans.Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fundexpenses. For some of our product candidates, we may decide to collaborate with additional pharmaceutical and biotechnology companies for thedevelopment and potential commercialization of those product candidates.We may also be restricted under existing license agreements from engaging in research and development activities or entering into future agreementson certain terms with potential collaborators. For example, pursuant to our license agreement with Symbioscience. we have agreed not to develop any otherarginase inhibitors for use in human healthcare outside of the scope of that agreement. We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, amongother things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposedcollaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA orsimilar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturingand delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership oftechnology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditionsgenerally. The collaborator may also consider alternative product candidates for similar indications that may be available to collaborate on and whether sucha collaboration could be more attractive than the one with us for our product candidate.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.If we decide to collaborate with a third party in connection with any of our development programs or product candidates, we may not be able tonegotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development program or theproduct candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delayits potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development orcommercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, wemay need to obtain 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 ableto further develop our product candidates or bring them to market and generate product revenue.33 To the extent we enter into any collaborations, we may depend on such collaborations for the development and commercialization of our productcandidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of our product candidates.We may selectively seek third-party collaborators for the development and commercialization of our product candidates. Our current and any futurecollaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies andbiotechnology companies. Pursuant to these arrangements and any potential future arrangements, we will have limited control over the amount and timing ofresources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenue from thesearrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.Collaborations involving our product candidates pose many risks to us, including that:·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 renewdevelopment or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding orexternal factors 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 productcandidates or products if the collaborators believe that competitive products are more likely to be successfully developed or can becommercialized under terms that are more economically attractive than ours.·A collaborator with marketing and distribution rights to one or more product candidates or products may not commit sufficient resources to themarketing and distribution of such drugs.·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 proprietary information or expose us to potential litigation.·Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercializationof our product candidates or products or that result in costly litigation or arbitration that diverts management attention and resources.·We may lose certain valuable rights under circumstances identified in our collaborations if we undergo a change of control.·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 afuture collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development orcommercialization program under such collaboration could be delayed, diminished or terminated.We have in-licensed portfolios of arginase inhibitors and hexokinase II inhibitors, respectively, as part of our efforts to develop product candidates forthese programs, and we are substantially dependent on these in-licenses for these programs. To the extent these in-licenses are terminated, our business maybe harmed.Risks Related to Our Intellectual PropertyRecent laws and rulings by U.S. courts make it difficult to predict how patents will be issued or enforced in our industry.Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may have a significant impact on ourability to protect our technology and enforce our intellectual property rights. There have been numerous recent changes to the patent laws and to the rules ofthe United States Patent and Trademark Office, or the USPTO, which may have a significant impact on our ability to protect our technology and enforce ourintellectual property rights. For example, the Leahy-Smith America Invents Act, which was signed into law in 2011, includes a transition from a “first-to-invent” system to a “first-to-file” system, and changes the way issued patents are challenged. Certain changes, such as the institution of inter partes reviewproceedings, came into effect on September 16, 2012. Substantive changes to patent law associated with the America Invents Act may affect our34 ability to obtain patents, and, if obtained, to enforce or defend them in litigation or post-grant proceedings, all of which could harm our business.Furthermore, the patent positions of companies engaged in the development and commercialization of biologics and pharmaceuticals are particularlyuncertain. Two cases involving diagnostic method claims and “gene patents” have recently been decided by the Supreme Court. On March 20, 2012, theSupreme Court issued a decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., or Prometheus, a case involving patent claims directed tomeasuring a metabolic product in a patient to optimize a drug dosage amount for the patient. According to the Supreme Court, the addition of well-understood, routine or conventional activity such as “administering” or “determining” steps was not enough to transform an otherwise patent ineligiblenatural phenomenon into patent eligible subject matter. On July 3, 2012, the USPTO issued guidance indicating that process claims directed to a law ofnature, a natural phenomenon or an abstract idea that do not include additional elements or steps that integrate the natural principle into the claimedinvention such that the natural principle is practically applied and the claim amounts to significantly more than the natural principle itself should be rejectedas directed to non-statutory subject matter. On June 13, 2013, the Supreme Court issued its decision in Association for Molecular Pathology v. MyriadGenetics, Inc., or Myriad, a case involving patent claims held by Myriad Genetics, Inc. relating to the breast cancer susceptibility genes BRCA1 and BRCA2.Myriad held that isolated segments of naturally occurring DNA, such as the DNA constituting the BRCA1 and BRCA2 genes, is not patent eligible subjectmatter, but that complementary DNA, which is an artificial construct that may be created from RNA transcripts of genes, may be patent eligible.We cannot assure you that our efforts to seek patent protection for our technology and products will not be negatively impacted by the decisionsdescribed above, rulings in other cases or changes in guidance or procedures issued by the USPTO. We cannot fully predict what impact the Supreme Court’sdecisions in Prometheus and Myriad may have on the ability of life science companies to obtain or enforce patents relating to their products andtechnologies in the future.Moreover, although the Supreme Court has held in Myriad that isolated segments of naturally occurring DNA are not patent-eligible subject matter,certain third parties could allege that activities that we may undertake infringe other gene-related patent claims, and we may deem it necessary to defendourselves against these claims by asserting non-infringement and/or invalidity positions, or pay to obtain a license to these claims. In any of the foregoing orin other situations involving third-party intellectual property rights, if we are unsuccessful in defending against claims of patent infringement, we could beforced to pay damages or be subjected to an injunction that would prevent us from utilizing the patented subject matter. Such outcomes could harm ourbusiness.If we are alleged to infringe intellectual property rights of third parties, our business could be harmed.Our research, development and commercialization activities may be alleged to infringe patents, trademarks or other intellectual property rights ownedby other parties. Certain of our competitors and other companies in the industry have substantial patent portfolios and may attempt to use patent litigation asa means to obtain a competitive advantage. We may be a target for such litigation. Even if our pending patent applications issue, they may relate to ourcompetitors’ activities and may therefore not deter litigation against us. The risks of being involved in such litigation may also increase as we become morevisible as a public company and move into new markets and applications for our product candidates. There may also be patents and patent applications thatare relevant to our technologies or product candidates that are unknown to us. For example, certain relevant patent applications may have been filed but notpublished. If such patents exist, or if a patent issues on any of such patent applications, that patent could be asserted against us. Third parties could bringclaims against us that would cause us to incur substantial expenses and, if the claims against us are successful, could cause us to pay substantial damages,including treble damages and attorneys’ fees for willful infringement. The defense of such a suit could also divert the attention of our management andtechnical personnel. Further, if an intellectual property infringement suit were brought against us, we could be forced to stop or delay research, developmentor sales of the product that is the subject of the suit.As a result of infringement claims, or to avoid potential claims, we may choose or be compelled to seek intellectual property licenses from thirdparties. These licenses may not be available on acceptable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to paylicense fees or royalties or both, and the rights granted to us likely would be nonexclusive, which would mean that our competitors also could obtain licensesto the same intellectual property. Ultimately, we could be prevented from commercializing a product candidate and/or technology or be forced to cease someaspect of our business operations if, as a result of actual or threatened infringement claims, we are unable to enter into licenses of the relevant intellectualproperty on acceptable terms. Further, if we attempt to modify a product candidate and/or technology or to develop alternative methods or products inresponse to infringement claims or to avoid potential claims, we could incur substantial costs, encounter delays in product introductions or interruptions insales.35 We may become involved in other lawsuits to protect or enforce our patents or other intellectual property, which could be expensive and time-consuming,and an unfavorable outcome could harm our business.In addition to the possibility of litigation relating to infringement claims asserted against us, we may become a party to other patent litigation andother proceedings, including inter partes review proceedings, postgrant review proceedings, derivation proceedings declared by the USPTO and similarproceedings in foreign countries, regarding intellectual property rights with respect to our current or future technologies or product candidates or products.The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustainthe costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Patent litigation and otherproceedings may also absorb significant management time. Uncertainties resulting from the initiation and continuation of patent litigation or otherproceedings could impair our ability to compete in the marketplace.Competitors may infringe or otherwise violate our intellectual property, including patents that may issue to or be licensed by us. As a result, we maybe required to file claims in an effort to stop third-party infringement or unauthorized use. Any such claims could provoke these parties to assertcounterclaims against us, including claims alleging that we infringe their patents or other intellectual property rights. This can be expensive, particularly fora company of our size, and time-consuming, and even if we are successful, any award of monetary damages or other remedy we may receive may not becommercially valuable. In addition, in an infringement proceeding, a court may decide that our asserted intellectual property is not valid or is unenforceable,or may refuse to stop the other party from using the technology at issue on the grounds that our intellectual property does not cover its technology. Anadverse determination in any litigation or defense proceedings could put our intellectual property at risk of being invalidated or interpreted narrowly andcould put our patent applications at risk of not issuing.If the breadth or strength of our patent or other intellectual property rights is compromised or threatened, it could allow third parties to commercializeour technology or products or result in our inability to commercialize our technology and products without infringing third-party intellectual property rights.Further, third parties may be dissuaded from collaborating with us.Interference or derivation proceedings brought by the USPTO or its foreign counterparts may be necessary to determine the priority of inventions withrespect to our patent applications, and we may also become involved in other proceedings, such as re-examination proceedings, before the USPTO or itsforeign counterparts. Due to the substantial competition in the pharmaceutical space, the number of such proceedings may increase. This could delay theprosecution of our pending patent applications or impact the validity and enforceability of any future patents that we may obtain. In addition, any suchlitigation, submission or proceeding may be resolved adversely to us and, even if successful, may result in substantial costs and distraction to ourmanagement.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some ofour confidential information could be compromised by disclosure during this type of litigation. Moreover, intellectual property law relating to the fields inwhich we operate is still evolving and, consequently, patent and other intellectual property positions in our industry are subject to change and are oftenuncertain. We may not prevail in any of these suits or other efforts to protect our technology, and the damages or other remedies awarded, if any, may not becommercially valuable. During the course of this type of litigation, there could be public announcements of the results of hearings, motions or other interimproceedings or developments. If securities analysts or investors perceive these results to be negative, the market price for our common stock could besignificantly harmed.We may not be able to protect our intellectual property rights throughout the world, which could impair our competitive position.Filing, prosecuting, defending and enforcing patents on all of our technologies, product candidates and products throughout the world would beprohibitively expensive. As a result, we seek to protect our proprietary position by filing patent applications in the United States and in select foreignjurisdictions and cannot guarantee that we will obtain the patent protection necessary to protect our competitive position in all major markets. Competitorsmay use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export infringingproducts to territories where we may obtain patent protection but where enforcement is not as strong as that in the United States. These products may competewith our current and future products in jurisdictions where we do not have any issued patents, and our patent claims or other intellectual property rights maynot be effective or sufficient to prevent them from so competing.Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legalsystems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection,which could make it difficult for us to stop the infringement of our patents or the marketing of competing products in violation of our proprietary rightsgenerally. The legal systems of certain countries make it difficult or impossible to obtain patent protection for pharmaceutical products and services.Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and could divert our efforts and attention from other aspectsof our business.36 If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.In addition to seeking patents for some of our technologies 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, corporate collaborators, outside scientificcollaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention assignment agreementswith our employees and consultants that obligate them to assign to us any inventions developed in the course of their work for us. However, we cannotguarantee that we have executed these agreements with each party that may have or have had access to our trade secrets or that the agreements we haveexecuted will provide adequate protection. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information,including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. As a result, we may be forced to bring claims against thirdparties, or defend claims that they bring against us, to determine ownership of what we regard as our intellectual property. Monitoring unauthorizeddisclosure is difficult and we do not know whether the procedures we have followed to prevent such disclosure are, or will be adequate. Enforcing a claim thata party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, somecourts inside and outside the United States may be less willing or unwilling to protect trade secrets. If any of the technology or information that we protect astrade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technologyor information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor, our competitive positionwould be harmed.If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest, and our businessmay be harmed.Our trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be infringing on other marks. As ameans to enforce our trademark rights and prevent infringement, we may be required to file trademark claims against third parties or initiate trademarkopposition proceedings. This can be expensive and time-consuming, particularly for a company of our size. In addition, in an infringement proceeding, acourt may decide that a trademark of ours is not valid or is unenforceable, or may refuse to stop the other party from using the trademark at issue. We may notbe able to protect our rights to these and other trademarks and trade names which we need to build name recognition by potential partners or customers in ourmarkets of interest. We do not currently have any registered trademarks in the United States. Any trademark applications in the United States and in otherforeign jurisdictions where we may file may not be allowed or may subsequently be opposed. In addition, other companies in the biopharmaceutical spacemay be using trademarks that are similar to ours and may in the future allege that our use of the trademark infringes or otherwise violates their trademarks.Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectivelyand our business may be harmed.Third parties may assert ownership or commercial rights to inventions we develop.Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. We have written agreements withcollaborators that provide for the ownership of intellectual property arising from our collaborations. In some instances, there may not be adequate writtenprovisions to address clearly the resolution of intellectual property rights that may arise from a collaboration. If we cannot successfully negotiate sufficientownership and commercial rights to the inventions that result from our collaborations, or if disputes otherwise arise with respect to the intellectual propertydeveloped in the course of a collaboration, we may be limited in our ability to capitalize on the market potential of these inventions.In addition, we may face claims by third parties that our agreements with employees, contractors or consultants obligating them to assign intellectualproperty to us are ineffective or are in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputesregarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such inventions.Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, ormay lose our exclusive rights in that intellectual property. Either outcome could have an adverse impact on our business.Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance MattersIf we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize, or will be delayed incommercializing, our product candidates, and our ability to generate revenue will be impaired.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 comparable authorities in other countries. Failure to obtain marketing approval for a productcandidate will prevent us from commercializing the product37 candidate. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have only limitedexperience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizationsto assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to thevarious regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval alsorequires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatoryauthority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects,toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.The process of obtaining marketing approvals, both in the United States and elsewhere, is expensive, may take many years and can vary substantiallybased upon a variety of factors, including the type, complexity and novelty of the product candidates involved. We cannot assure you that we will everobtain any marketing approvals in any jurisdiction. Changes in marketing approval policies during the development period, changes in or the enactment ofadditional statutes or regulations or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of anapplication. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept anyapplication or may decide that our data is insufficient for approval and require additional preclinical or other studies, and clinical trials. In addition, varyinginterpretations of the data obtained from preclinical testing and clinical trials could delay, limit or prevent marketing approval of a product candidate.Additionally, any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approvedproduct not commercially viable.Any product candidate for which we obtain marketing approval could be subject to marketing restrictions or withdrawal from the market, and we may besubject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products.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 submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMPrequirements, quality assurance and corresponding maintenance of records and documents and requirements regarding the distribution of samples tophysicians and recordkeeping. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated usesfor which the product may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitorthe safety or efficacy of the medicine. The FDA closely regulates the postapproval marketing and promotion of drugs to ensure that they are marketed onlyfor the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’communications regarding off-label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing.In addition, later discovery of previously unknown problems with our products, manufacturers or manufacturing processes, or failure to comply withregulatory requirements, may result in, among other things:·restrictions on such products, manufacturers or manufacturing processes;·restrictions on the labeling, marketing, distribution or use of a product;·requirements to conduct post-approval clinical trials;·warning or untitled 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 revenue;·suspension or withdrawal of marketing approvals;·refusal to permit the import or export of our products;·product seizure; and·injunctions or the imposition of civil or criminal penalties.38 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 play a primary role in the recommendation and prescription of any product candidates forwhich 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 our medicines for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include thefollowing:the federal healthcare 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 under federal and state healthcare programs such asMedicare and Medicaid;the federal False Claims Act imposes criminal and civil penalties, including 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, as amended by the Health Information Technology for Economic andClinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposesobligations, 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 any materiallyfalse statement in connection with the delivery of or payment for healthcare benefits, items or services;the federal transparency requirements under the Affordable Care Act requires manufacturers of drugs, devices, biologics and medical supplies to reportto the Department of Health and Human Services information related to physician payments and other transfers of value and physicianownership and investment interests; andanalogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claimsinvolving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state lawsrequire pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant complianceguidance 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.Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantialcosts. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or caselaw involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or anyother governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusionfrom government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physiciansor other providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal,civil or administrative sanctions, including exclusions from government funded healthcare programs.Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our productcandidates and affect the prices we may obtain.In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regardingthe healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect ourability to profitably sell any product candidates for which we obtain marketing approval.The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act, changed the way Medicare coversand pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursementmethodology based on average sales prices for physician-administered drugs. In addition, this legislation provided authority for limiting the number of drugsthat will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that wereceive for any approved products.39 While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy andpayment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from the Medicare Modernization Actmay result in a similar reduction in payments from private payors.More recently, in March 2010, President Obama signed into law the Affordable Care Act, a sweeping law intended to broaden access to healthinsurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Effective October 1,2010, the Affordable Care Act revises the definition of “average manufacturer price” for reporting purposes, which could increase the amount of Medicaiddrug rebates to states. Further, the new law imposes a significant annual fee on companies that manufacture or import branded prescription drug products.Substantial new provisions affecting compliance have also been enacted, which may affect our business practices with health care practitioners. We will notknow the full effects of the Affordable Care Act until applicable federal and state agencies issue regulations or guidance under the new law. Although it is tooearly to determine the effect of the Affordable Care Act, the new law appears likely to continue the pressure on pharmaceutical pricing, especially under theMedicare program, and may also increase our regulatory burdens and operating costs.Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities forpharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance orinterpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition,increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to morestringent product labeling and post-marketing testing and other requirements.Risks Related to Employee Matters and Managing GrowthOur future success depends on our ability to retain our senior management team and to attract, retain and motivate qualified personnel.We are highly dependent upon our senior management team, as well as the other principal members of our research and development teams. All of ourexecutive officers are employed “at will,” meaning we or they may terminate the employment relationship at any time. We do not maintain “key person”insurance for any of our executives or other employees. The loss of the services of any of these persons could impede the achievement of our research,development and commercialization objectives.Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. We maynot be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companiesfor similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. Inaddition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development andcommercialization strategy. Our consultants and advisors, may be employed by employers other than us and may have commitments under consulting oradvisory contracts with other entities that may limit their availability to us.We expect to expand our operations, and may encounter difficulties in managing our growth, which could disrupt our business.We expect to expand the scope of our operations, particularly in the areas of drug development, regulatory affairs and sales and marketing. To manageour anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities andcontinue to recruit and train additional qualified personnel. We may not be able to effectively manage the expected expansion of our operations or recruitand train additional qualified personnel. Moreover, the expected expansion of our operations may lead to significant costs and may divert our managementand business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.In the future, we may enter into transactions to acquire other businesses, products or technologies. Because we have not made any acquisitions to date,our ability to do so successfully is unproven. If we do identify suitable candidates, we may not be able to make such acquisitions on favorable terms, or at all.Any acquisitions we make may fail to strengthen our competitive position, and these transactions may be viewed negatively by customers or investors. Wemay decide to incur debt in connection with an acquisition or issue our common stock or other equity securities to the stockholders of the acquired company,which would reduce the percentage ownership of our existing stockholders. We could incur losses resulting from undiscovered liabilities of the acquiredbusiness that are40 not covered by the indemnification we may obtain from the seller. In addition, we may not be able to successfully integrate the acquired personnel,technologies and operations into our existing business in an effective, timely and non-disruptive manner. Acquisitions may also divert management attentionfrom day-to-day responsibilities, increase our expenses and reduce our cash available for operations and other uses. We cannot predict the number, timing orsize of future acquisitions or the effect that any such transactions might have on our operating results.Risks Related to Our Common StockThe trading price of our common stock is likely to be volatile, and purchasers of our common stock could incur substantial losses.Our stock price has fluctuated in the past and is likely to be volatile in the future. From the date of our IPO through March 20, 2015, the reported saleprice of our common stock has fluctuated between $6.51 and $33.48 per share. The stock market in general and the market for biotechnology companies inparticular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of thisvolatility, investors may experience losses on their investment in our common stock. The market price for our common stock may be influenced by manyfactors, including:the success of competitive products or technologies;regulatory actions with respect to our product candidates or our competitors’ product and product candidates;announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;results of clinical trials of our product candidates or those of our competitors;regulatory or legal developments in the United States and other countries;developments or disputes concerning patent applications, issued patents or other proprietary rights;the recruitment or departure of key personnel;the level of expenses related to any of our product candidates or clinical development programs;the results of our efforts to in-license or acquire additional products or product candidates;actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;variations in our financial results or those of companies that are perceived to be similar to us;fluctuations in the valuation of companies perceived by investors to be comparable to us;inconsistent trading volume levels of our shares;announcement or expectation of additional financing efforts;sales of our common stock by us, our insiders or our other stockholders;changes in the structure of healthcare payment systems;market conditions in the pharmaceutical and biotechnology sectors;general economic, industry and market conditions; andthe other factors described in this “Risk Factors” section.In addition, in the past, stockholders have initiated class action lawsuits against companies following periods of volatility in the market prices of thesecompanies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources.Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investorsfrom influencing significant corporate decisions.Our executive officers, directors and current beneficial owners of 5% or more of our common stock, in the aggregate, beneficially own a significantpercentage of our outstanding common stock. These persons, acting together, will be able to significantly influence all matters requiring stockholderapproval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of this group ofstockholders may not coincide with the interests of other stockholders.41 Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may causeour stock price to fluctuate or decline.We expect our operating results to be subject to quarterly fluctuations and will be affected by numerous factors, including:our ability to successfully develop, obtain regulatory approvals, and market and sell CB-839 and our other product candidates;the success of competitive products or technologies;results of clinical trials of our product candidates or those of our competitors;developments or disputes concerning patent applications, issued patents or other proprietary rights;the recruitment or departure of key personnel;the level of expenses related to any of our product candidates or clinical development programs;the results of our efforts to discover, develop, acquire or in-license additional product candidates or medicines;actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;variations in our financial results or those of companies that are perceived to be similar to us;market conditions in the pharmaceutical and biotechnology sectors;general economic, industry and market conditions; andthe 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.If securities or industry analysts do not publish research, or publish unfavorable research, about our business, our stock price and trading volume coulddecline.The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or ourbusiness, our market and our competitors. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our sharesor change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularlypublish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.We will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States,which may harm our operating results.As a public company listed in the United States, we will incur significant additional legal, accounting and other expenses. In addition, changing laws,regulations and standards relating to corporate governance and public disclosure, including regulations implemented by the Securities and ExchangeCommission, or the SEC, and the NASDAQ Global Market, may increase legal and financial compliance costs and make some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, and as a result, their application in practice may evolve over time asnew guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations and standards, andthis investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generatingactivities to compliance activities. If, notwithstanding our efforts to comply with new laws, regulations and standards, we fail to comply, regulatoryauthorities may initiate legal proceedings against us, and our business may be harmed.Further, failure to comply with these laws, regulations and standards might also make it more difficult for us to obtain certain types of insurance,including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs toobtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on ourBoard of Directors, on committees of our Board of Directors or as members of senior management.42 We do not anticipate paying any cash dividends on our common stock so any returns will be limited to changes in the value of our common stock.We have never declared or paid cash dividends on our common stock. We currently intend to retain our future earnings, if any, to fund thedevelopment and growth of our business. In addition, the terms of any existing or future credit facility may restrict our ability to pay dividends. Any return tostockholders will therefore be limited to the increase, if any, of our stock price.We are an “emerging growth company,” and we expect to comply with the reduced disclosure requirements applicable to emerging growth companies,which could make our common stock less attractive to investors.We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012, and for as long aswe continue to be an “emerging growth company,” we expect to take advantage of exemptions from various reporting requirements applicable to otherpublic companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestationrequirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptionsfrom the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments notpreviously approved. We will continue to be an “emerging growth company” until the earlier of (1) the last day of the fiscal year (a) following the fifthanniversary of the closing of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a largeaccelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and(2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We cannot predict if investors willfind our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of anychoices to reduce future disclosure, there may be a less active trading market for our common stock, and our stock price may be more volatile.If we are unable to maintain proper and effective internal controls over financial reporting, the accuracy and timeliness of our financial reporting may beadversely affected.Effective internal controls are necessary for us to provide reliable financial reports and to protect from fraudulent, illegal or unauthorized transactions.If we cannot provide effective controls and reliable financial reports, our business and operating results could be harmed. We have in the past discovered, andmay in the future discover, areas of our internal controls that need improvement. For example, in connection with the audit of our financial statements frominception through the year ended December 31, 2013, we and our independent public accounting firm identified a material weakness in our internal controlover financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there isa reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Thematerial weakness related to a deficiency in the operation of our internal controls over the accounting for a non-routine, complex equity transaction, whichresulted in material post-closing adjustments to the convertible preferred stock and additional paid-in capital balances in the financial statements for theyears ended December 31, 2011 and 2012. Specifically, we did not properly account for a reduction in the liquidation preference amount the holders of ourSeries A preferred stock would be entitled to receive in the event we consummate a change in control.We have implemented changes to our disclosure controls and procedures and internal control over financial reporting to remediate the materialweakness identified above. We have strengthened the operation of our internal controls over the accounting for non-routine, complex equity transactions,including increasing the depth and experience within our accounting and finance organization, as well as designing and implementing improved processesand internal controls to identify such matters. We have hired additional personnel to build our financial management and reporting infrastructure, includingthe hiring of our Chief Financial Officer and Vice President, Finance, in the second quarter of 2014. While we believe, we have remediated this materialweakness, neither we nor our independent registered public accounting firm has performed an evaluation of our internal control over financial reportingduring any period in accordance with the provisions of the Sarbanes-Oxley Act. In light of the material weakness that was identified as a result of the limitedprocedures performed, we believe that it is possible that, had we and our independent registered public accounting firm performed an evaluation of ourinternal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses or significant controldeficiencies may have been identified.If material weaknesses or control deficiencies occur in the future, we may be unable to report our financial results accurately on a timely basis, whichcould cause our reported financial results to be materially misstated and result in the loss of investor confidence and cause the market price of our commonstock to decline.We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectivenessof our internal control over financial reporting for the fiscal year ending December 31, 2015. This assessment will need to include disclosure of any materialweaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not berequired to attest to the effectiveness of our internal control43 over financial reporting until our first annual report required to be filed with the SEC following the later of the date we are deemed to be an “accelerated filer”or a “large accelerated filer,” each as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act, or the date we are no longer an“emerging growth company,” as defined in the JOBS Act. We will be required to disclose changes made in our internal control and procedures on a quarterlybasis. To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controlsand procedures and hiring accounting or internal audit staff. We have begun the costly and challenging process of compiling the system and processingdocumentation necessary to perform the evaluation needed to comply with Section 404, when applicable, and we may not be able to complete ourevaluation, testing and any required remediation in a timely fashion.Future sales of shares by existing stockholders could cause our stock price to decline.Sales of a substantial number of shares of our common stock in the public market, or the perception that the sales might occur, could depress themarket price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict theeffect that sales may have on the prevailing market price of our common stock.Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our managementor hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result.There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire, or attempt to acquire, controlof our company, even if a change in control was considered favorable by our stockholders.Our charter documents also contain other provisions that could have an anti-takeover effect, such as:·establishing a classified Board of Directors so that not all members of our Board of Directors are elected at one time;·permitting the Board of Directors to establish the number of directors and fill any vacancies and newly created directorships;·providing that directors may only be removed for cause;·prohibits cumulative voting for directors;·requiring super-majority voting to amend some provisions in our certificate of incorporation and bylaws;·authorizing the issuance of “blank check” preferred stock that our Board of Directors could use to implement a stockholder rights plan;·eliminating the ability of stockholders to call special meetings of stockholders; and·prohibiting stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders.Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law,which prohibit a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the dateof the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in aprescribed manner. Any provision in our certificate of incorporation or our bylaws or Delaware law that has the effect of delaying or deterring a change incontrol could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that someinvestors are willing to pay for our common stock.Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantiallyall disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or ourdirectors, officers or employees.Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for anyderivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arisingpursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our bylaws; or any action asserting a claimagainst us that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forumthat 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. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be44 inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm ourbusiness and financial condition.Item 1B.Unresolved Staff Comments.None.Item 2.Properties.Our headquarters are located at 343 Oyster Point Blvd., Suite 200, South San Francisco, California 94080 under a lease that expires in November 2017with an option to extend another two years to November 2019. We have subleased a portion of this laboratory space to another biotechnology companyunder a two-year sublease agreement. We believe that our existing facilities are adequate for our current needs, as the facilities have sufficient laboratoryspace to house additional scientists to be hired as we expand.Item 3.Legal Proceedings.From time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Our managementbelieves that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our resultsof operations, financial condition or cash flows.Item 4.Mine Safety Disclosures.Not applicable. 45 PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Price Range of Common StockOur common stock commenced trading on the NASDAQ Global Select Market under the symbol "CALA" on October 2, 2014. Prior to that date, therewas no public trading market for our common stock. The following table sets forth, for the periods indicated, the high and low reported sales prices of ourcommon stock as reported on the NASDAQ Global Select Market: 2014High Low Fourth Quarter (from October 2, 2014)$33.48 $6.51 As of March 20, 2015, there were 72 holders of record of our common stock.Stock Price Performance GraphThe following stock performance graph compares our total stock return with the total return for (i) the NASDAQ Composite Index and the (ii) theNASDAQ Biotechnology Index for the period from October 2, 2014 (the date our common stock commenced trading on the NASDAQ Global Market)through December 31, 2014. The figures represented below assume an investment of $100 in our common stock at the closing price of $9.41 on October 2,2014 and in the NASDAQ Composite Index and the NASDAQ Biotechnology Index on October 2, 2014 and the reinvestment of dividends into shares ofcommon stock. The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of possible future performance of ourcommon stock. $100 investment in stock or indexTickerOctober 2, 2014 December 31, 2014 Calithera Biosciences, Inc.CALA$100.00 $214.67 NASDAQ Composite IndexIXIC$100.00 $106.90 NASDAQ Biotechnology IndexNBI$100.00 $113.00 This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, asamended, or the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any ofour filings under the Securities Act of 1933, as amended, or the Securities Act, whether made before or after the date hereof and irrespective of any generalincorporation language in any such filing. 46 Dividend PolicyWe have never declared or paid cash dividends on our capital stock. We intend to retain all available funds and any future earnings, if any, to fund thedevelopment and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination relatedto dividend policy will be made at the discretion of our Board of Directors.Recent Sale of Unregistered SecuritiesFrom January 1, 2014 through December 31, 2014, we sold and issued the following unregistered securities, which share numbers have been adjusted,as appropriate, for the 48-to-1 reverse stock split that occurred on September 19, 2014:(1)Prior to filing our registration statement on Form S-8 in October 2014, we sold an aggregate of 155,532 shares of common stock to employees,directors and consultants for cash consideration in the aggregate amount of $249,000 upon the exercise of stock options and stock awards.(2)Prior to filing our registration statement on Form S-8 in October 2014, we granted stock options and stock awards to employees, directors andconsultants under our 2010 Equity Incentive Plan covering an aggregate of 547,160 shares of common stock, at an average exercise price of$5.05 per share. Of these, options covering an aggregate of 1,885 shares were cancelled without being exercised.(3)In July 2014, we issued 1,902,583 shares of our Series D preferred stock, par value $0.0001, to accredited investors at a price per share of $8.41for an aggregate purchase price of $16.0 million. Upon the closing of our initial public offering, these shares converted into 1,902,583 sharesof common stock.The offers, sales and issuances of the securities described in paragraphs (1) and (2) above were deemed to be exempt from registration under theSecurities Act under Rule 701 promulgated under the Securities Act as offers and sale of securities pursuant to certain compensatory benefit plans andcontracts relating to compensation in compliance with Rule 701.The offers, sales, and issuances of the securities described in paragraph (3) above were deemed to be exempt from registration under the Securities Actin reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. Therecipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with anydistribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactionswas an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.Use of Proceeds from Registered SecuritiesOn October 7, 2014, we closed our IPO, in which we issued and sold 8,000,000 shares of our common stock at a public offering price of $10.00 pershare, for net proceeds of $71.6 million, after deducting underwriting discounts and commissions of $5.6 million and estimated offering expenses of $2.8million payable by the Company. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii)any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates. The offer and sale of all of the shares in the IPO wereregistered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-198355), which was declared effective by the SEC onOctober 1, 2014. Citigroup Global Markets and Leerink Partners acted as joint book-running managers for the offering. Wells Fargo Securities and JMPSecurities acted as co-managers for the offering. Following the sale of the shares in connection with the closings of the IPO, the offering terminated.We have been using and will continue to use the net offering proceeds to advance our product candidates through clinical trial programs and forworking capital and general corporate purposes. No such payments were made directly or indirectly by us to directors, officers or persons owning ten percentor more of our common stock.There has been no material change in the planned use of proceeds from our IPO as described in our prospectus dated October 1, 2014, filed with theSEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended.Issuer Purchases of Equity SecuritiesNone.47 Item 6.Selected Financial Data.The statement of operations data for the years ended December 31, 2014, 2013 and 2012 and the balance sheet data as of December 31, 2014 and 2013are derived from our audited financial statements included elsewhere in this report. The selected balance sheet data as of December 31, 2012 is derived fromour audited financial statements which are not included in this report.Our historical results are not necessarily indicative of the results to be expected in the future. You should read the selected financial data below inconjunction with the section of this report entitled “Item 7. Management’s discussion and analysis of financial condition and results of operations” and ourfinancial statements and the related notes included in this Annual Report on Form 10-K. Year Ended December 31, 2014 2013 2012 Statements of Operation Data:(in thousands) Operating expenses: Research and development$16,367 $9,900 $6,558 General and administrative 5,354 2,478 1,417 Total operating expenses 21,721 12,378 7,975 Loss from operations (21,721) (12,378) (7,975)Other income 9 1 — Net loss (21,712) (12,377) (7,975)Gain on extinguishment of convertible preferred stock — — 2,889 Net loss attributable to common stockholders$(21,712) $(12,377) $(5,086)Net loss per share attributable to common stockholders, basic and diluted$(4.67) $(131.53) $(366.13)Shares used in computing net loss per share attributable to commonstockholders, basic and diluted 4,652 94 14 Year Ended December 31, 2014 2013 2012 Balance Sheet Data:(in thousands) Cash and cash equivalents$101,969 $33,820 $2,205 Working capital 99,742 32,825 1,363 Total assets 104,770 34,844 3,060 Convertible preferred stock — 54,282 10,722 Accumulated deficit (51,854) (30,142) (17,765)Total stockholders' equity (deficit) 100,366 (20,813) (8,571) 48 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.Some of the statements under in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to ourmanagement and involve significant elements of subjective judgment and analysis. Words such as “may,” “will,” “should,” “could,” “would,” “expect,”“plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “seek”“target,” “goals,”“intend,” variations of such words, and similarexpressions are intended to identify forward-looking statements. Our actual results and the timing of events may differ significantly from the resultsdiscussed in the forward-looking statements. Factors that might cause such a difference include those discussed under the caption “Special Note RegardingForward Looking Statements” and in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. These and many other factors could affect ourfuture financial and operating results. We undertake no obligation to update any forward-looking statement to reflect events after the date of this AnnualReport.OverviewWe are a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumormetabolism and tumor immunology targets for the treatment of cancer. Tumor metabolism and tumor immunology have emerged as promising new fields forcancer drug discovery, and recent clinical successes with therapeutic agents in each field have demonstrated the potential to create fundamentally newtherapies for cancer patients. Our lead product candidate, CB-839, is an internally discovered, first-in-class inhibitor of glutaminase, a critical enzyme intumor metabolism. We are currently evaluating CB-839 in three Phase 1 clinical trials in solid and hematological tumors. Our lead preclinical program intumor immunology is directed at developing inhibitors of the enzyme arginase and may provide a first-in-class therapeutic agent for this novel target. Ourongoing research efforts are focused on discovering additional product candidates against novel tumor metabolism and immunology targets.The field of tumor metabolism seeks to exploit the unique ways in which cancer cells take up and utilize nutrients in order to grow and survive. Ourlead product candidate in tumor metabolism, CB-839, takes advantage of the pronounced dependency many cancers have on the nutrient glutamine forgrowth and survival. CB-839 inhibits glutaminase, an enzyme required by cancer cells to utilize glutamine effectively. We are currently conducting threePhase 1 clinical trials of CB-839 in the United States in patients with solid tumors, leukemias, lymphomas and multiple myeloma. The purpose of these trialsis to evaluate the safety of CB-839 both as a single agent and in combination with approved therapies and to seek preliminary evidence of efficacy. Pendinginput from the FDA on the results of our Phase 1 trials and Phase 2 trial protocols, we plan to initiate one or more Phase 2 clinical trials of CB-839 in 2016.We currently hold all commercial rights to CB-839.Our second program in tumor metabolism is focused on the hexokinase II enzyme. A defining characteristic of most cancer cells is their increaseduptake of glucose. Cancer cells use glucose in a different manner than normal cells, but an obligate first step in all glucose utilizing pathways isphosphorylation of glucose by the enzyme hexokinase. Due to their higher glucose needs, cancer cells frequently increase the level of this critical enzyme,specifically the isoform hexokinase II. We believe inhibitors of hexokinase II will significantly impede the ability of cancer cells to survive and proliferateand may lead to new approaches in treating cancer. Our new program in hexokinase II inhibitors was in-licensed from TransTech Pharma and we seek toidentify and advance a drug candidate into clinical development as quickly as possible. We will provide additional details on our development plans andtimelines in the near future as we undertake pre-clinical studies to profile our portfolio of hexokinase II inhibitors.The field of tumor immunology seeks to activate the body’s own immune system to attack and kill cancer cells. Our preclinical program in tumorimmunology is focused on developing selective inhibitors of the enzyme arginase. Arginase depletes arginine, a nutrient that is critical for the activation,growth and survival of the body’s cancer-fighting immune cells. We believe that inhibitors of arginase can promote an anti-tumor immune response byrestoring arginine levels, thereby allowing activation of the body’s cancer-fighting immune cells. We are currently optimizing arginase inhibitors with theaim of submitting an IND application to the FDA in early 2016.Since our inception in 2010, we have devoted substantially all of our resources to identifying and developing CB-839, advancing our preclinicalprograms, conducting clinical trials and providing general and administrative support for these operations. We have not recorded revenue from product sales,collaboration activities or any other source. We have funded our operations to date primarily from the issuance and sale of convertible preferred stock and theinitial public offering, or IPO, of our common stock that occurred in October 2014. In connection with the IPO, we sold 8,000,000 shares of common stock forproceeds of $71.6 million net of underwriting discounts and commissions and offering expenses.We have never been profitable and have incurred net losses in each year since inception. Our net losses were $21.7 million, $12.4 million and $8.0million for 2014, 2013 and 2012. As of December 31, 2014 we had an accumulated deficit of $51.9 million. Substantially all of our net losses have resultedfrom costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.49 We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. We expect our expenses willincrease substantially in connection with our ongoing activities, as we:·advance product candidates through clinical trials;·pursue regulatory approval of product candidates;·operate as a public company;·continue our preclinical programs and clinical development efforts;·continue research activities for the discovery of new product candidates; and·manufacture supplies for our preclinical studies and clinical trials.Critical Accounting Polices and EstimatesOur 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 United States generally accepted accounting principles, or U.S. GAAP. The preparation of these financial statements requires usto make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dateof the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and onvarious other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carryingvalue of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions orconditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policiesrelate to the more significant areas involving management’s judgments and estimates.Accrued Research and Development CostsWe record accrued expenses for estimated costs of our research and development activities conducted by third-party service providers, which includethe conduct of preclinical studies and clinical trials and contract manufacturing activities. We record the estimated costs of research and developmentactivities based upon the estimated amount of services provided but not yet invoiced, and include these costs in accrued liabilities in the balance sheet andwithin research and development expense in the statement of operations and comprehensive loss. These costs are a significant component of our research anddevelopment expenses. We record accrued expenses for these costs based on the estimated amount of work completed and in accordance with agreementsestablished with these third parties.We estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage ofcompletion of the services and the agreed-upon fee to be paid for such services. We make significant judgments and estimates in determining the accruedbalance in each reporting period. As actual costs become known, we adjust our accrued estimates. Although we do not expect our estimates to be materiallydifferent from amounts actually incurred, our understanding of the status and timing of services performed, the number of patients enrolled, and the rate ofpatient enrollment may vary from our estimates and could result in us reporting amounts that are too high or too low in any particular period. Our accruedexpenses are dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers.To date, there have been no material differences from our accrued expenses to actual expenses.Stock-Based CompensationWe recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant,net of estimated forfeitures. We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which isgenerally the vesting period of the respective awards.The Black-Scholes option-pricing model requires the use of highly subjective assumptions, which determine the fair value of stock-based awards.These assumptions include:Expected Term. Our expected term represents the period that our stock-based awards are expected to be outstanding and is determined using thesimplified method (based on the mid-point between the vesting date and the end of the contractual term).Expected Volatility. Since we have only been publicly traded for a short period and do not have adequate trading history for our common stock, theexpected volatility was estimated based on the average volatility for comparable publicly traded50 biopharmaceutical companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based ontheir similar size, stage in the life cycle, or area of specialty.Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periodscorresponding with the expected term of option.Expected Dividend. We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, weused an expected dividend yield of zero.In addition to the Black-Scholes assumptions, we estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue toevaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior, and other factors. The impact fromany forfeiture rate adjustment would be recognized in full in the period of adjustment and if the actual number of future forfeitures differs from our estimates,we might be required to record adjustments to stock-based compensation in future periods.Prior to our IPO in October 2014, the fair value of the shares of common stock underlying our share-based awards were estimated on each grant date byour Board of Directors. In order to determine the fair value of our common stock underlying option grants, our Board of Directors considered, among otherthings, timely valuations of our common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provide by the AmericanInstitute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Given the absenceof a public trading market for our common stock, our Board of Directors exercised reasonable judgment and considered a number of objective and subjectivefactors to determine the best estimate of the fair value of our common stock, including our stage of development; progress of our research and developmentefforts; the rights, preferences and privileges of our preferred stock relative to those of our common stock; equity market conditions affecting comparablepublic companies and the lack of marketability of our common stock. After the closing of our IPO, our Board of Directors determines the fair value of eachshare of underlying common stock based on the closing price of our common stock as reported by the NASDAQ Global Market on the date of grant.Income TaxesAs of December 31, 2014, we had approximately $48.6 million and $48.0 million, respectively, of federal and state operating loss carryforwardsavailable to reduce future taxable income that will begin to expire in 2030 for federal and state tax purposes.As of December 31, 2014, we also had research and development tax credit carryforwards of approximately $1.6 million and $1.4 million,respectively, for federal and state purposes available to offset future taxable income tax. If not utilized, the federal carryforwards will expire in variousamounts beginning in 2030, and the state credits can be carried forward indefinitely.Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations providedby the Internal Revenue Code of 1986, as amended, and similar state provisions. We have performed an analysis to determine whether an "ownership change"has occurred from inception to December 31, 2014. Based on this analysis, management has determined that there was an ownership change. The annuallimitation may result in the expiration of net operating losses and credits before utilization, however, we do not believe any of our net operating losses andresearch and development credits are limited by this potential ownership change.Financial Operations OverviewResearch and Development ExpensesResearch and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates.We recognize all research and development costs as they are incurred. Research and development expenses consist primarily of the following:·employee-related expenses, which include salaries, benefits and stock-based compensation;·expenses incurred under agreements with clinical trial sites that conduct research and development activities on our behalf;·laboratory and vendor expenses related to the execution of preclinical studies and clinical trials;·contract manufacturing expenses, primarily for the production of clinical supplies;·facilities and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation andamortization expense and other supplies.51 The largest component of our total operating expenses has historically been our investment in research and development activities including theclinical development of our product candidates. We allocate to research and development expenses the salaries, benefits, stock-based compensation expense,and indirect costs of our clinical and preclinical programs on a program-specific basis, and we include these costs in the program-specific expenses. Thefollowing table shows our research and development expenses for 2014, 2013 and 2012: Years Ended December 31, 2014 2013 2012 (in thousands)Development candidate: CB-839$12,381 $5,283 $— Preclinical and research: CB-839 - 3,849 5,791 Arginase inhibitors 3,461 - - Other preclinical and research 525 768 767 Total preclinical and research 3,986 4,617 6,558 Total$16,367 $9,900 $6,558 We expect our research and development expenses will increase during the next few years as we advance our product candidates into and throughclinical trials, pursue regulatory approval of our product candidates, which will require a significant investment in contract manufacturing and inventorybuild-up related costs. In December 2014, we entered into an exclusive license agreement with Symbioscience to develop and commercialize their portfolioof arginase inhibitors and in March 2015, we entered into an exclusive license agreement with TransTech to develop and commercialize their hexokinase IIinhibitors. These license agreements will result in higher research and development expenses in the future.The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achievingmarketing approval for our product candidates. The probability of success of our product candidates may be affected by numerous factors, including clinicaldata, competition, manufacturing capability and commercial viability. As a result, we are unable to determine the duration and completion costs of ourresearch and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our productcandidates.General and Administrative ExpensesGeneral and administrative expenses consist of personnel costs, allocated expenses and other expenses for outside professional services, includinglegal, audit and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. Allocated expenses consist of facilities andother allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation and amortization expense and othersupplies. We expect to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulationsapplicable to companies listed on a national securities exchange and costs related to compliance and reporting obligations pursuant to the rules andregulations of the SEC. In addition, we have incurred and expect to continue to incur increased expenses related to additional insurance, investor relationsand other increases related to needs for additional human resources and professional services associated with being a public company.Results of OperationsComparison of the Years Ended December 31, 2014 and 2013 Years Ended December 31, Change 2014 2013 $ % (in thousands, except percentages) Operating expenses: Research and development $16,367 $9,900 $6,467 65%General and administrative 5,354 2,478 2,876 116%Total operating expenses 21,721 12,378 9,343 75%Loss from operations (21,721) (12,378) (9,343) 75%Other income 9 1 8 * Net loss $(21,712) $(12,377) $(9,335) 75%52 * Percentage not meaningful.Research and DevelopmentResearch and development expenses increased $6.5 million, or 65%, from $9.9 million for 2013 to $16.4 million for 2014. The increase was due to anincrease of $3.5 million in clinical trial related expenses in connection with our CB-839 Phase 1 clinical trials which began enrolling patients in February2014, an increase of $1.9 million in personnel-related costs primarily as a result of higher headcount, an increase of $0.8 million in costs related to CB-839development and manufacturing to support our Phase 1 clinical trials, and $0.3 million related to our licensing arrangement for arginase inhibitors program.General and AdministrativeGeneral and administrative expenses increased $2.9 million, or 116%, from $2.5 million for 2013, to $5.4 million for 2014. The increase was due to anincrease of $1.7 million in personnel-related costs as a result of higher headcount, salary increases and stock-based compensation expense, an increase of $0.6million in professional services costs primarily related to audit fees and an increase of $0.5 million in facility costs due to our office expansion in the secondhalf of 2013.Comparison of the Years Ended December 31, 2013 and 2012 Years Ended December 31, Change 2013 2012 $ % (in thousands, except percentages) Operating expenses: Research and development $9,900 $6,558 $3,342 51%General and administrative 2,478 1,417 1,061 75%Total operating expenses 12,378 7,975 4,403 55%Loss from operations (12,378) (7,975) (4,403) 55%Other income 1 - 1 * Net loss $(12,377) $(7,975) $(4,402) 55% * Percentage not meaningful.Research and DevelopmentResearch and development expenses increased $3.3 million, or 51%, from $6.6 million for 2012 to $9.9 million for 2013. The increase was due to an increaseof $2.1 million in external costs related to CB-839 development activities and manufacturing to support our Phase 1 clinical trials, an increase of $0.7million in connection with start-up activities to support our CB-839 Phase 1 clinical trials, an increase of $0.5 million in personnel-related costs as a result ofincreased headcount and an increase of $0.2 million in professional services costs. These increases were partially offset by a decrease of $0.4 million inlaboratory supplies costs.General and AdministrativeGeneral and administrative expenses increased $1.1 million, or 75%, from $1.4 million for 2012, to $2.5 million for 2013. The increase was due to anincrease of $0.9 million in professional consulting expenses in connection with our market evaluation of CB-839, our evaluation of potential partnershipopportunities and accounting services. In addition, facility-related costs increased by $0.1 million due to our office expansion in the second half of 2013.Liquidity and Capital ResourcesAs of December 31, 2014, we had cash and cash equivalents totaling $102.0 million. In connection with our IPO that closed in October 2014, wereceived cash proceeds of $71.6 million, net of underwriters’ discounts and commissions and expenses paid by us. Prior to the IPO, our operations have beenfinanced primarily by net proceeds from the sale of shares of our preferred stock.53 Our primary uses of cash are to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses isimpacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.We believe that our existing cash and cash equivalents as of December 31, 2014 will be sufficient for us to meet our current operating plan for at leastthe next twelve months. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is aforward-looking statement that involves risks and uncertainties, and actual results could vary materially. In order to complete the process of obtainingregulatory approval for our product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary tocommercialize our product candidates, if approved, we will require substantial additional funding.We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our availablecapital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization ofpharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend onmany factors, including, but not limited to:the timing and costs of our planned clinical trials for our product candidates;the timing and costs of our planned preclinical studies of our product candidates;our success in establishing and scaling commercial manufacturing capabilities;the number and characteristics of product candidates that we pursue;the outcome, timing and costs of seeking regulatory approvals;subject to receipt of regulatory approval, revenue received from commercial sales of our product candidates;the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish;the amount and timing of any payments we may be required to make in connection with the licensing, filing, prosecution, maintenance, defense andenforcement of any patents or patent applications or other intellectual property rights; andthe extent to which we in-license or acquire other products and technologies.We plan to continue to fund our operations and capital funding needs through equity and/or debt financing. We may also consider collaborations orselectively partnering for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders.The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financingcovenants that would restrict our operations. If we are not able to secure adequate additional funding we may be forced to make reductions in spending,extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could harm ourbusiness, results of operations and future prospects.The following table summarizes our cash flows for the periods indicated: Years Ended December 31, 2014 2013 2012 (in thousands) Cash used in operating activities $(19,231) $(11,837)$(6,990)Cash used in investing activities $(486) $(173)$(49)Cash provided by financing activities $87,866 $43,625 $5,966 Cash Flows from Operating ActivitiesCash used in operating activities for the year ended December 31, 2014 was $19.2 million, consisting of a net loss of $21.7 million, which was offsetby non-cash charges $0.4 million for depreciation and amortization expense and $0.7 million for stock-based compensation. The change in our net operatingassets and liabilities was primarily due to a $1.5 million increase in prepaid expenses and other current assets primarily related to our prepayment of clinicaltrial activities and directors and officers liability insurance, a $2.6 million increase in accounts payable and accrued liabilities related to an increase in ourresearch and development activities, and a $0.4 million increase in deferred rent.Cash used in operating activities for 2013 was $11.8 million, consisting of a net loss of $12.4 million, which was offset in part by non-cash charges of$0.3 million for depreciation and amortization expense and $70,000 for stock-based compensation. The change54 in our net operating assets and liabilities was due to a $0.4 million increase in our accounts payable and accrued liabilities related to an increase in ourresearch and development activities and an increase of $0.3 million in prepaid expenses and other current assets related to our prepayment for clinical trialactivities.Cash used in operating activities for 2012 was $7.0 million, consisting of a net loss of $8.0 million, which was offset in part by non-cash charges of$0.3 million for depreciation and amortization expense and $31,000 for stock-based compensation. The change in our net operating assets and liabilities wasdue primarily to an increase of $0.7 million in our accounts payable and accrued liabilities related to an increase in our research and development activities.Cash Flows from Investing ActivitiesCash used in investing activities for the year ended December 31, 2014 was $0.5 million and was related the purchase of property and equipment of$0.6 million, offset by the reduction in restricted cash of $70,000. Purchases of property and equipment were primarily related to leasehold improvements inconnection with our office expansion.Cash used in investing activities for the years ended December 31, 2013 and 2012, was related to our purchase of property and equipment of $0.2million and $49,000, respectively. Purchases of property and equipment were primarily related to the expansion of our laboratory and related equipment.Cash Flows from Financing ActivitiesCash provided by financing activities for the year ended December 31, 2014 was $87.9 million and was related to net proceeds of $71.6 million fromthe sale of our common stock, upon our initial public offering in October 2014, $16.0 million in net proceeds from the sale and issuance of preferred stock,and $0.3 million from the issuance of common stock upon the exercise of stock options.Cash provided by financing activities for 2013 and 2012 was primarily related to net proceeds from the sale and issuance of preferred stock of $43.6million and $6.0 million, respectively.Contractual Obligations and Other CommitmentsThe following table summarizes our contractual obligations as of December 31, 2014: Payments Due By Period Contractual Obligations:Less Than 1 Year 1 to 3 Years 3 to 5 Years More Than 5 Years Total (in thousands) Operating lease obligations (1)$969 $1,873 $- $- $2,842 Less: sublease income (2) (154) (92) - - (246) Total contractual obligations (3)$815 $1,781 $- $- $2,596 (1)Represents future minimum lease payments under the non-cancelable lease for our headquarters in South San Francisco, California. The minimum lease payments abovedo not include any related common area maintenance charges or real estate taxes.(2)In September 2014, we entered into a non-cancelable sublease agreement for a portion of our facilities, through July 2016.(3)We enter into agreements in the normal course of business with organizations for collaborations or in-licensing arrangements, contract research organizations for clinicaltrials and vendors for preclinical studies and other services and products for operating purposes which are cancelable at any time by us, generally upon 30 to 60 daysprior written notice. These payments are not included in this table of contractual obligations.Off-Balance Sheet ArrangementsDuring 2014, 2013, and 2012 we did not have any off-balance sheet arrangements.JOBS Act Accounting ElectionWe are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new orrevised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We haveirrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new orrevised accounting standards as other public companies that are not emerging growth companies.55 Recent Accounting PronouncementsIn June 2014, the Financial Accounting Standards Board, or FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination ofCertain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10simplifies the accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments related tothe elimination of the inception-to-date information and other disclosure requirement of Topic 915 should be applied retrospectively, and are effective forannual reporting periods beginning after December 15, 2014, and interim periods therein. We early adopted this guidance and, accordingly, there is noinception to date information presented in the financial statements included elsewhere in this Annual Report.In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide relatedfootnote disclosures. In doing so, companies will have reduced diversity in the timing and content of footnote disclosures than under today’s guidance. ASU2014-15 is effective for the Company in the first quarter of 2016 with early adoption permitted. We are currently assessing the impact the adoption of ASU2014-15 will have on the financial statements.Item 7A.Quantitative and Qualitative Disclosures About Market Risk.We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. We had cash and cashequivalents of $102.0 million as of December 31, 2014, which consist of bank deposits and money market funds. Such interest-earning instruments carry adegree of interest rate risk; however, historical fluctuations in interest income have not been significant. We had no outstanding debt as of December 31,2014. 56 Item 8.Financial Statements and Supplementary Data.CALITHERA BIOSCIENCES, INC.INDEX TO FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm 58Balance Sheets 59Statements of Operations and Comprehensive Loss 60Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) 61Statements of Cash Flows 62Notes to Financial Statements 63 57 Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Calithera Biosciences, Inc. We have audited the accompanying balance sheets of Calithera Biosciences, Inc. as of December 31, 2014 and 2013, and the related statements of operationsand comprehensive loss, convertible preferred stock and stockholder’s equity (deficit) and cash flows for each of the three years in the period endedDecember 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesefinancial 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. We were not engagedto perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reportingas a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Calithera Biosciences, Inc. atDecember 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, inconformity with U.S. generally accepted accounting principles./s/ Ernst & Young LLPRedwood City, CaliforniaMarch 27, 2015 58 Calithera Biosciences, Inc.Balance Sheets(in thousands, except per share amounts) December 31, 2014 2013 Assets Current assets: Cash and cash equivalents$101,969 $33,820 Prepaid expenses and other current assets 1,894 349 Total current assets 103,863 34,169 Restricted cash 46 116 Property and equipment, net 861 559 Total assets$104,770 $34,844 Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable$693 $150 Accrued liabilities 3,428 1,194 Total current liabilities 4,121 1,344 Deferred rent 270 31 Other non-current liabilities 13 - Total liabilities 4,404 1,375 Commitments and contingencies (Note 5) Convertible preferred stock, $0.0001 par value, no shares and 7,757 shares authorized as of December 31, 2014 and 2013, respectively; no shares and 7,689 shares issued and outstanding as of December 31, 2014 and 2013, respectively - 54,282 Stockholders’ equity (deficit): Preferred stock, $0.0001 par value per share, 10,000 shares and no shares authorized as of December 31, 2014 and 2013, respectively; no share issued and outstanding as of December 31, 2014 and 2013 - - Common stock, $0.0001 par value, 200,000 and 9,896 shares authorized as of December 31, 2014 and 2013, respectively; 17,943 and 161 shares issued and outstanding as of December 31, 2014 and 2013, respectively 2 - Additional paid-in capital 152,218 9,329 Accumulated deficit (51,854) (30,142)Total stockholders’ equity (deficit) 100,366 (20,813)Total liabilities, convertible preferred stock and stockholders’ equity (deficit)$104,770 $34,844 See accompanying notes. 59 Calithera Biosciences, Inc.Statements of Operations and Comprehensive Loss(in thousands, except per share amounts) Year Ended December 31, 2014 2013 2012 Operating expenses: Research and development$16,367 $9,900 $6,558 General and administrative 5,354 2,478 1,417 Total operating expenses 21,721 12,378 7,975 Loss from operations (21,721) (12,378) (7,975)Other income 9 1 — Net loss and comprehensive loss (21,712) (12,377) (7,975)Gain on extinguishment of convertible preferred stock — — 2,889 Net loss attributable to common stockholders$(21,712) $(12,377) $(5,086)Net loss per share attributable to common stockholders, basic and diluted$(4.67) $(131.53) $(366.13)Weighted average shares used in computing net loss per share attributable to commonstockholders, basic and diluted 4,652 94 14 See accompanying notes. 60 Calithera Biosciences, Inc.Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)(in thousands, except per share amounts) Convertible PreferredStock Common Stock AdditionalPaid-InCapital Accumulated Deficit TotalStockholders'Equity(Deficit) Shares Amount Shares Amount Balance at January 1, 2012 875 $7,689 10 $- $6,230 $(9,790) (3,560)Issuance of Series B convertible preferred stockfor cash at $4.77 per share in May 2012, net of$15 in issuance costs 838 3,985 - - - - - Extinguishment of convertible preferred stockand related conversion to common stock (428) (2,930) 43 - 41 - 41 Gain on extinguishment of convertiblepreferred stock - - - - 2,889 - 2,889 Issuance of Series C convertible preferred stockfor cash at $4.77 per share in December 2012,net of $22 in issuance costs 419 1,978 - - - - - Vesting of common stock issued to founders - - 3 - - - - Exercise of stock options - - 2 - 3 - 3 Stock-based compensation expense - - - - 31 - 31 Net loss - - - - - (7,975) (7,975)Balance at December 31, 2012 1,704 10,722 58 - 9,194 (17,765) (8,571)Issuance of Series C convertible preferred stockfor cash at $4.77 per share in April 2013, net of$24 in issuance costs 1,823 8,676 - - - - - Issuance of Series D convertible preferred stockfor cash at $8.41 per share in October 2013, netof $115 in issuance costs 4,162 34,884 - - - - - Vesting of common stock issued to founders - - 3 - - - - Exercise of stock options - - 100 - 65 - 65 Stock-based compensation expense - - - - 70 - 70 Net loss - - - - - (12,377) (12,377)Balance at December 31, 2013 7,689 54,282 161 - 9,329 (30,142) (20,813)Issuance of Series D convertible preferred stockfor cash at $8.41 per share in July 2014, net of$41 in issuance costs 1,903 15,959 - - - - - Conversion of preferred stock to common stockupon initial public offering (9,592) (70,241) 9,592 1 70,240 - 70,241 Issuance of common stock in connection withinitial public offering, net of underwritingdiscounts, commissions and issuance costs - - 8,000 1 71,623 - 71,624 Issuance of common stock to nonemployees - - 21 - 54 - 54 Vesting of common stock issued to founders - - 1 - 1 - 1 Exercise of stock options - - 168 - 282 - 282 Stock-based compensation expense - - - - 689 - 689 Net loss - - - - - (21,712) (21,712)Balance at December 31, 2014 - $- 17,943 $2 $152,218 $(51,854) 100,366 See accompanying notes.61 Calithera Biosciences, Inc.Statements of Cash Flows(in thousands) Year Ended December 31, 2014 2013 2012 Cash Flows From Operating Activities Net loss$(21,712) $(12,377) $(7,975)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 361 281 269 Stock-based compensation 689 70 31 Loss on disposal of property and equipment 2 5 7 Changes in operating assets and liabilities: Prepaid expenses and other current assets (1,544) (282) (9)Accounts payable 543 125 25 Accrued liabilities 2,058 310 675 Deferred rent, non-current 372 31 (13)Net cash used in operating activities (19,231) (11,837) (6,990) Cash Flows From Investing Activities Purchase of property and equipment (556) (164) (49)Change in restricted cash 70 (9) - Net cash used in investing activities (486) (173) (49) Cash Flows From Financing Activities Proceeds from issuance of common stock upon initial public offering, net 71,625 — — Net proceeds from issuance of convertible preferred stock 15,959 43,560 5,963 Proceeds from stock option exercises 282 65 3 Net cash provided by financing activities 87,866 43,625 5,966 Net increase (decrease) in cash and cash equivalents 68,149 31,615 (1,073)Cash and cash equivalents at beginning of period 33,820 2,205 3,278 Cash and cash equivalents at end of period$101,969 $33,820 $2,205 Supplemental Disclosure of Non-Cash Investing and Financing Information: Services settled through the issuance of common stock$55 $— $— Unpaid amounts related to property and equipment purchases$110 $— $— Conversion of preferred stock warrants to common stock warrants$— $— $41 Gain on extinguishment of convertible preferred stock$— $— $2,889 See accompanying notes. 62 Calithera Biosciences, Inc.Notes to Financial Statements1. Organization and Basis of PresentationCalithera Biosciences, Inc. (the “Company”) was incorporated in the State of Delaware on March 9, 2010. The Company is a clinical-stagebiopharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor metabolism and tumor immunologytargets for the treatment of cancer. The Company’s principal operations are based in South San Francisco, California, and it operates in one segment.Initial Public OfferingIn October 2014, the Company completed an initial public offering (“IPO”) of its common stock. In connection with its IPO, the Company issued andsold 8,000,000 shares of its common stock, at a price to the public of $10.00 per share. As a result of the IPO, the Company received $71.6 million in netproceeds, after deducting underwriting discounts and commissions of $5.6 million and offering expenses of $2.8 million paid by the Company.At the closing of the IPO, 9,592,042 shares of outstanding convertible preferred stock were automatically converted into 9,592,042 shares of commonstock with the related carrying value of $70.2 million reclassified to common stock and additional paid-in capital. In connection with the IPO, the Companyamended and restated its Amended and Restated Certificate of Incorporation to change the authorized capital stock to 200,000,000 shares designated ascommon stock and 10,000,000 shares designated as preferred stock, all with a par value of $0.0001 per share. There are no shares of preferred stockoutstanding at December 31, 2014.LiquidityIn 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. The Company has incurred net losses fromoperations since inception and has an accumulated deficit of $51.9 million as of December 31, 2014. The Company intends to raise additional capitalthrough the issuance of additional equity, and potentially through strategic alliances with partner companies. However, if such financing is not available atadequate levels, the Company will need to reevaluate its operating plans. Management believes that the currently available resources will provide sufficientfunds to enable the Company to meet its operating plan for at least the next twelve months. However, if the Company’s anticipated operating results are notachieved in future periods, management believes that planned expenditures may need to be reduced in order to extend the time period over which the then-available resources would be able to fund the Company’s operations.Reverse Stock SplitOn September 18, 2014, the Company’s Board of Directors, and on September 19, 2014, the Company’s stockholders, approved the amendment andrestatement of the Company’s certificate of incorporation to effect a reverse split of the Company’s common stock and convertible preferred stock at a 1-for-48 ratio (the “Reverse Stock Split”). The Reverse Stock Split became effective on September 19, 2014, upon the filing of the Company’s amended andrestated certificate of incorporation. The par value of the common and convertible preferred stock was not adjusted as a result of the Reverse Stock Split. Allissued and outstanding common stock, convertible preferred stock, options for common stock and per share amounts contained in the financial statementshave been retroactively adjusted to reflect this Reverse Stock Split for all periods presented. 2. Summary of Significant Accounting PoliciesUse of EstimatesThe accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Thepreparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue andexpenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to clinical trial accrued liabilities,fair value of common stock, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various othermarket specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from thoseestimates.63 Cash and Cash EquivalentsThe Company considers all highly liquid investments with original maturities of three months or less at the time from the date of purchase to be cashequivalents. Cash equivalents, which consist primarily of amounts invested in money market accounts, are stated at fair value.Restricted CashRestricted cash consists of money market funds held by the Company’s financial institution as collateral for the Company’s obligations under itsfacility lease for the Company’s corporate headquarters in South San Francisco, California.Concentration of Credit RiskFinancial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The Company’s cashand cash equivalents are held by a financial institution in the United States. Amounts on deposit may at times exceed federally insured limits. Managementbelieves that the financial institution is financially sound, and accordingly, minimal credit risk exists with respect to the financial institution.Property and EquipmentProperty and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using thestraight-line method over the estimated useful lives of the respective assets. Depreciation and amortization begins at the time the asset is placed in service.Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation andamortization are removed from the balance sheet and the resulting gain or loss is reflected in operations.The useful lives of property and equipment are as follows: Research and development 5 years Furniture and office equipment 5 years Computer equipment 3 years Software 3 years Leasehold improvements Shorter of remaining lease term or estimated useful life Impairment of Long-Lived AssetsThe Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstancesindicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount ofeach asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amountof any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. The Company has not recordedimpairment of any long-lived assets during any of the periods presented.Accrued Research and Development CostsThe Company accrues for estimated costs of research and development activities conducted by third-party service providers, which include theconduct of preclinical studies and clinical trials, and contract manufacturing activities. The Company records the estimated costs of research anddevelopment activities based upon the estimated amount of services provided but not yet invoiced, and include these costs in accrued liabilities in thebalance sheets and within research and development expense in the statements of operations and comprehensive loss. These costs are a significantcomponent of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the workcompleted and in accordance with agreements established with its third-party service providers. The Company makes significant judgments and estimates indetermining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. TheCompany has not experienced any material differences between accrued costs and actual costs incurred. However, the status and timing of actual servicesperformed, number of patients enrolled, and the rate of patient enrollment may vary from the Company’s estimates, resulting in adjustments to expense infuture periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results ofoperations.64 Research and Development CostsResearch and development costs are expensed as incurred and consist of salaries and benefits, stock-based compensation expense, laboratory suppliesand allocated facility costs, as well as fees paid to third parties that conduct certain research and development activities on the Company’s behalf. Amountsincurred in connection with license agreements are also included in research and development costs. Nonrefundable advance payments for goods or servicesto be rendered in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the relatedgoods are delivered or the services are performed.Deferred RentRent expense is recognized on a straight-line basis over the noncancelable term of the Company’s operating lease and, accordingly, the Companyrecords the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. Incentives granted under the Company’sfacility leases, including allowances to fund leasehold improvements, are deferred and are recognized as adjustments to rental expense on a straight-line basisover the term of the lease.Stock-Based CompensationStock-based awards issued to employees and directors, including stock options, are recorded at fair value as of the grant date using the Black-Scholesoption-pricing model and recognized as expense on a straight-line basis over the employee or director’s requisite service period (generally the vestingperiod). Because noncash stock compensation expense is based on awards ultimately expected to vest, it is reduced by an estimate for future forfeitures.Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates.Income TaxesThe Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based onthe differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be ineffect when the differences are expected to reverse. The Company must then assess the likelihood that the resulting deferred tax assets will be realized. Avaluation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s lackof earnings history, the net deferred tax assets have been fully offset by a valuation allowance.The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination basedsolely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’spolicy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, therehave been no interest or penalties charged in relation to the unrecognized tax benefits.Net Loss per Share Attributable to Common StockholdersBasic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by theweighted average number of shares of common stock outstanding during the period without consideration of common stock equivalents. The net lossattributable to common stockholders is calculated by adjusting the net loss of the Company for the gain on the extinguishment of convertible preferred stock.Since the Company was in a loss position for all periods presented, basic net loss per share attributable to common stockholders is the same as diluted net lossper share attributable to common stockholders for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.ReclassificationCertain reclassifications have been made to prior period amounts to conform to current period presentation. These reclassifications did not have animpact on the Company’s results of operations or financial condition as of December 31, 2014 and 2013.Recent Accounting PronouncementsIn June 2014, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, Development StageEntities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic810, Consolidation. ASU 2014-10 simplifies the accounting guidance by removing all65 incremental financial reporting requirements for development stage entities. The amendments related to the elimination of the inception-to-date informationand other disclosure requirement of Topic 915 should be applied retrospectively, and are effective for annual reporting periods beginning after December 15,2014, and interim periods therein. The Company early adopted this guidance as of January 1, 2012.In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide relatedfootnote disclosures. In doing so, companies will have reduced diversity in the timing and content of footnote disclosures than under today’s guidance. ASU2014-15 is effective for the Company in the first quarter of 2016 with early adoption permitted. The Company is currently assessing the impact the adoptionof ASU 2014-15 will have on the financial statements. 3. Fair Value MeasurementsFair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on arecurring basis (at least annually). Financial instruments include cash and cash equivalents, accounts payable and accrued liabilities that approximate fairvalue due to their relatively short maturities.Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated withthe inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paidto transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on themeasurement date. The authoritative guidance on fair value measurements establishes a three tier fair value hierarchy for disclosure of fair valuemeasurements as follows:Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical orsimilar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data forsubstantially the full term of the related assets or liabilities; andLevel 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or nomarket data.The Company’s financial instruments consist only of Level 1 assets, which are highly liquid money market funds. As of December 31, 2014 and 2013,the Company had $46,000 and $116,000 in money market funds that are included in restricted cash on the balance sheets. 4. Balance Sheet ComponentsProperty and Equipment, NetProperty and equipment, net consist of the following (in thousands): December 31, 2014 2013 Research and development equipment$1,427 $1,137 Furniture and office equipment 75 52 Computer equipment 211 156 Software 58 38 Leasehold improvements 321 47 Total property and equipment 2,092 1,430 Less: accumulated depreciation and amortization (1,231) (871)Property and equipment, net$861 $559 Property and equipment depreciation and amortization expense for the years ended December 31, 2014, 2013 and2012 was $361,000, $281,000 and $269,000, respectively.66 Accrued LiabilitiesAccrued liabilities consist of the following (in thousands): December 31, 2014 2013 Accrued bonus and payroll expenses$1,476 $934 Accrued professional and consulting services 490 127 Accrued clinical and manufacturing expenses 1,029 107 Other 433 26 Total accrued liabilities$3,428 $1,194 5. Commitments and ContingenciesFacilitiesIn July 2010, the Company entered into a lease agreement for office and laboratory facilities in South San Francisco, California. The lease commencedin November 2010 and initially expired one year after the commencement date. The Company entered into addendums to the lease agreement at variouspoints in time to add space to the arrangement and extend the lease term through June 2013.In February 2013, the Company entered into a non-cancelable facility lease agreement for office and laboratory facilities in South San Francisco,California. The lease commenced on July 2013 and expires two years after the commencement date. In October 2013, the Company signed an addendum tothe lease agreement for additional space and to extend the lease term through November 2017. The lease has a two-year renewal option prior to expiration. Inaddition the lease provides for a tenant improvement allowance of up to $230,000, which was fully utilized in 2014 and included in deferred rent. The leasehas rent escalation clauses through the lease term, as well as reduced rent on the additional space for the first 12 months. The Company recognizes rentexpense on a straight-line basis over the noncancelable term of the lease. Under the terms of the lease agreement for its new South San Francisco facility, the Company provided the lessor with an irrevocable letter of credit inthe amount of $46,000. The lessor shall be entitled to draw on the letter of credit in the event of any uncured default by the Company under the terms of thelease.Future aggregate minimum lease payments under the noncancelable operating leases as of December 31, 2014 (in thousands) are as follows: Year ending December 31: 2015$969 2016 977 2017 896 Total$2,842 In September 2014, the Company entered into a non-cancelable sublease agreement for a portion of its facilities, through July 2016. Future annualminimum sublease proceeds as of December 31, 2014 (in thousands) are as follows: Year ending December 31: 2015$154 2016 92 Total$246 Expenses and income associated with the Company’s operating leases were as follows (in thousands): Year Ended December 31, 2014 2013 2012 Rent expense $ 1,309 $ 866 $ 782 Sublease income (73) — — 67 IndemnificationsThe Company indemnifies each of its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is orwas serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws.The term of the indemnification period lasts as long as an officer or a director may be subject to any proceeding arising out of acts or omissions of such officeror director in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director andofficer liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of anyfuture amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, it has not recognized anyliabilities relating to these obligations for any period presented.Other MattersIn October 2014, the Company received an invoice of approximately $1.3 million relating to a contingent amount associated with a terminatedlicense agreement, incurred as a result of the closing of its IPO in October 2014. The Company believes that the invoice amount is substantially in excess ofthe amount actually owed pursuant to the agreement and has initiated discussions with the third party to resolve the matter. The Company does not believethat the ultimate resolution of this matter will be material to the Company’s results of operations, financial condition or cash flows. 6. Convertible Preferred Stock and Stockholders’ Equity (Deficit)Convertible Preferred StockAs of December 31, 2013, the Company had outstanding convertible preferred stock as follows (in thousands, except share amounts): Convertible Preferred Stock:Shares Authorized Shares Issued andOutstanding CarryingValues LiquidationPreference Series A 27,499 27,497 $2,786 $3,750 Series B 1,257,545 1,257,543 5,958 6,000 Series C 2,242,622 2,242,620 10,654 10,700 Series D 4,229,166 4,161,799 34,884 35,000 Total convertible preferred stock 7,756,832 7,689,459 $54,282 $55,450 In July 2014, the Company issued 1,902,583 shares of Series D convertible preferred stock at a price of $8.41 per share, with the same provisions ofpreviously issued Series D convertible preferred stock. Aggregate net proceeds were approximately $16.0 million.Immediately prior to the completion of the Company’s IPO, all of the outstanding shares of convertible preferred stock automatically converted into9,592,042 shares of common stock on a one-to-one basis. In connection with the IPO, the Company amended and restated its Amended and RestatedCertificate of Incorporation to change the authorized capital stock to 200,000,000 shares designated as common stock and 10,000,000 shares designated aspreferred stock, all with a par value of $0.0001 per share.Extinguishment of Preferred StockPursuant to the Company’s then-effective Certificate of Incorporation, if a holder of Series B did not purchase such holder’s pro rata share in theCompany’s Series C financing by a specified time (a “nonparticipating holder”), then each share of Preferred Stock held by the non-participating holderwould be converted into 1/10th of a share of common stock at that specified time. In connection with Series C financing during 2012, one of the Company’sinvestors did not purchase its pro rata share of the Series C. Such holder was therefore a non-participating holder and, as a result, the 9,166 shares Series A and419,181 Series B held by such non-participating holder automatically converted into an aggregate of 42,834 shares of common stock.The Company has accounted for the conversion of the Series A and Series B as an extinguishment of the converted Preferred Stock and issuance ofcommon stock due to the significance of the change in the fair value from the Preferred Stock to the common stock. Accordingly, for the year endedDecember 31, 2012, the Company recorded an aggregate gain of $2.9 million within stockholders’ deficit equal to the difference between the $41,000 fairvalue of the shares of common stock issued and the $2.9 million carrying amount of the converted shares of Preferred Stock Extinguished. The gain onextinguishment is reflected in the calculation of net loss attributable to common stockholders.68 Restricted StockIn March 2010, the Company entered into a restricted stock purchase agreement with two founders of the Company. The individuals purchased a totalof 17,416 shares of common stock for a total purchase price of $836. These agreements contain a repurchase option that gives the Company an irrevocableoption for a period of ninety days after the individual’s employment is terminated either voluntarily or involuntarily to repurchase the unvested restrictedstock at a price that is the lower of the original price per share paid by the founder for such stock or the fair value as of the date of such repurchase. Therestricted stock vested and the repurchase option lapsed over 48 months measured from the date that the first share of Series A was issued, which was June 17,2010. As of December 31, 2014 and 2013, zero and 1,146 of these shares, respectively, remained subject to repurchase. 7. Equity Incentive Plans2010 PlanIn 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”). Under the Plan, shares of the Company’s common stock have beenreserved for the issuance of stock options to employees, directors, and consultants under terms and provisions established by the Board of Directors. A total of1,456,950 shares were reserved for issuance under the 2010 Plan at December 31, 2014, of which zero shares are available for future grant. Under the terms ofthe 2010 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of allclasses of stock, the exercise prices for incentive and nonstatutory stock options may not be less than 110% of fair market value, as determined by the Boardof Directors. The terms of options granted under the 2010 Plan may not exceed ten years. The vesting schedule of newly issued option grants is typically fouryears.The Company granted options under the 2010 Plan until October 2014 when it was terminated as to future awards, although it continues to govern theterms of options that remain outstanding under the 2010 Plan.As of December 31, 2014, a total of 1,186,420 shares of common stock are subject to options outstanding under the 2010 Plan.2014 PlanOn September 18, 2014, the Company’s Board of Directors, and on September 19, 2014, the Company’s stockholders, approved the 2014 EquityIncentive Plan (the “2014 Plan”) which became effective in October 2014, at which time the 2010 Equity Incentive Plan was terminated. The 2014 Planprovides for the grant of stock options, other forms of equity compensation, and performance cash awards. The maximum number of shares of common stockthat may be issued under the 2014 Plan is 971,340. In addition, the number of shares of common stock reserved for issuance under the 2014 Plan willautomatically increase on January 1 of each year, beginning on January 1, 2015 and ending on and including January 1, 2024, by 4% of the total number ofshares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’sBoard of Directors.As of December 31, 2014, a total of 971,340 shares of common stock were reserved for issuance under the 2014 Plan, of which 946,840 shares ofcommon stock are available for future grant.69 The following summarizes option activity (in thousands, except share and price per option data): Options Outstanding Number of Options Weighted-AverageExercise Price perOption AggregateValueIntrinsic Outstanding — December 31, 2011 134,781 $1.08 Shares reserved - $- Options granted 127,452 $0.48 Options exercised (1,765) $1.46 Options canceled (15,540) $0.92 Outstanding — December 31, 2012 244,928 $0.77 Shares reserved - $- Options granted 725,161 $1.99 Options exercised (100,273) $0.64 Options canceled (4,986) $1.05 Outstanding — December 31, 2013 864,830 $1.80 $769 Shares reserved - Options granted 571,660 $5.24 Options exercised (168,523) $1.67 Options canceled (57,047) $1.87 Outstanding — December 31, 2014 1,210,920 $3.44 $20,292 Exercisable — December 31, 2014 184,881 $2.45 $3,282 Vested and expected to vest — December 31, 2014 1,173,415 $3.42 $19,684 The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exerciseprice of the options and the fair value of the Company’s common stock of $20.20 per share as of December 31, 2014.The weighted-average fair value per share of employee options granted during the years ended December 31, 2014, 2013 and 2012 were $4.90, $1.44and $0.48, respectively. The total fair value of options that vested during the years ended December 31, 2014, 2013 and 2012 was $582,000, $60,000 and$32,000, respectively.As of December 31, 2014, the weighted-average remaining contractual life was 8.33 years and 8.94 years for exercisable options and vested andexpected to vest options, respectively.Stock-Based Compensation ExpenseTotal stock-based compensation recognized related to the 2010 and 2014 Plans was as follows (in thousands): Year Ended December, 31 2014 2013 2012 Research and development$275 $47 $21 General and administrative 345 23 10 Total stock-based compensation$620 $70 $31 As of December 31, 2014, the total unrecognized compensation expense related to unvested options, net of estimated forfeitures, was $3.1 million,which the Company expects to recognize over an estimated weighted average period of 3.3 years.Prior to the Company’s IPO on October 2014, the fair value of the shares of common stock underlying stock options were historically determined bythe Company’s Board of Directors. Because there had been no public market for the Company’s common stock, the Board of Directors had determined fairvalue of the common stock at the time of grant of the option by considering a number of objective and subjective factors including important developmentsin the Company’s operations, valuations performed by an independent third party, sales of convertible preferred stock, actual operating results and financialperformance, the conditions in70 the biotechnology industry and the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidityof the Company’s common stock, among other factors.In each of the periods presented, the exercise price per share for each stock option was the same as the fair value of the Company’s common stock onthe date of grant.In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below.Each of these inputs is subjective and generally requires significant judgment to determine.Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and isdetermined using the simplified method (based on the midpoint between the vesting date and the end of the contractual term).Expected Volatility—Since the Company has only been publicly traded for a short period and does not have adequate trading history for its commonstock, the expected volatility was estimated based on the average volatility for comparable publicly traded biopharmaceutical companies over aperiod equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle,or area of specialty.Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periodscorresponding with the expected term of option.Expected Dividend—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore,the Company used an expected dividend yield of zero.The fair value of stock option awards was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2014 2013 2012 Expected term5.9 - 6.6 years 6.3 years 5.9 years Volatility78.6 - 97.7% 87.1 - 96.0% 79.80% Risk-free interest rate0.9% - 2.3% 1.1 - 1.9% 0.90% Expected dividend rate —% —% —% ESPPOn September 18, 2014, the Company’s Board of Directors, and on September 19, 2014, the Company’s stockholders, approved the 2014 EmployeeStock Purchase Plan (the “ESPP”) which became effective in October 2014. The initial number of shares of common stock that may be issued under the ESPPis 189,883 shares and the number of shares reserved for the ESPP will increase automatically each year, beginning on January 1, 2015 and continuingthrough and including January 1, 2024, by the lesser of (1) 1% of the total number of shares of common stock outstanding on December 31 of the precedingcalendar year; (2) 250,000 shares of common stock; or (3) such lesser number as determined by the Company’s Board of Directors.The ESPP allows eligible employees to purchase shares of the Company's common stock at a discount through payroll deductions of up to 15% oftheir eligible compensation, subject to any plan limitations. The ESPP provides for 24-month offering periods with four 6-month purchase periods, and at theend of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company's common stock on the firsttrading day of the offering period or on the last day of the purchase period. As of December 31, 2014, no shares of common stock have been issued toemployees participating in the ESPP and 189,883 shares were available for issuance under the ESPP. The ESPP is a compensatory plan as defined by theauthoritative guidance for stock compensation. As such stock-based compensation expense has been recorded for the year ended December 31, 2014.Total stock-based compensation expense recognized related to the ESPP was as follows (in thousands): Year EndedDecember 31, 2014 Research and development $ 41 General and administrative 28 Total stock based compensation $ 69 71 The Company used the following assumptions to estimate the fair value of the ESPP offered for the year ended December 31, 2014: expected term of0.37 years to 2.13 years, weighted-average volatility of 65.2% to 81.0%, risk-free interest rate of 0.05% to 0.58% and expected dividend yield of zero. 8. Income TaxesNo provision for income taxes was recorded for the years ended December 31, 2014, 2013 and 2012. The Company has incurred net operating lossesfor all the periods presented. The Company has not reflected any benefit of such net operating loss carryforwards in the accompanying financial statements.The effective tax rate of the provision for income taxes differs from the federal statutory rate as follows: Year Ended December, 31 2014 2013 2012 Federal statutory income tax rate 34.0% 34.0% 34.0%State income taxes, net of federal benefit 5.8 5.8 5.8 Federal and state tax credits 1.1 3.8 1.2 Change in valuation allowance (40.9) (43.6) (41.0) 0% 0% 0% The components of the deferred tax assets and liabilities are as follows (in thousands): Year Ended December, 31 2014 2013 Deferred tax assets: Net operating loss carryforwards$19,323 $11,584 Tax credits 1,512 963 Accrued liabilities 712 384 Stock based compensation 21 — Other 241 91 Gross deferred tax assets 21,809 13,022 Valuation allowance (21,809) (13,022)Net deferred tax assets$- $- Due to the Company’s lack of earnings history, the deferred tax assets have been fully offset by a valuation allowance as of December 31, 2014 and2013. The valuation allowance increased by $8.8 million and $5.4 million during the years ended December 31, 2014 and 2013, respectively. ASC Topic740 requires that the tax benefit of deductible temporary differences of carryforwards be recorded as a deferred tax assets to the extent that managementassesses that realization is "more likely than not." Future realization of the tax benefit ultimately depends on the existence of sufficient taxable income withinthe carryback or carryforward period available under the tax law. The Company has set up the valuation allowance against the federal and state deferred taxassets because based on all available evidence, these deferred tax assets are not more likely than not to be realizable.As of December 31, 2014, the Company had approximately $48.6 million and $48.0 million, respectively, of federal and state operating losscarryforwards available to reduce future taxable income that will begin to expire in 2030 for federal and state tax purposes.As of December 31, 2014, the Company also had research and development tax credit carryforwards of approximately $1.6 million and $1.4 million,respectively, for federal and state purposes available to offset future taxable income tax. If not utilized, the federal carryforwards will expire in variousamounts beginning in 2030, and the state credits can be carried forward indefinitely.72 Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations providedby the Internal Revenue Code of 1986, as amended, and similar state provisions. The Company has performed an analysis to determine whether an"ownership change" has occurred from inception to December 31, 2014. Based on this analysis, management has determined that there was an ownershipchange. The annual limitation may result in the expiration of net operating losses and credits before utilization, however, the Company does not believe anyof its net operating losses and research and development credits are limited by this potential ownership change.Uncertain Tax PositionsAs of December 31, 2014, the Company’s total unrecognized tax benefit was $1.2 million, of which none of the tax benefit, if recognized, would affectthe effective income tax rate due to the valuation allowance that currently offsets deferred tax assets. A reconciliation of the Company’s unrecognized taxbenefits for the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands): Year Ended December, 31 2014 2013 2012 Balance at beginning of year$773 $388 $271 Additions based on tax positions related to current year 421 385 117 Balance at end of year$1,194 $773 $388 The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would increase our credit carryforwards and hence deferredtax assets. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.Interest and penalties are zero, and the Company’s policy is to account for interest and penalties in tax expense on the statement of operations andcomprehensive loss. The Company files income tax returns in the U.S. federal and California tax jurisdictions. All periods since inception are subject toexamination by U.S. federal and California tax jurisdictions, none of which are currently under examination. 9. Net Loss per Common ShareSince the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as theinclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted pershare calculations because they would be anti-dilutive were as follows (in thousands): December 31, 2014 2013 2012 Options to purchase common stock 1,211 865 245 Common stock subject to repurchase — 1 4 Convertible preferred stock — 7,689 1,704 Total 1,211 8,555 1,953 10. Licensing AgreementsArginase License AgreementIn December 2014, the Company entered into an exclusive license agreement with Mars, Inc., by and through its Mars Symbioscience division, orSymbioscience, under which the Company has been granted the exclusive, worldwide license rights to develop and commercialize Symbioscience’s portfolioof arginase inhibitors for use in human healthcare. Under the terms of the License Agreement, the Company will pay Symbioscience an upfront license fee of$0.3 million and potential development and regulatory milestone payments totaling up to $24.4 million for the first licensed product. Symbioscience iseligible for an additional $95.0 million in potential sales-based milestones, as well as royalty payments based on sales of such licensed product. If theCompany develops additional licensed products, after achieving regulatory approval of the first licensed product, the Company would owe additionalregulatory milestone payments and additional royalty payments based on sales of such additional licensed products.Under the License Agreement, the Company will be responsible for the worldwide development and commercialization of the licensed products, at itscost, is required to use commercially reasonable efforts with respect to such development and73 commercialization activities, and must meet certain general diligence obligations. The Company holds the first right to prosecute and to enforce all licensedrights under the Licenses Agreement throughout the world, and Symbioscience will retain certain step-in enforcement rights. Under the exclusivityprovisions of the License Agreement, each party agrees not to develop any other arginase inhibitors for use in human healthcare outside of the scope of theLicense Agreement. For the year ended December 31, 2014, the Company recorded a payment totaling $0.3 million related to its licensing arrangements withSymbioscience, in research and development expense in the statements of operations and comprehensive loss. 11. Related Party TransactionsThe spouse of the Company’s Chief Executive Officer is the founder of a management consulting firm that provided services to the Company throughMarch 2013. For the years ended December 31, 2014, 2013 and 2012, the Company recognized zero, $62,000 and $41,000, respectively, paid to thismanagement consulting firm, for consulting services which were primarily included in research and development expenses in the statements of operationsand comprehensive loss. As of December 31, 2014 and 2013, the Company had no outstanding liability to the management consulting firm.The spouse of one of the Company’s executive officers was a consultant who provided accounting services for the Company through May 2014. Forthe years ended December 31, 2014, 2013 and 2012, the Company recognized consulting services of $61,000, $91,000 and $36,000, respectively, withingeneral and administrative expenses in the statements of operations and comprehensive loss. As of December 31, 2014 and 2013, the Company had anoutstanding liability to the individual of nil and $12,000, respectively. 12. Selected Quarterly Financial Data (Unaudited)Selected quarterly results from operations for the years ended December 31, 2014 and 2013 are as follows (in thousands, except per share amounts): 2014 Quarter Ended March 31, June 30, September 30, December 31, Operating expenses$4,150 $5,492 $5,241 6,838 Net loss (4,149) (5,491) (5,239) (6,833)Basic and diluted net loss per common share$(22.80) $(24.22) $(16.85) $(0.39) 2013 Quarter Ended March 31, June 30, September 30, December 31, Operating expenses$2,281 $2,691 $3,318 $4,088 Net loss (2,281) (2,691) (3,318) (4,087)Basic and diluted net loss per common share$(39.11) $(45.47) $(34.22) $(25.42) 13. Subsequent Event In March 2015, the Company entered into a License and Research agreement with High Point Pharmaceuticals, LLC and TransTech Pharma LLC, orcollectively TransTech, under which the Company obtained an exclusive, worldwide license to develop and commercialize TransTech’s hexokinase IIinhibitors. Under the terms of the License Agreement, the Company will pay TransTech an initial license fee of $0.6 million, and potential development andregulatory milestone payments totaling up to $30.5 million for the first licensed product. TransTech is eligible for an additional $77.0 million in potentialsales-based milestones, as well as royalty payments, at mid-single digit royalty rates, based on tiered sales of the first commercialized licensed product. Inaddition, the Company will fund up to $1.1 million during the first 12 months of the License Agreement for the costs associated with up to four full-timeemployees for TransTech to develop additional hexokinase inhibitors. If the Company develops additional licensed products, after achieving regulatoryapproval of the first licensed product, the Company would owe additional regulatory milestone payments and additional royalty payments based on sales ofsuch additional licensed products. The License Agreement will not impact the Company’s ability to fund its operating expenses and capital expenditurerequirements for at least the next twelve months. Except for the research program funded by the Company at TransTech, the Company will be responsible for the worldwide development andcommercialization of the licensed products, at its cost, is required to use commercially reasonable efforts with respect to such development andcommercialization activities, and must meet certain specified diligence obligations. The Company holds the first right to prosecute and to enforce alllicensed patents under the License Agreement throughout the world, and TransTech will retain certain step-in enforcement rights. 74 Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.None.Item 9A.Controls and Procedures.Evaluation of Disclosure Controls and ProceduresAs of December 31, 2014, management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation ofthe effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Ourdisclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act isrecorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that suchinformation is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timelydecisions regarding required disclosures.Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controlobjective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on thisevaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2014, the design and operation of our disclosurecontrols and procedures were effective at a reasonable assurance level.Management’s Annual Report on Internal Control Over Financial ReportingThis 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 registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting.Attestation Report of the Registered Public Accounting FirmThis Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established bythe JOBS Act for “emerging growth companies.”Item 9B.Other Information.None. 75 PART IIIItem 10.Directors, Executive Officers and Corporate Governance.Information required by this item will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission onSchedule 14A in connection with our 2015 Annual Meeting of Stockholders or the Proxy Statement, which is expected to be filed not later than 120 daysafter the end of our fiscal year ended December 31, 2014, under the headings “Executive Officers,” “Election of Directors,” “Corporate Governance,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees which is available on our website atwww.calithera.com. The Code of Business Conduct and Ethics is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of BusinessConduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performingsimilar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specifiedofficers, the name of such person who is granted the waiver and the date of the waiver on our website in the future.Item 11.Executive Compensation.The information required by this item regarding executive compensation is incorporated by reference to the information set forth in the sections titled“Executive Compensation” in our Proxy Statement.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to theinformation set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information”in our Proxy Statement.Item 13.Certain Relationships and Related Transactions, and Director Independence.The information required by this item regarding certain relationships and related transactions and director independence is incorporated by referenceto the information set forth in the sections titled “Transactions Related Persons” and “Election of Directors – Independence of the Board of Directors,”respectively, in our Proxy Statement.Item 14.Principal Accounting Fees and Services.The information required by this item regarding principal accountant fees and services is incorporated by reference to the information set forth in thesection titled “Principal Accountant Fees and Services” in our Proxy Statement. 76 PART IVItem 15.Exhibits, Financial Statement Schedules.(a) The following documents are filed as part of this report:1. Financial StatementsSee Index to Financial Statements at Item 8 herein.2. Financial Statement SchedulesAll schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.3. ExhibitsSee the Exhibit Index immediately following the signature page of this Annual Report on Form 10-K. 77 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report tobe signed on its behalf by the undersigned, thereunto duly authorized. Calithera Biosciences, Inc. Date: March 27, 2015 By: /s/ Susan M. Molineaux Susan M. Molineaux, Ph.D. President and Chief Executive OfficerPOWER OF ATTORNEYEach person whose individual signature appears below hereby authorizes and appoints Susan M. Molineaux and William D. Waddill, and each ofthem, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to actin his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file anyand all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with theSecurities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each andevery act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully door cause to be done by virtue thereof.Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons onbehalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Susan M. Molineaux President, Chief Executive Officer and Director March 27, 2015Susan M. Molineaux, Ph.D. (Principal Executive Officer) /s/ William D. Waddill Senior Vice President, Chief Financial Officer, Treasurerand Secretary March 27, 2015William D. Waddill (Principal Financial and Accounting Officer) /s/ Ralph E. Christoffersen Director March 27, 2015Ralph E. Christoffersen, Ph.D. /s/ Jonathan Drachman Director March 27, 2015Jonathan Drachman M.D. /s/ Jean M. George Director March 27, 2015Jean M. George /s/ Deepa R. Pakianathan Director March 27, 2015Deepa R. Pakianathan, Ph.D. /s/ H. Ward Wolff Director March 27, 2015H. Ward Wolff 78 Exhibit Index Incorporation By ReferenceExhibitNumber Exhibit Description Form SEC File No. Exhibit Filing Date 3.1 Amended and Restated Certificate of Incorporation of the Registrant 8-K 001-36644 3.1 10/07/2014 3.2 Amended and Restated Bylaws of the Registrant S-1 333-198355 3.4 9/19/2014 4.1 Reference is made to Exhibits 3.1 through 3.2. 4.2 Form of common stock certificate of the Registrant. S-1 333-198355 4.1 9/25/2014 10.1 Amended and Restated Investor Rights Agreement, among the Registrant and certain of itssecurity holders, dated October 7, 2013, as amended. S-1 333-198355 10.1 8/25/2014 10.2 2014 Equity Incentive Plan. S-1 333-198355 10.4 9/25/2014 10.3 Form of Stock Option Grant Notice (2014 Equity Incentive Plan). S-1 333-198355 10.5 9/25/2014 10.4 2014 Employee Stock Purchase Plan. S-1 333-198355 10.6 9/25/2014 10.5 Employment Agreement between the Registrant and Susan Molineaux, dated June 1, 2010,as amended. S-1 333-198355 10.7 8/25/2014 10.6 Offer Letter between the Registrant and William Waddill, dated March 10, 2014. S-1 333-198355 10.8 8/25/2014 10.7 Employment Agreement between the Registrant and Mark Bennett, dated June 1, 2010. S-1 333-198355 10.9 8/25/2014 10.8 Employment Agreement between the Registrant and Eric Sjogren, dated June 1, 2010. S-1 333-198355 10.10 8/25/2014 10.9 Employment Agreement between the Registrant and Christopher Molineaux, dated April 8,2013. S-1 333-198355 10.11 8/25/2014 10.10 Offer Letter between the Registrant and Curtis Hecht, dated March 28, 2014. S-1 333-198355 10.12 8/25/2014 10.11 Form of Indemnification Agreement between the Registrant and each of its directors andexecutive officers. S-1 333-198355 10.13 9/19/2014 10.14 Lease between Are-Technology Center SSF, LLC and the Registrant, dated February 14,2013. S-1 333-198355 10.14 8/25/2014 10.15 Amendment to lease between Are-Technology Center SSF, LLC and the Registrant, datedOctober 30, 2013. S-1 333-198355 10.15 8/25/2014 10.16† Collaboration and License Agreement by and between the Registrant and Mars, Inc., datedDecember 9, 2014 23.1 Consent of Independent Registered Public Accounting Firm. 24.1 Power of Attorney (included on signature page to this Annual Report on Form 10-K). 31.1 Certifications of Principal Executive Officer pursuant to Rule 13a-14(a). 31.2 Certifications of Principal Financial Officer pursuant to Rule 13a-14(a). 32.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the SecuritiesExchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the SecuritiesExchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document. 101.SCH** XBRL Taxonomy Extension Schema Document. 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document. 79 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB** XBRL Taxonomy Extension Label Linkbase Document. 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document. *The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities andExchange Commission and are not to be incorporated by reference into any filing of Calithera Biosciences, Inc. under the Securities Act of 1933, asamended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any generalincorporation language contained in such filing.**Attached as Exhibit 101 to this Annual Report on Form 10-K formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Comprehensive Income (Loss), (iv) Statements of Cash Flows, and (v) Notes to Financial Statements,tagged as blocks of text and including detailed tags.†Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with theSecurities and Exchange Commission. 80 Exhibit 10.16[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.COLLABORATION AND LICENSE AGREEMENTThis Collaboration and License Agreement (the “Agreement”) is made and entered into effective as of December 9, 2014 (the “Effective Date”),by and between Calithera Biosciences, Inc., a Delaware Corporation located at 343 Oyster Point Boulevard, Suite 200, South San Francisco, CA 94080(“Calithera”),andMars, Inc., a Delaware corporation, by and through its Mars Symbioscience division, having a place of business at 20425 Seneca MeadowsParkway, Germantown, Maryland 20876 (“Symbioscience”). Symbioscience and Calithera each may be referred to herein individually as a “Party,” or collectively as the “Parties.”RecitalsA. Symbioscience controls certain patents and other intellectual property pertaining to Arginase Inhibitors and their use, including forpharmaceutical applications in human healthcare.B. Symbioscience and Calithera desire to enter into a collaboration whereby Calithera will develop, manufacture and commercializeArginase Inhibitors.C. Calithera desires to obtain an exclusive license under Symbioscience’s intellectual property rights for the purpose of developing,manufacturing and commercializing pharmaceutical products containing Arginase Inhibitors, and Symbioscience desires to grant Calithera such alicense on the terms and conditions set forth in this Agreement.In consideration of the foregoing premises, the mutual promises and covenants set forth in this Agreement, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, Symbioscience and Calithera hereby agree as follows:Agreement1.DefinitionsWhen used in this Agreement, the following capitalized terms will have the meanings as defined below. Unless the context indicatesotherwise, the singular will include the plural and the plural will include the singular.1.1 “Affiliate” means, with respect to a Party, any corporation, firm, partnership or other entity that directly or indirectly controls or iscontrolled by or is under common control with such Party, but only for so long as such control exists. As used in this definition, “control” means(with correlative meanings for the terms “controlled by” and “under common control with”) that the applicable entity has the actual ability to directand manage the business affairs of the Party, whether through ownership, directly or indirectly, of more than fifty percent (50%) of the shares ofstock entitled to vote for the election of directors of the Party, in the case of a corporation, or more than fifty percent (50%) of the equity interestsin the case of any other type of legal entity, status as a general partner in any partnership, or by contract or any other arrangement whereby suchentity controls or has the right to control the business affairs of the Party. 1.2 “Arginase Inhibitor” means a small molecule that inhibits the activity of the enzyme arginase I, arginase II, or both.1.1.3 “Commercialization” means all activities relating to the manufacture, marketing, obtaining pricing and reimbursement approvals,promotion, advertising, importing, selling, distribution and customer support of a Licensed Product in a country. The term “Commercialize” has acorrelative meaning.1.4 “Commercially Reasonable Efforts” means, with respect to tasks and obligations to be conducted by a Party under this Agreementwith respect to Developing or Commercializing a Licensed Product, the carrying out of such activities using good faith efforts equivalent to thoseefforts and resources that a similarly situated pharmaceutical development company would reasonably devote to Developing or Commercializing atherapeutic product that has a similar market potential, is at a similar stage in product life, and is in a similar therapeutic area, and taking intoaccount all applicable market, business and legal factors such as the competitiveness of the market (including alternative products), theproprietary and intellectual property position of the product, the likelihood of regulatory approval, including considerations of safety and efficacy,given the regulatory authority and structure involved, the potential profitability of and market size for the product and other similar factors.1.5 “Controlled” means, with respect to any Know-How, Patent, or other intellectual property right, that the applicable Party owns or hasa license under such Know-How, Patent, or other intellectual property right and has the ability to assign to the other Party, or grant to the otherParty a license, sublicense or other right to or under, such Know-How, Patent or right as provided for herein without violating the terms of anyagreement or other arrangements with any Third Party.1.6 “Development” means non-clinical and clinical drug discovery, research and/or development activities reasonably related to orleading to the development and submission of information to a Regulatory Authority, including compound screening, medicinal chemistry, chemicalsynthesis, toxicology, pharmacology and other discovery and pre‑clinical efforts, test method development and stability testing, manufacturingprocess development, formulation development, delivery system development, quality assurance and quality control development, manufacturing,statistical analysis, and clinical studies. When used as a verb, “Develop” means to engage in Development.1.7 “FDA” means the United States Food and Drug Administration, or any successor agency thereto.1.8 “Field” means any use in human healthcare, including any therapeutic, prophylactic, preventative or diagnostic uses. 1.9 “First Commercial Sale” means, with respect to a given Licensed Product in a particular country, the first sale to a Third Party ofsuch Licensed Product in the country, after obtaining all required Marketing Approvals in such country. “First Commercial Sale” shall not includethe supply of any Licensed Product for use in clinical trials or for compassionate use.1.10 “GLP Tox” means a long-term safety study in the appropriate animal species (usually one rodent and one mammal) under the GoodLaboratory Practices guidelines as described in 21 CFR Part 58 which design and results are suitable to support a filing of an IND. 1.11 “IND” means an Investigational New Drug application filed with the FDA and sufficient to satisfy the requirements of 21 CFR 312.20.1.12 “Indication” means the first NDA approval, and each subsequently approved NDA, for a new Indication and Usage as described inthe Code of Federal Regulations (CFR) labeling requirements in 21 CFR Part 201 – Labeling that is substantiated with at least one pivotal clinicalstudy not previously submitted to the FDA within an NDA submission.1.13 “Know-How” means any non-public, documented or otherwise recorded or memorialized knowledge, experience, know-how,technology, technical information, results, trade secrets, data and all other information, including formulas and formulations, processes,techniques, unpatented inventions, discoveries, ideas, and developments, test procedures, and results, together with all documents and filesembodying the foregoing, and including relevant proprietary materials.1.14 “Licensed Compound” means any Arginase Inhibitor that: (i) [*] in such country (a “Tier 1 Compound”, in such country), or (ii) [*]and [*] that is [*], and that is not included in (i) above (a “Tier 2 Compound”).2.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.1.15 “Licensed Know-How” means any Know-How that is necessary or reasonably needed for the research, Development, manufactureor Commercialization of Arginase Inhibitors in the Field and is Controlled by Symbioscience as of the Effective Date or during the Term of theAgreement.1.16 “Licensed Patent” means: (a) any of the Patents of Symbioscience as of the Effective Date listed in Exhibit A, and including allother Patents issuing or arising from such Patents (and all foreign equivalents of any of the foregoing); and (b) any Patents Controlled bySymbioscience during the Term that [*].1.17 “Licensed Product” means any pharmaceutical preparation in final form containing a Licensed Compound as an active ingredient,either alone or in combination with one or more other active ingredients. A “Tier 1 Product” means a Licensed Product sold in a country where theLicensed Compound in such Licensed Product is a Tier 1 Compound (i.e., such compound [*] in such country); a “Tier 2 Product” means aLicensed Product sold in a country where the Licensed Compound in such Licensed Product is a Tier 2 Compound (i.e., such compound meets thecriteria in subsection 1.14(ii) and is [*] in such country). For the avoidance of doubt, Licensed Product shall not mean foods or dietarysupplements.1.18 “Licensed Technology” means the Licensed Patents and the Licensed Know-How.1.19 “Major European Market” means any of the following countries: France, Germany, Italy, Spain and the United Kingdom. 1.20 “Major Market Country” means the United States of America, or any country in the Major European Market. 1.21 “Marketing Approvals” means, with respect to a Licensed Product, the approvals, registrations, licenses and permits of anyRegulatory Authority in a country, including pricing and/or reimbursement approvals, that are necessary to be obtained in order to market and sellcommercially such Licensed Product in that country.1.22 “NDA” means any filing for Marketing Approval of a Licensed Product, including without limitation any new drug application filed withthe United States Food and Drug Administration (as more fully defined in 21 C.F.R. 314.5 et seq.) and/or any Marketing Authorization Applicationfiled with the European Medicines Agency, or any foreign equivalent.1.23 “Net Sales” shall mean the amount invoiced by Calithera, its Affiliates or Sublicensees for commercial sales of a Licensed Productto Third Party purchasers less the following deductions, to the extent applicable to such sales of the Licensed Product, for:(i) normal and customary charges for packaging, transportation, freight and insurance actually incurred, and not charged to thepurchaser separately, for the shipping and delivery of the Licensed Product;(ii) sales, value added and excise taxes or customs duties or any other governmental charges imposed upon the sale of theLicensed Product and paid by the selling party, other than franchise tax or income tax of any kind;(iii) arm’s-length fees paid to Third Party consignees or agents in connection with the sale of the Licensed Product;(iv) reasonable and customary rebates, quantity discounts, charge-backs, allowances and premiums granted or allowed inconnection with the sale of the Licensed Product;(v) credits or allowances given or made for rejection of or return of, and for uncollectible amounts on, previously sold LicensedProducts or for retroactive price reductions;(vi) credits and allowances to customers on account of governmental or managed care requirements on the Licensed Product;(vii) bad debts actually written off in connection with such Licensed Products, [*] for Licensed Product sales in the applicableroyalty period; and3.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.(viii) costs of customer programs, such as cost effectiveness or patient assistance studies or programs, designed to aid in patientcompliance with medication schedules in connection with the sales of a Licensed Product. Net Sales shall be determined in accordance with GAAP or IFRS, as applicable. For the purpose of calculating Net Sales, the Parties recognizethat (a) Calithera's (and its Affiliate’s and Sublicensee’s) customers may include persons in the chain of commerce who enter into agreements withthe selling party as to price even though title to the Licensed Product does not pass directly from the selling party to such customers and eventhough payment for purchase of such Licensed Product is not made directly by such customers, and (b) in such cases, charge-backs paid byCalithera to or through such a Third Party (such as a wholesaler) can be deducted by Calithera (or its Affiliate or Sublicensee, as applicable) fromgross revenue in order to calculate Net Sales. Any deductions listed above which involve a payment by Calithera (or its Affiliate or Sublicensee)shall be taken as a deduction against aggregate sales for the period in which the payment or deduction is made. Sales of Licensed Productssolely for research or clinical testing purposes shall be excluded from the computation of Net Sales.In the event that Licensed Products are sold in a package with other products, any discount applied to the Licensed Products to determine NetSales shall be no greater than the average discount of the entire package. In the event a Licensed Product is sold in the form of a combination product containing one or more active ingredients in addition to a LicensedCompound, Net Sales for such combination product (for purposes of calculating royalties and any sales milestone payments based on suchsales), on a country-by-country basis, will be adjusted by multiplying actual Net Sales of such combination product (as determined above) by thefraction A / (A + B) where A is the invoice price of the Licensed Compound in such Licensed Product, if sold separately as a Licensed Productwithout other active ingredients, and B is the invoice price of the other active ingredient or ingredients in the combination product, if soldseparately. If, on a country-by-country basis, the other active ingredient or ingredients in the combination are not sold separately in that country,Net Sales shall be calculated by multiplying actual Net Sales of such combination product by the fraction A / C where A is the amount asdetermined above, and C is the invoice price of the combination product as sold. If, on a country-by-country basis, the other active ingredient oringredients in the combination are sold separately in that country, but the Licensed Compound(s) is/are not sold separately as a Licensed Product,Net Sales shall be calculated by multiplying actual Net Sales of such combination product by the fraction (C-B)/C where B and C are calculated asprovided above. If, on a country-by-country basis, neither the Licensed Product nor the other active component or components of the combinationproduct is sold separately in said country, and thus A and B above cannot be determined with respect to such sale in such country, the fraction, tobe applied to determine adjusted Net Sales for such combination product, shall be the fraction reflecting the relative fair market value contributionof the Licensed Compound in such combination product to the total market value of such combination product, as determined by the Partiesreasonably and in good faith prior to the first commercial sale of the relevant combination product. In the event that the Parties are unable toagree on the relative fair market values, the Parties shall agree upon an internationally recognized, independent pharmaceutical executive withsignificant experience in pharmaceutical pricing and valuation, who shall be engaged by the Parties to make such determination and whosedetermination shall be final and binding on the Parties (with the Parties sharing the costs of such engagement). 1.24 “Patents” means (a) all patents and patent applications in any country or supranational jurisdiction, and (b) any substitutions,divisions, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementaryprotection certificates and the like, and any provisional applications, of any such patents or patent applications, and all foreign equivalents of anyof the foregoing.1.25 “Phase I Clinical Trial” shall mean a human clinical trial of a Licensed Product that would satisfy the requirements of 21 CFR312.21(a).1.26 “Phase II Clinical Trial” shall mean a human clinical trial of a Licensed Product that would satisfy the requirements of 21 CFR312.21(b).1.27 “Phase III Clinical Trial” means a clinical study in humans of the efficacy and safety of a Licensed Product that is prospectivelydesigned to demonstrate with statistical significance that such product is effective and safe for use in a particular Indication in a manner sufficientto file for Marketing Approval of such product and would satisfy the requirements of 21 CFR 312.21(c).4.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.1.28 “Regulatory Authority” means any federal, state or local regulatory agency, department, bureau or other government entity,including the FDA, which has responsibility for granting any licenses or approvals or granting pricing and/or reimbursement approvals necessary forthe marketing and sale of a Licensed Product in any country.1.29 “Sublicense Agreement” means any agreement entered into in accordance with Section 2.3 under which Calithera grants a ThirdParty a sublicense, option or other right relating to any Licensed Technology allowing such Third Party to Develop and Commercialize one or moreLicensed Products.1.30 “Sublicensee” means any Third Party that has entered into a Sublicense Agreement.1.31 “Term” has the meaning assigned to it in Section 10.1.1.32 “Territory” means all countries of the world.1.33 “Third Party” means any party other than Symbioscience, Calithera, or their respective Affiliates.1.34 “Tier 1 Product” means a Licensed Product that contains a Tier 1 Compound as an active pharmaceutical ingredient.1.35 “Tier 2 Product” means a Licensed Product that does not contain a Tier 1 Compound as an active pharmaceutical ingredient (butcontains (for clarity) a Tier 2 Compound as an active pharmaceutical ingredient). 1.36 “Valid Claim” means (a) any pending claim in any pending patent application within the Licensed Patents that has not beenabandoned, disclaimed or finally rejected with no further possibility of appeal, or (b) any claim of any issued and unexpired patent within theLicensed Patents that has not been disclaimed or abandoned held invalid or unenforceable by judgment or decree entered in any judicialproceeding that is not further appealable. 2.Licenses2.1 License Grant. Subject to the terms and conditions of this Agreement, Symbioscience hereby grants to Calithera the exclusive,worldwide, royalty-bearing license, with rights to grant sublicenses through multiple tiers in accordance with in Section 2.3, under the LicensedTechnology to research, have researched, Develop, have Developed, make, have made, use, have used, sell, have sold, offer for sale, haveoffered for sale, promote, have promoted, export, have exported, import and have imported Licensed Products in the Field in the Territory.2.2 Reservation of Rights; Restrictive Covenants. 2.2.1 No implied licenses are granted under this Agreement, and Symbioscience reserves all rights to all of its technology except forthe rights licensed to Calithera under Section 2.1. 2.2.2 In order to preserve exclusivity, (i) Symbioscience covenants that it and its Affiliates will not [*] during [*], (ii) Symbiosciencewill not [*] at any time during the Term, (iii) Calithera will not [*] from or after the time of [*] that are [*], and (iv) Calithera will not undertake, directlyor through any Third Party, [*] which is [*] that are [*]. 2.2.3 While the exclusive license granted to Calithera is limited to the Field, Symbioscience covenants and agrees that it and itsAffiliates shall not develop or commercialize (or license or otherwise permit any other party to do so) any product for use outside the Field thatcontains (a) any Licensed Compound, during [*], and (b) thereafter, any [*] Licensed Compounds reserved by Calithera for use in a LicensedProduct in the Field by Calithera (the “Reserved Compounds”). At any time after [*], Symbioscience may request, and Calithera shall provide inwriting within 10 business days, the list (the “Reserved Compound List”) of the Reserved Compounds (which for clarity [*], provided that [*] that [*]or [*], including any [*], other than [*] Reserved Compounds). From time to time thereafter, Calithera may modify such Reserved Compound Listby substituting one or more other Licensed Compounds for the Reserved Compounds then on such list (in each case, [*]), subject to the followingprocedure: If Calithera wishes to modify the Reserved Compound List, it shall submit to Symbioscience a list (a “Substitution List”) of theLicensed Compounds ([*]) that Calithera desires to add (as “new” Reserved Compounds) to the Reserve Compounds List, and the particularLicensed Compounds on the existing Reserved Compound List (for each such Licensed Compound desired to be added to the ReservedCompound List) that Calithera desires to remove from such list (and thereby delete as Reserved Compounds, while remaining, for clarity, asLicensed Compounds). Each such Licensed Compound that Calithera proposes, in a particular Substitution List, to add to5.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.the Reserved Compound List as a “new” Reserved Compound shall (as of the date thirty (30) business days after Calithera submits suchSubstitution List to Symbioscience) automatically be added to the Reserved Compound List as a Reserved Compound, and the respectiveLicensed Compound that Calithera indicates (on such Substitution List) to remove (in exchange for the substitution of such new ReservedCompond) from the Reserved Compound List shall then automatically be removed from the Reserved Compound List and no longer be a ReservedCompound, unless Symbioscience delivers to Calithera, by the date thirty (30) business days after Calithera submits such Substitution List toSymbioscience, documentary evidence demonstrating, to Calithera’s reasonable satisfaction, that, [*]: (a) [*] and [*] with respect to such LicensedCompound that Calithera proposed (on such Substitution List) to add as a new Reserved Compound or [*] with respect to such [*], or (b) [*] and [*]or [*] such Licensed Compound that Calithera proposed to add as new Reserved Compound. In the event that either of the circumstances insubclauses (a) or (b) exist, and Symbioscience shall have notified Calithera in writing within 30 business days of receipt of such Substitution Listof such circumstance and have provided such documentary evidence to Calithera as required above, then the relevant Licensed Compound(covered by such circumstances) shall not be added to the Reserved Compound List (and shall remain a Licensed Compound), and Calithera shallbe permitted to request a substitute therefor by submitting a new Substitution List for such compound (and for any other License Compound on theprior Substitution List that was not added to the Reserved Compound List due to the foregoing), pursuant to the above procedure.2.2.4 In the event that Symbioscience decides to pursue (or authorize a Third Party to pursue) [*] (which pursuit must in any eventbe in accordance with the restriction in Section 2.2.3 (i.e., [*]), Symbioscience shall give written notice to Calithera specifying in reasonable detailthe program that Symbioscience intends to pursue (the "Offer"). Calithera shall have thirty (30) days after the date of the Offer to provide a writtenresponse to Symbioscience (the "Response") as to whether or not it wishes to enter into negotiations with Symbioscience with respect to rights tosuch program. If the Response states that Calithera wishes to enter into negotiations with Symbioscience, the Parties shall negotiate in good faiththe licensing of such rights [*] for a period of ninety (90) days from the date of the Response. If the Response is not received within the thirty (30)day response period or if Calithera declines to enter into negotiations or if the Parties do not agree upon and execute a written agreement within aninety (90) day negotiation period after Calithera’s Response is given, then Symbioscience shall thereafter be free to pursue the relevant program,alone or with third parties, subject to compliance with Section 2.2.3. 2.3 Right to Sublicense.2.3.1 Calithera may grant sublicenses under the license set forth in Section 2.1 to its Affiliates and Third Parties, subject to theterms and conditions set forth in Sections 2.2 and 2.3. An existing Sublicensee in good standing may grant further sublicenses, also subject tosuch terms and conditions. Calithera will provide Symbioscience with a complete copy of each Sublicense Agreement within thirty (30) days ofexecution of such agreement, and shall use reasonable efforts to obtain and provide to Symbioscience a complete copy of each further sublicenseas soon as practicable after execution thereof. 2.3.2 Each Sublicense Agreement with a Sublicensee, and each further sublicense, shall be consistent with and subject to theterms and conditions of this Agreement.2.3.3 Calithera will monitor compliance with and use reasonable efforts to enforce the terms of the Sublicense Agreements againstits Sublicensees, and shall require that its Sublicensees also use reasonable efforts to enforce the terms of any approved sublicense agreementswith further Sublicensees.2.3.4 In no event shall Calithera or any Affiliate or Sublicensee have the right to grant any sublicense that is a [*] to any Third Partyunder the Licensed Patents without the prior written consent of Symbioscience, which consent shall not be unreasonably withheld, conditioned, ordelayed. For purposes hereof, a “[*]” shall mean a sublicense granted to a Third Party under any Licensed Patent that both: (a) [*] that [*] or [*] or[*] the relevant sublicense is granted, and (b) [*] and/or [*] that [*] or [*] or [*] such sublicense is granted, and [*] and [*]. Any breach of thisSection 2.3.4 by any Affiliate or Sublicensee shall be deemed a material breach of this Agreement by Calithera, giving rise to termination rights asprovided in Section 10.2, provided that it is understood and agreed that Calithera may cure such breach by either terminating the SublicenseAgreement with the Sublicensee that breaches this provision, or by causing the termination of the applicable [*], prior to the date that is [*] daysafter notice from Symbioscience under Section 10.2.1 of such breach.2.4 Technology Transfer. Promptly after the Effective Date, Symbioscience will provide Calithera, at no additional expense, withreasonable assistance in transitioning its Arginase Inhibitor program to Calithera, including: (a) by providing copies of Licensed Technology andrelated program information (including without limitation data, lab books, and other reports generated by or on behalf of Symbioscience regardingany previously conducted in vitro and in vivo6.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.studies of the Licensed Compounds) as reasonably requested by Calithera, and (b) reasonable amounts of available compound samples of eachLicensed Compound in such reasonable quantities as may be agreed by the Parties, and (c) providing reasonable amounts of consultationregarding such information and the status of the Symbioscience program.3.Development of Licensed Products3.1 Responsibilities. Subject to the terms and conditions of this Agreement (including without limitation Section 3), Calithera will beresponsible, at Calithera’s expense, for the Development of Licensed Products in the Field in the Territory, using Commercially ReasonableEfforts. Calithera will conduct, and will cause its Affiliates and Sublicensees to conduct, such activities in a good scientific manner and incompliance in all material respects with all applicable laws. 3.2 Records. All Development activities conducted by or on behalf of Calithera will be recorded, in reasonable detail and in goodscientific manner. Calithera, its Affiliates and Sublicensees will also retain all records required by applicable law to be maintained in connectionwith the Development of Licensed Products hereunder. 3.3 Expenses. Calithera will bear all expenses in connection with its Development of Licensed Products in the Field hereunder. 3.4 Diligence. Calithera will use Commercially Reasonable Efforts to Develop and to obtain Marketing Approvals for at least oneLicensed Product in the Field [*], as soon as reasonably practicable. Calithera shall provide notice to Symbioscience if at any time during theTerm it decides to abandon the further Development and Commercialization of all Licensed Compounds and Licensed Products. Any such noticeshall constitute notice by Calithera to terminate, and will result in termination of, the Agreement pursuant to Section 10.3. In the event thatSymbioscience believes Calithera is in material breach of its obligation to use Commercially Reasonable Efforts under this Section 3.4, thenSymbioscience may so notify Calithera in writing, which notice shall provide available details regarding the basis for its belief and specifying thatsuch notice (a “Diligence Breach Notice”) is being provided by Symbioscience pursuant to this Section 3.4. If a Diligence Breach Notice isprovided to Calithera, Calithera may, within a further period of [*] days after its receipt of such notice, provide a written report to Symbioscience tojustify why Calithera believes it is not in such material breach of such diligence obligation. If no such report is provided by Calithera by the end ofsuch time period, Symbioscience shall be permitted to terminate this Agreement pursuant to Section 9.3. If Calithera provides a response, theParties shall then conduct an initial meeting within [*] days after delivery of such a written report from Calithera to discuss in good faith theconcerns raised by Symbioscience and shall conduct such additional meetings as are reasonably necessary to reach agreement as to whether ornot Calithera is in material breach of its obligations under this Section 3.4 for an additional [*] days after such initial meeting. If after such [*] dayperiod following the initial meeting, the Parties cannot reach agreement then, upon request of either Party, the matter shall be referred to thedispute resolution procedure outlined under Section 13.3, which procedure shall be required to: (a) determine whether there was, in fact, a materialbreach by Calithera of its diligence obligation, and (b) if it is determined that there was an uncured material breach, specify what additional effortsCalithera must undertake to cure such breach, and the time period during which such efforts must be commenced and completed (which timeperiod shall be commercially reasonable). If such procedure determines that there was a material breach of the diligence obligation hereunder, andCalithera does not commence or complete the cure efforts specified by the arbitration result (in response to the clause (b) requirement above) bythe required relevant dates, then Symbioscience may terminate the Agreement pursuant to Section 9.3. All efforts of Calithera’s Affiliates, ThirdParty contractors and Sublicensees will be considered efforts of Calithera for the purpose of determining Calithera’s compliance with its obligationsunder this Section 3.4. 4.Commercialization of Licensed Products4.1 General. Calithera (and/or its Affiliates and Sublicensees) will be solely responsible, at its own cost, and using CommerciallyReasonable Efforts, for Commercialization of the Licensed Products in the Territory during the Term.4.2 Diligence. Calithera (or its Affiliate or Sublicensee, as applicable) will use Commercially Reasonable Efforts to launch eachLicensed Product in each country of the Territory [*] after receiving Marketing Approval in such country. Thereafter, Calithera (or its Affiliate orSublicensee, as applicable) will use Commercially Reasonable Efforts to Commercialize the Licensed Product in such country. All efforts ofCalithera’s Affiliates, Third Party contractors and Sublicensees will be considered efforts of Calithera for the purpose of determining Calithera’scompliance with its obligations under this Section 4.7.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.4.3 Reports. Calithera shall, on or before each anniversary of the Effective Date, and continuing until such time as First CommercialSale of a first Licensed Product has occurred in all Major Market Countries and Japan, provide Symbioscience with a summary written report ofthe status of its efforts, and those of its Affiliates and Sublicensees, to Develop and Commercialize Licensed Compounds and Licensed Products.In addition, upon request of Symbioscience, no more than once per year, Calithera shall make a representative familiar with Calithera’s efforts withrespect to the Development and/or or Commercialization of Licensed Compounds and Licensed Products available for a meeting (to be a half-dayor less) with Symbioscience representatives, at a mutually agreed location or by teleconference, to discuss the progress reports provided aboveand, prior to such time as a First Commercial Sale has occurred with respect to a Licensed Product for each Major Market Country and Japan,Calithera shall promptly and in good faith provide such information with respect to such efforts as is reasonably requested by Symbioscience fromtime to time.5.Manufacture of Licensed ProductsManufacture and Supply. Calithera will be solely responsible, using its reasonable efforts, for and shall control all activities relating to,obtaining quantities of Licensed Products for its Development and Commercialization efforts in the Territory hereunder. 6.Financial Terms6.1 Initial License Fee. Calithera will pay to Symbioscience a non-creditable, non-refundable initial license fee of [*] dollars ($[*]) on theEffective Date.6.2 Milestone Payments. 6.2.1 Development Milestones. Calithera will pay to Symbioscience the following non-creditable, non-refundable milestonepayments within sixty (60) days following the first achievement by any Licensed Product of the corresponding events described in the tablebelow. Subject to the paragraphs following the table below, each Development Milestone payment below shall be paid only once, upon the firstattainment of the applicable milestone event by any Licensed Product. Milestone Event Milestone Payment TIER 1 PRODUCT TIER 2 PRODUCT[*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*][*] $[*] $[*]For clarity, each of the above milestones payments will be paid in full only once, with the amount of certain of the milestone payments dependenton whether it is a Tier 1 Product or a Tier 2 Product that first meets the milestone (as indicated in the table above).If Calithera also pursues Development of additional Licensed Products in either category set forth above (i.e., a product containing a differentactive ingredient than the initial Tier 1 Product or Tier 2 Product in clinical development and for which a full payment was made as providedabove), then the above milestone payments shall be owed for development8.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.milestones, commencing with the “[*]” milestone, achieved by each such additional Licensed Product, for both Tier 1 Products and Tier 2Products, but the payments shall be [*] of the milestone payment amounts set forth for the applicable milestone in the above schedule, and nosuch additional payments shall be payable unless and until [*] in the relevant category, provided that the payments for other Licensed Productsshall [*] with respect to all Licensed Products for which [*].6.2.2 Net Sales Milestones. Within sixty (60) days of the first achievement by Net Sales during a calendar year of all LicensedProducts in the aggregate of any of the following annual Net Sales Milestone events, Calithera will pay to Symbioscience the applicable milestonepayment as set forth in the schedule below in the specified amount of US Dollars. Each Net Sales Milestone payment below shall be paid onlyonce on the first occurrence of such milestone event, subject to the paragraph following the table below. Net Sales Milestone(aggregate Net Salesamounts in a CalendarYear) Payment (Tier 1Product) Payment (Teir 2Product)$[*] $[*] $[*]$[*] $[*] $[*]$[*] $[*] $[*]$[*] $[*] $[*]Payment of the milestone for achievement of each of the above Net Sales milestones will be made only once, with the amount of the milestonepayment, for a particular sales milestone that is achieved, dependent on whether Tier 1 Products and/or Tier 2 Products are being sold when theNet Sales Milestone threshold is achieved. In the event that more than one Licensed Product contributes to the total Net Sales, then the resultingpayment will be proportional to the contribution of each individual Licensed Product (examples provided in Exhibit B).6.3 Royalties.6.3.1 Royalty Rates. Calithera will pay to Symbioscience a royalty on Net Sales of Licensed Products by Calithera, its Affiliatesand Sublicensees in the Territory. The royalty rates shall be determined on a Licensed Product-by-Licensed Product and country-by-countrybasis, based on: (a) the type of Licensed Product (Tier 1 Product or Tier 2 Product) being sold in the applicable country, and (b) the aggregate NetSales of all Licensed Products throughout the Territory during a calendar year, as follows : Royalty Tiers (aggregate annual Net Sales) Tier 1Products Tier 2ProductsThe portion of aggregate Net Sales of Licensed Products during acalendar year that is equal to or less than $[*] [*]% [*]%The proportion of aggregate Net Sales of Licensed Products during acalendar year that is greater than $[*] but equal to or less than $[*] [*]% [*]%The proportion of aggregate Net Sales of Licensed Products during acalendar year that is greater than $[*] but equal to or less than $[*] [*]% [*]%The proportion of aggregate Net Sales of Licensed Products during acalendar year that exceeds $[*] [*]% [*]%6.3.2 Royalty Reduction for Generic Products. If there are one or more unauthorized Third Parties selling a generic version of aLicensed Product in a country (“Generic Product”) at the time of sale of the Licensed Product in a country, then the royalty rate shall be reduced insuch country for a given calendar quarter by: (i) [*], if aggregate total unit sales of such Generic Products in such country in such calendar quarterexceed [*] of the aggregate total of all unit sales for such Licensed Product and such Generic Product(s) (i.e., based on unit volume market share)in such country during9.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.such calendar quarter; (ii) by [*], if aggregate total unit sales of such Generic Products in such country in such calendar quarter exceed [*] of theaggregate total of all unit sales for such Licensed Product and such Generic Product(s) in such country during such calendar quarter; and (iii) by[*], if unit sales of such Generic Products in such country in such calendar quarter exceed [*] of the sum of all unit sales for such LicensedProduct and such Generic Product(s) in such country during such calendar quarter.6.3.3 Royalty Term. Calithera’s royalty payment obligations under this Section 6.3 will expire, with respect to a particular LicensedProduct sold in a country (on a Licensed Product-by-Licensed Product and country-by-country basis), upon the expiration of the period (the“Royalty Term” for such Licensed Product in such country) commencing upon First Commercial Sale of the applicable Licensed Product in suchcountry and ending upon the later of: (a) expiration of the last-to-expire Valid Claim of any Patent Controlled by Calithera covering the sale of suchLicensed Product in the country of sale on the date of sale, and (b) [*] years after the First Commercial Sale of such Licensed Product byCalithera, its Affiliates or Sublicensees in such country. 6.4 Third Party Obligations. Calithera shall be responsible for the payment of any additional Third-Party license fees, milestonepayments, royalties and any other license payments with respect to Licensed Products that are based on agreements entered into by Calithera (orits relevant Affiliate or Sublicensee); provided however, that Calithera shall be entitled to credit [*] of any license payments (including royalties)paid by Calithera under agreements entered into by Calithera (or its relevant Affiliate or Sublicensee) after the Effective Date [*] against royaltiesdue to Symbioscience hereunder for the relevant Licensed Product and country, provided, further, that in no event shall the amounts due toSymbioscience from Calithera with respect to the relevant Licensed Product and country be reduced by more than [*] of the amounts otherwisedue (with any such amounts not creditable due to the foregoing limitation on reduction, being carried forward to future payment obligations, untilfully credited).6.5 Royalty Reports; Payment. Following the First Commercial Sale of any Licensed Product for which royalties are due pursuant toSection 6.3, and continuing for so long as royalties are due hereunder, within sixty (60) days after the end of each calendar quarter, Calithera shallprovide a royalty report showing, on a Licensed Product-by-Licensed Product and country-by-country basis:(a) the Net Sales of each Licensed Product sold by Calithera, its Affiliates and Sublicensees during such calendar quarterreporting period, and an indication of whether each such Licensed Product is a Tier 1 Product or a Tier 2 Product;(b) the royalties payable in United States dollars which shall have accrued hereunder with respect to such Net Sales;(c) withholding taxes, if any, required by applicable law to be deducted with respect to such royalties; and(d) the rate of exchange with supporting calculations, determined in accordance with Section 6.6, used by Calithera indetermining the amount of United States dollars payable hereunder.Calithera shall pay to Symbioscience the royalties for each calendar quarter at the time of submission of Calithera’s royalty report. If no royalty isdue for any royalty period hereunder following commencement of the reporting obligation, Calithera shall so report.6.6 Currency Exchange. In the case of Net Sales outside the United States, the rate of exchange to be used in computing the amountof currency equivalent in United States dollars shall be the rate of exchange used by Calithera or its Affiliate or Sublicensee, as relevant, for itsown financial reporting purposes in connection with its other products or accounts, which shall be consistent with GAAP. Upon request bySymbioscience, Calithera shall provide Symbioscience with a copy of Calithera’s (or its Affiliate’s or Sublicensee’s, as relevant) then-currentcurrency exchange policy.6.7 Records; Audit. Records and Audits. Calithera shall keep for [*] years from the date of payment of any amounts owed hereunderaccurate records of sales by Calithera of each Licensed Product in sufficient detail to allow the accruing royalties and milestone payments to bedetermined. Symbioscience shall have the right for a period of [*] years after receiving any royalty report to appoint an independent certified andinternationally recognized public accountant reasonably acceptable to Calithera for the sole purpose of inspecting the relevant records of Calitherato verify relevant reports. Upon reasonable notice from Symbioscience, Calithera shall make such records available for such inspection10.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.during regular business hours at such place or places where such records are customarily kept. Such inspection right shall not be exercised morethan once in any calendar year nor more than once with respect to sales of Licensed Products in any given payment period. The results of eachinspection, if any, shall be binding on both Parties, unless either Party commences an Audit Disagreement procedure pursuant to Section 6.8within 90 days from notification of such results by the appointed accountant. Symbioscience shall pay for the costs of any such inspection, exceptthat Calithera shall pay for the reasonable costs of such inspection if its binding results or the result of the Audit Disagreement procedure showsany upward adjustment in aggregate amounts payable for the period inspected of more than [*] of the amount actually paid. 6.8 Audit Disagreement. If there is a dispute between the Parties following any inspection performed pursuant to Section 6.7, eitherParty may refer the issue (the “Audit Disagreement”) to an independent certified public accountant for resolution. In the event that an AuditDisagreement is submitted for resolution by either Party, the Parties shall comply with the following procedures:(a) The Party submitting the Audit Disagreement for resolution shall provide written notice to the other Party that it is invokingthe procedures of this Section 6.8;(b) Within thirty (30) days of giving such notice, the Parties shall in good faith jointly select and engage a recognizedinternational independent accounting firm to act as an independent certified public accountant to resolve such Audit Disagreement (the “ResolutionFirm”); if no agreement on the independent expert can be reached by the Parties within that time then the accounting firm engaged to resolve suchAudit Disagreement as the Resolution Firm shall be the independent accounting firm that is not used by either Party and that has the largest, bytotal revenues, auditing practice in the United States as of the end of the calendar year immediately prior to the time of the dispute;(c) The Audit Disagreement submitted for resolution shall be described by the Parties to the engaged Resolution Firm, whichdescription may be in written or oral form, within ten (10) business days from the selection of such firm; if the description is made to the ResolutionFirm in oral form, it will be reduced by the Resolution Firm to writing, with a copy provided to each Party;(d) The Resolution Firm shall have the right to access and review the relevant records of Calithera as needed to resolve theAudit Dispute. The Resolution Firm shall render a decision on the matter as soon as practicable;(e) The decision of the Resolution Firm shall be final and binding unless such Audit Disagreement and/or such decisioninvolves alleged fraud, breach of this Agreement, or construction or interpretation of any of the terms and conditions thereof, in which case thematter shall be resolved under Section 13.3; (f) All fees and expenses of the Resolution Firm, including any Third Party support staff or other costs incurred with respectto carrying out the procedures specified at the direction of the independent expert in connection with such Audit Disagreement, shall be borne byeach Party in inverse proportion to the disputed amounts awarded to the Party by the Resolution Firm through such decision (e.g., Party Adisputes $100, the independent expert awards Party A $ 60, then Party A pays forty percent (40%) and Party B pays sixty percent (60%) of theResolution Firm’s costs).6.9 Confidentiality. Each Party will treat all information subject to review under Sections 6.7 and 6.8 in accordance with the provisionsof Section 9 and will cause its accounting firm and the independent expert to enter into a reasonably acceptable confidentiality agreement with theaudited Party obligating such entity to maintain all such financial information in confidence pursuant to such confidentiality agreement.6.10 Payment Terms; Interest. 6.10.1 Payments under this Agreement shall be made in U.S. Dollars by wire transfer of immediately available funds to an accountat a commercial bank designated by Symbioscience, such designation in writing to be provided to Calithera at least ten (10) business days beforepayment is due. Any payments due under this Agreement shall be due on such date as specified in the Agreement or, in the event that such dateis not a business day, the next succeeding business day. Any payments based on invoices shall be made within thirty (30) days from Calithera’sreceipt of such invoice.6.10.2 If Calithera does not make a payment that is owed under the terms of this Agreement by the date when due, then Calitherashall be obligated to pay computed simple interest, the interest period commencing from such date and ending on the date that payment of theamount owed is actually made, at an interest rate per annum equal to [*]11.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.as quoted on the due date, or the highest rate allowed by law, whichever is lower. The interest calculation shall be based on the act/360computation method. Such interest shall be due and payable on the tender of the underlying principal payment.6.11 Taxes.6.11.1 Withholding Taxes. Symbioscience will be responsible for any income or other taxes owed by Symbioscience andrequired by applicable law to be withheld or deducted from any of the royalty and other payments made by or on behalf of Calithera toSymbioscience hereunder (“Withholding Taxes”), and Calithera may deduct from any amounts that Calithera is required to pay hereunder toSymbioscience an amount equal to any such Withholding Taxes required by Calithera to be withheld and paid to the proper tax authority. Symbioscience will provide Calithera any information available to Symbioscience that is necessary to determine the Withholding Taxes. SuchWithholding Taxes will be paid to the proper taxing authority for Symbioscience’s account and evidence of such payxment will be secured and sentto Symbioscience within ten (10) days of such payment. The Parties will use reasonable efforts to do such lawful acts and sign such lawful deedsand documents as either Party may reasonably request from the other Party to enable Symbioscience and Calithera or its Affiliates orSublicensees to take advantage of any applicable legal provision or any double taxation treaties with the object of paying the sums due toSymbioscience hereunder without, or to minimize the amount of, such withholding or deduction of any Withholding Taxes.7.Intellectual Property Rights7.1 Filing, Prosecution and Maintenance of Licensed Patents. 7.1.1 In accordance with this Section 7.1.1, unless the Parties otherwise agree in writing and for so long as Calithera retainsexclusive rights hereunder, Calithera will have lead responsibility for, and Symbioscience shall cooperate fully, with respect to, the preparation,filing, prosecution, enforcement and maintenance in the Territory of the Licensed Patents identified on Exhibit A. Calithera shall be responsible forall costs and expenses (including reasonable out-of-pocket costs incurred by Symbioscience in performing any related activities at the prior writtenrequest of Calithera) with respect to such activities. Calithera will perform such activities through patent counsel of its choice but reasonablyacceptable to Symbioscience. Calithera will provide Symbioscience with copies of all official correspondence received from patent offices, andwith any proposed substantive responses thereto sufficiently in advance for Calithera to provide comments and suggestions on such proposedresponses. Calithera will provide Symbioscience with an update of the filing, prosecution and maintenance status for each Licensed Patent on aperiodic basis. In the event that Calithera elects not to pursue or continue the filing, prosecution or maintenance of any Licensed Patent in anycountry, Calithera shall provide Symbioscience with notice of this decision at least thirty (30) days prior to any pending lapse or abandonmentthereof and provide Symbioscience with an opportunity to assume responsibility for such filing, prosecution or maintenance. In the event thatSymbioscience elects in writing to assume responsibility for such filing, prosecution and maintenance, Symbioscience shall have the right totransfer the responsibility for such filing, prosecution and maintenance of such patent applications and patents to patent counsel (outside orinternal) selected by it, and Calithera shall cooperate with Symbioscience as reasonably requested to facilitate transfer of the control of such filing,prosecution and maintenance. For clarity, all filings with respect to Licensed Patents shall at all times continue to be pursued in the name ofSymbioscience or its designee. In the event that Symbioscience assumes responsibility for any such Licensed Patent as provided above, [*] and[*] of [*] with respect to such filing, prosecution and maintenance [*], and [*].7.2 Enforcement.7.2.1 Initiation. If either Party learns of any infringement or threatened infringement by a Third Party of any Licensed Patent, suchParty shall promptly notify the other Party and shall provide such other Party with available evidence of such infringement. Calithera shall havethe first right, but not the obligation, at its sole expense, to bring suit or other appropriate legal action against any actual or suspected infringementof any Licensed Patents relating to the Development or Commercialization of Licensed Products in the Field in the Territory. If Calithera does nottake such action within one hundred twenty (120) days after written notice from Symbioscience of such infringement, then on written request bySymbioscience, and with Calithera’s prior written consent (not to be unreasonably withheld) Symbioscience shall have the right but not theobligation, at its own expense, to bring suit or other appropriate legal action against such infringement.7.2.2 Cooperation. Each Party shall execute all papers and perform such other acts (other than monetary) as may be reasonablyrequired to maintain any infringement suit brought in accordance with Section 7.2.1 above (including giving legal consent for bringing such suit alsoin the name and on behalf of Calithera), and at its option and expense, may be represented in such suit by counsel of its choice. In addition, theParties shall cooperate with each other12.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.in obtaining patent term restoration or supplemental protection certificates or their equivalents in any country where applicable to Licensed Patents.In the event that elections with respect to obtaining such patent term restoration, supplemental protection certificates or their equivalents are to bemade, the Parties shall agree upon such elections.7.2.3 Recovery. Any amount recovered, whether by judgment or settlement, shall first be applied to reimburse the costs andexpenses (including attorneys’ fees) of the Party bringing suit, then to the costs and expenses (including attorneys’ fees), if any, of the otherParty. If Calithera brings the suit, then Calithera shall retain the net amount recovered (after payment of costs and expenses as above), and suchnet recovery shall be deemed Net Sales for the calendar quarter received, and Calithera shall pay Symbioscience royalties thereon under Section6.3.1 [*]. If Symbioscience brings such suit, then any such net amounts of recovery (remaining after payment of costs and expenses as above)shall be allocated [*] to Symbioscience and [*] to Calithera (or [*] if the suit is brought jointly).7.3 Defense of Infringement Claims. If the manufacture, sale or use of a Licensed Product pursuant to this Agreement results in, ormay result in, any claim, suit, or proceeding by a Third Party alleging patent infringement by Calithera (or its Affiliates or Sublicensees) in the Fieldin the Territory, Calithera will promptly notify Symbioscience thereof in writing. Calithera or its Affiliate or Sublicensee will have the exclusive rightto defend and control the defense of any such claim, suit, action or proceeding at its own expense, using counsel of its own choice, and maysettle any such claim, suit, action or proceeding at its sole discretion; provided, that if any such settlement would admit or concede that anymaterial aspect of the Licensed Patents are invalid or unenforceable, or require Symbioscience to pay any amounts, the aspects of suchsettlement directly involving such admission or concession or payment shall require the prior written consent of Symbioscience. Calithera willkeep Symbioscience reasonably informed of all material developments in connection with any such claim, suit, or proceeding. Calithera agrees toprovide Symbioscience with copies of all material pleadings filed in such action and to allow Symbioscience reasonable opportunity to comment onthe defense of the claims (provided that Calithera shall have no obligation to disclose any matter that is covered by the attorney-client privilege orwork product privilege). 8.Representation and Warranties; Covenants8.1 Symbioscience Warranties. Symbioscience hereby warrants and represents to Calithera as of the Effective Date that: (i) Symbioscience has the right to grant the licenses under the Licensed Technology as set forth in this Agreement; (ii) Symbioscience has notentered into any agreement, arrangement or understanding that conflicts with the terms of this Agreement; (iii) Symbioscience owns or Controlsthe entire right, title and interest in and to the Licensed Technology; (iv) Symbioscience and its Affiliates have not granted to any Third Party anylicense rights, options or other rights in, under or to the Licensed Technology that conflict with the terms of this Agreement; (v) as of the EffectiveDate, Symbioscience is not aware of (a) any patent rights owned by a Third Party that would be infringed by the use or practice of the LicensedTechnology in the Field in the Territory under the License granted in Section 2.1, or (b) any patent rights owned or licensed by Symbioscience orits Affiliates that are not Licensed Patents and for which a license likely would be required to use or practice the Licensed Technology in the Fieldin the Territory under the License granted in Section 2.1, or (c) any prior art or other facts or circumstances that would reasonably leadSymbioscience, or its Affiliate, to believe that any of the Licensed Patents are likely invalid or unenforceable; and (vi) none of the LicensedTechnology has been misappropriated from any Third Party. 8.2 Reciprocal Representations and Warranties. Each Party represents and warrants to the other Party that: (i) this Agreement is alegal and valid obligation binding upon its execution and enforceable against it in accordance with its terms and conditions; and (ii) the execution,delivery and performance of this Agreement by such Party has been duly authorized by all necessary corporate action, and (iii) the personexecuting this Agreement on behalf of such Party has been duly authorized to do so by all requisite corporate actions.8.3 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTIONS 8.1 AND 8.2, NEITHERPARTY MAKES ANY REPRESENTATIONS NOR GRANTS ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BYOPERATION OF LAW, BY STATUTE OR OTHERWISE, AND SYMBIOSCIENCE AND CALITHERA EACH SPECIFICALLY DISCLAIMS ANYOTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY ORMERCHANTABILITY, OR ANY WARRANTY AS TO THE VALIDITY OR ENFORCEABILITY OF ANY PATENTS OR THE NON-INFRINGEMENTOF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.13.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.9.Confidentiality9.1 Definition. During the Term, a Party (the “Disclosing Party”, with respect to information disclosed by such Party) may disclose orotherwise communicate to the other Party (the “Receiving Party”, with respect to information disclosed to such Party by the other Party) itsinformation in connection with this Agreement or the performance of its obligations hereunder (the “Confidential Information” of the disclosingParty), which may include scientific and manufacturing information and plans, marketing and business plans, and financial and personnel mattersrelating to a Party or its present or future products, sales, suppliers, customers, employees, investors or business. Without limiting the foregoing,“Confidential Information” of a Party is hereby deemed to include any information disclosed by such Party to the other Party pursuant to thatcertain confidentiality agreement between the Parties dated as of 11/20/13 (the “Prior CDA”).9.2 Exclusions. Notwithstanding the foregoing, information disclosed by a Disclosing Party will not be deemed Confidential Informationwith respect to the Receiving Party for purposes of this Agreement if such information:(a) was already known to the Receiving Party or its Affiliates, as evidenced by their written records, other than under an obligation ofconfidentiality or non-use, at the time of disclosure to the Receiving Party;(b) was generally available or was otherwise part of the public domain at the time of its disclosure to the Receiving Party;(c) became generally available or otherwise became part of the public domain after its disclosure to the Receiving Party, through nofault of or breach of its obligations under this Section 11 or the Prior CDA by the Receiving Party;(d) was disclosed to the Receiving Party, other than under an obligation of confidentiality or non-use, by a Third Party who had noobligation to the Party that controls such information and know-how not to disclose such information or know-how to others and has the lawful rightto disclose it; or(e) was independently discovered or developed by the Receiving Party or its Affiliate, as evidenced by written records, without theuse of Confidential Information belonging to the Disclosing Party.9.3 Disclosure and Use Restriction. Except as expressly otherwise provided herein, each Party agrees that, during the Term and for [*]years thereafter, such Party (as the Receiving Party with respect to Confidential Information of the other Party) and its Affiliates and Sublicenseeswill keep completely confidential, and will not publish or otherwise disclose and will not use for any purpose except for the purposes contemplatedby this Agreement, any Confidential Information of the Disclosing Party..9.4 Authorized Disclosure. A Receiving Party may disclose specific Confidential Information of the Disclosing Party to the extent thatsuch disclosure is:9.4.1 required by a valid order of a court of competent jurisdiction or other governmental or regulatory body of competent jurisdiction;provided, that such Receiving Party will first have given reasonable prior notice of such disclosure requirement to the Disclosing Party and giventhe Disclosing Party a reasonable opportunity to quash such order and/or to obtain a protective or order limiting such disclosure and/or requiringthat the Confidential Information and documents that are the subject of such order be held in confidence by such court or governmental orregulatory body and/or, if disclosed, be used only for the purposes for which the order was issued; and provided, further, that if the disclosurerequirement is not quashed, the Confidential Information disclosed in response to such court or governmental order will be limited to thatinformation that is legally required to be disclosed in response to such court or governmental order, taking into account any protective or othersimilar order limiting such disclosure obligation;9.4.2 required by law; provided, that the Disclosing Party will provide the Receiving Party with notice of such disclosure in advancethereof to the extent practicable and the disclosure will be limited to that information that is legally required to be disclosed in response to suchcourt or governmental order;9.4.3 made by the Receiving Party to regulatory authorities as required in connection with any regulatory filing or application made inaccordance with the terms of this Agreement; provided, that reasonable measures will be taken to assure confidential treatment of suchinformation;14.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.9.4.4 made by the Receiving Party as reasonably required in connection with the performance of this Agreement, to Affiliates,employees, consultants, representatives or agents, each of whom prior to disclosure must be bound by obligations of confidentiality and non-useat least equivalent in scope to those set forth in this Section 9.4;9.4.5 made by the Receiving Party to existing or potential acquirers or merger candidates; potential sublicensees or collaborators (tothe extent contemplated hereunder); investment bankers; existing or potential investors, venture capital firms or other financial institutions orinvestors for purposes of obtaining financing; or Affiliates, each of whom prior to disclosure must be bound by obligations of confidentiality andnon-use at least equivalent in scope to those set forth in this Section 9.4;9.4.6 made by the Receiving Party with the prior written consent of the Disclosing Party.9.5 Use of Name. Neither Party may make public use of the other Party’s name except (a) in connection with announcements and otherdisclosures relating to this Agreement and the activities contemplated hereby as permitted in Section 9.4, (b) as required by applicable law, and (c)otherwise as agreed in writing by such other Party.9.6 Press Releases9.6.1 The Parties have mutually agreed on a press release to be issued by Calithera announcing the execution of this Agreement,which is attached hereto as Exhibit C. For subsequent press releases and other written public disclosures relating to this Agreement or the Parties’relationship hereunder (each, a “Public Disclosure”), each Party will use reasonable efforts to submit to the other Party a draft of such PublicDisclosure for review and comment by the other Party at least five (5) full business days prior to the date on which such Party plans to releasesuch Public Disclosure, and in any event will submit such drafts at least 24 hours prior to the release of such Public Disclosure, and will reviewand consider in good faith any comments provided in response.9.6.2 If a Party is unable to comply with the foregoing 24-hour notice requirement because of a legal obligation or stock exchangerequirement to make more rapid disclosure, such Party will not be in breach of this Agreement but will in that case give telephone and email noticeto a senior executive of the other Party and provide a draft disclosure with as much notice as possible prior to the release of such PublicDisclosure.9.6.3 A Party may publicly disclose, without regard to the preceding requirements of this Section 9.6, information that waspreviously disclosed in a Public Disclosure that was in compliance with such requirements.9.7 Terms of Agreement to be Maintained in Confidence. The Parties agree that the terms of this Agreement are confidential and willnot be disclosed by either Party to any Third Party (except to a Party’s professional advisor) without prior written permission of the other Party;provided, that either Party may make any filings of this Agreement required by law or regulation in any country so long as such Party uses itsreasonable efforts to obtain confidential treatment for portions of this Agreement as available, consults with the other Party, and permits the otherParty to participate, to the extent practicable, in seeking a protective order or other confidential treatment; and provided further, that a Party maypublicly disclose, without regard to the preceding requirements of this Section 9.7, information that was previously disclosed in compliance withsuch requirements; and provided further, that a Party may disclose such terms in confidence as provided in Section 9.4.5.10.Term and Termination10.1 Term. The term of this Agreement will commence as of the Effective Date and, will expire upon the expiration of the last RoyaltyTerm for all Licensed Products in all countries in the Territory, or will terminate if the Agreement is earlier terminated in accordance with thisSection 10 (such period, the “Term”).10.2 Termination for Material Breach.10.2.1 Any material failure by a Party (the “Breaching Party”) to comply with its material obligations contained in this Agreement(such failure a “Material Breach”) will entitle the other Party (“Non-Breaching Party”) to give to the Breaching Party written notice of the MaterialBreach, which notice shall specify in detail the nature of the breach and shall, require the Breaching Party to make good or otherwise cure suchMaterial Breach.10.2.2 If such Material Breach is not cured within [*] after the receipt of notice pursuant to Section 10.2.1 above (subject toSection 3.4), the Non-Breaching Party will be entitled to terminate this Agreement on written notice to15.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.the Breaching Party and without prejudice to any of its other rights conferred on it by this Agreement and other remedies available under applicablelaw, provided that if the allegedly Breaching Party notifies the Non-Breaching Party in writing within [*] days of its receipt of the relevant notice ofbreach provided pursuant to Section 10.2.1 that it disputes in good faith that it has committed a Material Breach, or that it has not timely curedsuch breach, and provides information justifying its position in such dispute, then such termination shall not be effective unless and until thedispute is resolved in the favor of the Non-Breaching Party. 10.3 Termination at Will. Calithera may terminate this Agreement at will upon [*] days’ prior written notice to Symbioscience.10.4 Consequences of Expiration and Termination.10.4.1 Expiration. Upon expiration of the Royalty Term in a particular country for a given Licensed Product, Calithera’s licenseunder Section 2.1 with respect to such Licensed Product in the Field in such country will become a non-exclusive, irrevocable, perpetual, and fully-paid license.10.4.2 Early Termination or Material Breach by Calithera. Upon termination of this Agreement pursuant to Section 10.3, or atermination by Symbioscience for Material Breach by Calithera pursuant to Section 10.2, the following provisions will apply:(a) All rights and licenses granted by Symbioscience to Calithera under this Agreement will terminate immediately.(b) Promptly but no later than within sixty (60) days after such termination, Calithera will, upon Symbioscience’s requestand under commercially reasonable terms, assign to Symbioscience all of Calithera’s right, title and interest in and to any agreements betweenCalithera and Third Parties that are freely assignable by Calithera and that relate directly and solely to the Development or Commercialization ofany Licensed Product. To the extent that any agreement described in this Section 10.4.2(b) is not assignable by Calithera, then such agreementwill not be assigned, and upon the request of Symbioscience, Calithera will cooperate in good faith and use diligent efforts to obtain forSymbioscience of the rights to assign such agreement.(c) Calithera will, upon Symbioscience’ request, transfer to Symbioscience or its designee the management and continuedperformance of any clinical trials for Licensed Products ongoing as of the effective date of such termination.(d) If and to the extent requested by Symbioscience, Calithera will transfer to Symbioscience any stock of LicensedProduct held by Calithera or its Affiliates, to be purchased by Symbioscience [*].(e) Each of Calithera’s Sublicensees with respect to any affected Licensed Products in any affected country at such timewill continue to have the rights and license set forth in their Sublicense Agreements, subject to the continued performance of the obligationsthereunder; provided, however, that such Sublicensee agrees in writing that Symbioscience is entitled to enforce all relevant terms and conditionsof such Sublicense Agreement directly against such Sublicensee; and provided, further, that such Sublicensee is not then in breach of itsSublicense Agreement.10.4.3 Material Breach by Symbioscience. Upon termination of this Agreement by Calithera for Material Breach bySymbioscience pursuant to Section 10.2, without limiting any other remedies available under applicable law, Calithera may, as elected by Calitherain writing, continue to practice the license granted in Section 2.1 in accordance with the terms of this Agreement, except that the obligations underSection [*] shall no longer apply to Calithera, and, solely in the event that any such termination is based on breach of the provisions of Section [*]by Symbioscience, the associated payments set forth in Article 6 with respect to such license shall be reduced by [*].10.4.4 Survival. Expiration or termination of this Agreement will not relieve the Parties of any obligation accruing prior to suchexpiration or termination. The provisions of Sections 1, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 7.3, 8.3, 9, 10.4, 11.1, 11.2, 11.3, 11.4, 12 and 13 willsurvive any termination or expiration of this Agreement.11.Indemnification and Insurance11.1 Indemnification by Symbioscience. Symbioscience will indemnify Calithera, its Affiliates, its Sublicensees, and their respectivedirectors, officers, employees and agents, and defend and hold each of them harmless, from and16.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.against any losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) basedon or suffered in connection with any liability suits, investigations, allegations, actions, claims or demands by Third Parties (“Third Party Claims”)to the extent arising from or occurring as a result of or in connection with (i) any breach by Symbioscience of its representations, warranties orother obligations under this Agreement, or (ii) the gross negligence or willful misconduct of Symbioscience or its Affiliate; except to the extent thatsuch Losses or Third Party Claims arise out of or result from the gross negligence or willful misconduct of a party seeking indemnificationhereunder, or a breach by Calithera of any provision of this Agreement.11.2 Indemnification by Calithera. Calithera will indemnify Symbioscience, its Affiliates, and their respective directors, officers,employees and agents, and defend and save each of them harmless, from and against any Losses based on or suffered in connection with anyThird Party Claims against any such indemnified party arising from or occurring as a result of or in connection with: (i) any theory of productliability (including actions in the form of tort, warranty or strict liability) concerning a Licensed Product that is developed or commercialized byCalithera, its Affiliates or Sublicensees, (ii) any breach by Calithera of its representations, warranties or obligations under this Agreement, or (iii)the gross negligence or willful misconduct of Calithera, its Affiliates or Sublicensees; except to the extent that such Losses or Third Party Claimsarise out of or result from the gross negligence or willful misconduct of a party seeking indemnification hereunder, or a breach by Symbioscienceof any provision of this Agreement.11.3 Indemnification Procedure.11.3.1 Notice of Claim. The indemnified Party will give the indemnifying Party (the “Indemnifying Party”) prompt written notice(an “Indemnification Claim Notice”) of any Losses or discovery of fact upon which such Indemnified Party intends to base a request forindemnification under Section 11.1 or Section 11.2; provided, however, that the failure to give such prompt written notice will not relieveIndemnifying Party of its indemnification obligation under this Agreement except and only to the extent that the Indemnifying Party is actuallyprejudiced as a result of such failure. In no event will the Indemnifying Party be liable for any Losses that result from any delay in providing suchnotice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that thenature and amount of such Loss are known at such time). The indemnified Party will furnish promptly to the indemnifying Party copies of allpapers and official documents received in respect of any Losses. All indemnification claims in respect of a Party, its Affiliates or their respectivedirectors, officers, employees and agents (collectively, the “Indemnitees” and each an “Indemnitee”) will be made solely by such Party to thisAgreement (the “Indemnified Party”).11.3.2 Control of Defense. At its option, the Indemnifying Party may assume the defense of any Third Party Claim by givingwritten notice to the Indemnified Party within 30 days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. Upon assumingthe defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counselselected by the Indemnifying Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party willimmediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by any Indemnitee in connectionwith the Third Party Claim. Should the Indemnifying Party assume the defense of a Third Party Claim, the Indemnifying Party will not be liable tothe Indemnified Party or any other Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other Indemnitee inconnection with the analysis, defense or settlement of the Third Party Claim.11.3.3 Right to Participate in Defense. Without limiting Section 11.3.2 above, any Indemnitee will be entitled to participate in, butnot control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, that such employment will be atthe Indemnitee’s own expense unless (i) the employment thereof has been specifically authorized by the Indemnifying Party in writing, or (ii) theIndemnifying Party has failed to assume the defense and employ counsel in accordance with Section 11.3.2 (in which case the Indemnified Partywill control the defense).11.3.4 Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third PartyClaim and that will not result in the Indemnitee’s becoming subject to injunctive or other relief or otherwise adversely affect the business of theIndemnitee in any manner, and as to which the Indemnifying Party will have acknowledged in writing the obligation to indemnify the Indemniteehereunder, the Indemnifying Party will have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise disposeof such Loss, on such terms as the Indemnifying Party, in its sole discretion, will deem appropriate, and will transfer to the Indemnified Party allamounts which said Indemnified Party will be liable to pay prior to the time prior to the entry of judgment. With respect to all other Losses inconnection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section11.3.2, the Indemnifying Party will have authority to consent to the17.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.entry of any judgment, enter into any settlement or otherwise dispose of such Loss provided it obtains the prior written consent of the IndemnifiedParty (which consent will be at the Indemnified Party’s sole and absolute discretion). The Indemnifying Party will not be liable for any settlementor other disposition of a Loss by an Indemnitee that is reached without the written consent of the Indemnifying Party. Regardless of whether theIndemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnitee will admit any liability with respect to, or settle,compromise or discharge, any Third Party Claim without the prior written consent of the Indemnifying Party.11.3.5 Cooperation. The Indemnified Party will, and will cause each other Indemnitee to, cooperate in the defense or prosecutionthereof and will furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings,hearings, trials and appeals as may be reasonably requested in connection with the defense or prosecution of any Third Party Claim. Suchcooperation will include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the IndemnifiedParty of, records and information that are reasonably relevant to such Third Party Claim, and making Indemnitees and other employees and agentsavailable on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and theIndemnifying Party will reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.11.4 Expenses. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements ofcounsel, incurred by the Indemnified Party in connection with any claim will be reimbursed on a calendar quarter basis by the Indemnifying Party,without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event theIndemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.11.5 Insurance. Each Party will have and maintain such types and amounts of liability insurance as is normal and customary in theindustry generally for parties similarly situated, and will upon request provide the other Party with a copy of its policies of insurance in that regard,along with any amendments and revisions thereto.12.Limitation of LiabilityIN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST PROFITS, LOSS OF DATA, OR FOR ANYSPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITYAND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING UNDER ANY CAUSEOF ACTION AND ARISING IN ANY WAY OUT OF THIS AGREEMENT. THE FOREGOING LIMITATIONS WILL NOT APPLY TO AN AWARDOF ENHANCED DAMAGES AVAILABLE UNDER THE PATENT LAWS FOR WILLFUL PATENT INFRINGEMENT AND WILL NOT LIMIT EITHERPARTY’S OBLIGATIONS TO THE OTHER PARTY UNDER SECTIONS 9 AND 11 OF THIS AGREEMENT.13.Miscellaneous13.1 Assignment. Without the prior written consent of the other Party hereto (which consent shall not be unreasonably withheld), aParty will not sell, transfer, assign, delegate, pledge or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise,this Agreement or any of its rights or duties hereunder; provided, that a Party hereto may assign or transfer this Agreement and its rights orobligations hereunder without the consent of the other Party: (a) to any Affiliate of such Party; or (b) to any Third Party with which it merges orconsolidates, or to which it transfers all or substantially all of its assets to which this Agreement relates, and provided that the foregoing consentobligation shall not limit the ability to grant sublicenses as permitted in this Agreement or to engage subcontractors to perform certain obligationshereunder. The assigning Party (except if it is not the surviving entity) will remain jointly and severally liable with the relevant Affiliate or ThirdParty assignee under this Agreement, and the relevant Affiliate assignee, Third Party assignee or surviving entity will assume in writing all of theassigning Party’s obligations under this Agreement. Any purported assignment or transfer in violation of this Section 13.1 will be void ab initio andof no force or effect.13.2 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and ifthe rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fullyseverable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a parthereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid orunenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there will be addedautomatically18.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may bepossible and reasonably acceptable to the Parties herein. To the fullest extent permitted by applicable law, each Party hereby waives anyprovision of law that would render any provision prohibited or unenforceable in any respect.13.3 Governing Law; Dispute Resolution. 13.3.1 This Agreement, and any disputes between the Parties related to or arising out of this Agreement (including the Parties’relationship created hereby, the negotiations for and entry into this Agreement, its conclusion, binding effect, amendment, coverage, termination,or the performance or alleged non-performance of a Party of its obligations under this Agreement) (each a “Dispute”), will be governed by the lawsof the State of New York without reference to any choice of law principles thereof that would cause the application of the laws of a differentjurisdiction.13.3.2 In the event of any Dispute, a Party may notify the other Party in writing of such Dispute, and the Parties will try to settlesuch Dispute amicably between themselves. If the Parties are unable to resolve the Dispute within 30 days of receipt of the written notice by theother Party, such Dispute will be referred to the Chief Executive Officers of each of the Parties (or their respective designees) who will use theirgood faith efforts to resolve the Dispute within 30 days after it was referred to the Chief Executive Officers.13.3.3 In the event that any Dispute is not resolved as provided in Section 13.3.2, whether before or after termination of thisAgreement, either Party may refer such dispute for resolution by a court of competent jurisdiction.13.3.4 Notwithstanding the foregoing, nothing in this Section 13.3 will limit either Party’s right to seek immediate temporaryinjunctive or other temporary equitable relief whenever the facts or circumstances would permit a Party to seek such relief in a court of competentjurisdiction.13.4 Notices. All notices or other communications that are required or permitted hereunder will be in writing and delivered personally,sent by facsimile (and promptly confirmed by personal delivery or overnight courier as provided herein), or sent by internationally-recognizedovernight courier addressed as follows:If to Symbioscience, to:Mars Symbioscience20425 Seneca Meadows ParkwayGermantown, Maryland 20876Attention: Chief Counselwith a copy to:Mars, Inc.6885 Elm StreetMcLean, VA 22101Attention: General CounselIf to Calithera, to:Calithera Biosciences, Inc.343 Oyster Point Boulevard, Suite 200South San Francisco, CA 94080Attention: Curtis Hecht, Vice President, Business DevelopmentWith copy to Facsimile: 650-588-5272or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Anysuch communication will be deemed to have been given (i) when delivered, if personally delivered or sent by facsimile on a business day, and (ii)on the second business day after dispatch, if sent by internationally-recognized overnight courier. It is understood and agreed that this Section13.4 is not intended to govern the day-to-day business communications necessary between the Parties in performing their duties, in due course,under the terms of this Agreement.19.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.13.5 Entire Agreement; Modifications. This Agreement including the Exhibits attached hereto, each of which is hereby incorporatedand made part of in this Agreement by reference, sets forth and constitutes the entire agreement and understanding between the Parties withrespect to the subject matter hereof and all prior agreements, understanding, promises and representations, whether written or oral, with respectthereto. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forthherein. No amendment or modification of this Agreement will be binding upon the Parties unless in writing and duly executed by authorizedrepresentatives of both Parties.13.6 Relationship of the Parties. It is expressly agreed that the Parties’ relationship under this Agreement is strictly one of a purecontract relationship between Symbioscience and Calithera, and that this Agreement does not create or constitute a partnership, joint venture, oragency. Neither Party will have the authority to make any statements, representations or commitments of any kind, or to take any action, whichwill be binding (or purport to be binding) on the other.13.7 Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, butno such waiver will be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term orcondition. The waiver by either Party hereto of any right hereunder or of claims based on the failure to perform or a breach by the other Party willnot be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.13.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all ofwhich together will constitute one and the same instrument.13.9 No Benefit to Third Parties. The representations, warranties, covenants and agreements set forth in this Agreement are for thesole benefit of the Parties hereto and their successors and permitted assigns, and they will not be construed as conferring any rights on any otherparties.13.10 Further Assurance. Each Party will duly execute and deliver, or cause to be duly executed and delivered, such furtherinstruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents andinstruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectivelythe provisions and purposes, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.13.11 English Language. This Agreement has been written and executed in the English language as used in the United States ofAmerica and will be interpreted in accordance with the English language as used in the United States of America. Any translation by a Party intoany other language will not be an official version thereof, and in the event of any conflict in interpretation between the English version and suchtranslation, the English version will control.13.12 No Drafting Party. This Agreement has been submitted to the scrutiny of, and has been negotiated by, both Parties and theircounsel, and will be given a fair and reasonable interpretation in accordance with its terms, without consideration or weight being given to any suchterms having been drafted by any Party or its counsel. No rule of strict construction will be applied against either Party.13.13 Construction. Except where the context otherwise requires, wherever used, the use of any gender will be applicable to allgenders and the word “or” is used in the inclusive sense (and/or). The captions of this Agreement are for convenience of reference only and in noway define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term“including” as used herein means including, without limiting the generality of any description preceding such term. The word “any” will mean “any”unless otherwise clearly indicated by context. Unless the context requires otherwise, (a) any definition of or reference to any agreement,instrument or other document refer to such agreement, instrument or other document as from time to time amended, supplemented or otherwisemodified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any lawsrefer to such laws as from time to time enacted, repealed or amended, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import,refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Sections and Exhibits, unlessotherwise specifically provided, refer to the Sections and Exhibits of this Agreement.[Remainder of page intentionally left blank. Signature page follows.] 20.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. In Witness Whereof, the Parties have executed this Agreement by their respective authorized representatives as of the date first writtenabove. Mars, Inc. (through its division Mars Symbioscience) By: /s/ Frank Mars Name: Frank Mars Title: President - MSS Calithera Biosciences, Inc. By: /s/ Susan Molineaux Name: Susan Molineaux, Ph.D. Title: President & CEO [*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Exhibit ALicensed Patents TITLECOUNTRYAPPLICATION No.DATE FILEDSTATUSSLW Ref.[*][*][*][*][*][*] [*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Exhibit BExamples of Proportional Net Sales Milestone Payments1)In 2020 there is one Tier 1 Product with total annual net sales of $[*]a.The milestone payment will be $[*]2)In 2022 there are two Licensed Products, one is the Tier 1 Product with annual net sales of $[*] and the other is a Tier 2 Product with$[*] annual net sales. In total, there are $[*] of annual net sales, triggering the milestone, but the payment is proportional to thecontribution of each product:a.The Tier 1 Product contributes $[*] of the $[*] total net sales milestone objective ([*]), so the associated $[*] payment isreduced proportionally: $[*] * [*] = $[*]b.The Tier 2 Product contributes $[*] of the $[*] total net sales milestone objective ([*]), so the $[*] payment is reducedproportionally: $[*] * [*] = $[*]ØThe total milestone payment would be = $[*] + $[*] = $[*]3)In 2024 there are three Licensed Products, one the Tier 1 Product ($[*] net sales), Tier 2 Product-A ($[*] net sales) and Tier 2Product-B ($[*] net sales).a.The Tier 1 Product would contribute: [*] * $[*] = $[*]b.The Tier 2 Product-A would contribute: [*] * $[*] = $[*]c.The Tier 2 Product-B would contribute: [*] * $[*] = $[*]ØThe total milestone payment would be = $[*] + $[*] + $[*] = $[*] [*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Exhibit CPress releaseCalithera Biosciences Gains Exclusive, Worldwide License to Mars Symbioscience’s Arginase InhibitorsSouth San Francisco, Calif., Dec.9, 2014 (GLOBE NEWSWIRE)-- Calithera Biosciences, Inc. (NASDAQ:CALA) announced today the signing of anexclusive global license agreement with Mars Symbioscience (“Symbioscience”), a division of Mars, Incorporated, granting Calithera rights toresearch, develop and commercialize Symbioscience’s portfolio of arginase inhibitors, discovered as part of Mars’ cocoa flavanol researchprogram, for use in human healthcare. Symbioscience’s preclinical arginase inhibitor program will enhance Calithera’s efforts to submit anInvestigational New Drug application for an arginase inhibitor with the FDA for the treatment of cancer near the end of 2015."We believe that drugs targeting immuno-oncology and tumor metabolism pathways have the potential to be transformational in the treatment ofcancer, and at Calithera, we are dedicated to researching and developing potential first-in-class therapies that could significantly advance thesepromising fields of research," said Susan M. Molineaux, PhD, President and CEO, Calithera Biosciences. "I am particularly excited about thisagreement because we believe we can apply our core expertise in tumor biology to rapidly advance Symbioscience’s potent and selective small-molecule arginase inhibitors into the clinic to develop a first-in-class immuno-oncology therapy for cancer patients.”Under the terms of the agreement, Calithera will obtain exclusive, worldwide rights to Symbioscience’s arginase inhibitors for drug research,development and commercialization. Symbioscience will receive an upfront payment and will be eligible to receive future development andcommercialization milestones as well as royalties on sales of approved products.About Tumor Immunology and Arginase InhibitorsThe field of tumor immunology is focused on developing agents that activate the body’s own immune system to attack and kill tumors. Calithera’spreclinical program in tumor immunology is focused on developing selective inhibitors of the enzyme arginase, an enzyme produced by myeloidderived suppressor cells in the tumor microenvironment that depletes arginine, a naturally occurring amino acid that is critical for the activation,growth and survival of the body’s cancer-fighting cytotoxic T cells. Depletion of arginine due to elevated levels of arginase has been observed inrenal cell carcinoma and acute myeloid leukemia patients. By inhibiting arginase, it may be possible to restore the tumor killing activity ofcytotoxic T cells by preventing the depletion of arginine. Symbioscience has discovered novel compounds that selectively and potently inhibitarginase activity which may have therapeutic potential in the treatment of cancer.About Calithera BiosciencesCalithera Biosciences is a clinical-stage company focused on discovering and developing novel small molecule drugs directed against tumormetabolism and tumor immunology. Calithera's lead clinical candidate, CB-839, is a first-in-class inhibitor of glutaminase, a critical enzyme intumor metabolism, and is currently being tested in patients with solid and hematological cancers. Calithera Biosciences is headquartered in SouthSan Francisco. For more information about Calithera Biosciences, please visit www.calithera.com.About Mars SymbioscienceMars Symbioscience is a technology-based health and life sciences business focused on evidence-based product development. First establishedin 2005, Mars Symbioscience acts as an incubator for business ideas generated throughout Mars business segments. Pioneering some of themost innovative and breakthrough fundamental scientific research, Symbioscience is developing solutions that translate science into productswhich have a positive impact on people, pets and the planet.[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.Forward-Looking StatementsThis news release contains forward-looking statements by Calithera that involve risks and uncertainties. These statements include those related tothe potential of Calithera to rapidly move Symbioscience’s potent and selective small molecule arginase inhibitors into the clinic to develop a first-in-class immuno-oncology therapy for cancer patients and that drugs targeting immuno-oncology; that the inhibition of arginase activity may havetherapeutic potential in the treatment of cancer; and the potential of tumor metabolism pathways to be transformational in the treatment of cancer.Actual results may differ from Calithera’s expectations and important factors that could cause actual results to differ materially. Calithera’sarginase program or other potential product candidates that Calithera develops may not progress through clinical development or receive requiredregulatory approvals within expected timelines or at all. In addition, clinical trials may not confirm any safety, potency or other productcharacteristics described or assumed in this press release. Such product candidates may not be beneficial to patients or successfullycommercialized. The failure to meet expectations with respect to any of the foregoing matters may have a negative effect on Calithera’s stockprice. Additional information concerning these and other risk factors affecting Calithera’s business can be found in Calithera’s filings withthe Securities and Exchange Commission at www.sec.gov. These forward-looking statements are not guarantees of future performance and speakonly as of the date hereof, and, except as required by law, Calithera disclaims any obligation to update these forward-looking statements to reflectfuture events or circumstances.SOURCE: Calithera Biosciences, IncorporatedCONTACT:Investor Contact:Jennifer McNealeyir@Calithera.com650-870-1071[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commissionpursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-199126) pertaining to the Calithera Biosciences, Inc. 2010Equity Incentive Plan, the Calithera Biosciences, Inc. 2014 Equity Incentive Plan and the Calithera Biosciences, Inc. 2014 Employee Stock Purchase Plan; ofour report dated March 27, 2015, with respect to the financial statements of Calithera Biosciences Inc., included in this Annual Report (Form 10-K) for theyear ended December 31, 2014./s/ Ernst & Young LLPRedwood City, CaliforniaMarch 27, 2015 Exhibit 31.1CERTIFICATIONSI, Susan M. Molineaux, certify that:1.I have reviewed this Annual Report on Form 10-K of Calithera Biosciences, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)):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)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; andc)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; and5.The registrant’s other certifying officer(s) 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; andb)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 27, 2015 /s/ Susan M. MolineauxSusan M. Molineaux, Ph.D.President and Chief Executive Officer  Exhibit 31.2CERTIFICATIONSI, William D. Waddill, certify that:1.I have reviewed this Annual Report on Form 10-K of Calithera Biosciences, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)):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)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; andc)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; and5.The registrant’s other certifying officer(s) 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; andb)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 27, 2015 /s/ William D. WaddillWilliam D. WaddillSenior Vice President, Chief Financial Officer, Treasurer andSecretary  Exhibit 32.1CALITHERA BIOSCIENCES, INC.CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Calithera Biosciences, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2014, asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Susan M. Molineaux, President and Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of myknowledge:(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 theCompany. /s/ Susan M. MolineauxSusan M. Molineaux, Ph.D.President and Chief Executive OfficerMarch 27, 2015This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to beincorporated by reference into any filing of Calithera Biosciences, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. Exhibit 32.2CALITHERA BIOSCIENCES, INC.CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Calithera Biosciences, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2014, asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, William D. Waddill, Senior Vice President, Chief Financial Officer,Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,that to the best of my 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 theCompany. /s/ William D. WaddillWilliam D. WaddillSenior Vice President, Chief Financial Officer,Treasurer and SecretaryMarch 27, 2015This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to beincorporated by reference into any filing of Calithera Biosciences, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. 

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