Chimerix
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549 Form 10-K (Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017 oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from toCommission file number: 001-35867 Chimerix, Inc.(Exact Name of Registrant as Specified in its Charter) Delaware 33-0903395(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) 2505 Meridian Parkway, Suite 100Durham, North Carolina 27713(Address of Principal Executive Offices) (Zip Code) (919) 806-1074(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share The NASDAQ Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o 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 o 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 1934 during the preceding 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:Large accelerated filer o Accelerated filer xNon-accelerated filer o Smaller reporting company o(Do not check if a smaller reporting company) Emerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o No xThe aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant based upon the closing price of its Common Stock on TheNasdaq Global Market on June 30, 2017 was $151,017,173.The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of February 22, 2018 was 47,652,332.DOCUMENTS INCORPORATED BY REFERENCEDocument DescriptionPortions of the registrant’s notice of annual meeting of stockholders and proxy statement to be filed pursuant to Regulation 14Awithin 120 days after registrant’s fiscal year end of December 31, 2017 are incorporated by reference into Part III of thisreport………………………………………………………10-K PartIIICHIMERIX, INC.FORM 10-KFor the Fiscal Year Ended December 31, 2017Table of Contents Page PART I Item 1Business3Item 1ARisk Factors21Item 1BUnresolved Staff Comments49Item 2Properties49Item 3Legal Proceedings49Item 4Mine Safety Disclosures49 PART II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities50Item 6Selected Financial Data51Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations52Item 7AQuantitative and Qualitative Disclosures About Market Risk66Item 8Financial Statements and Supplementary Data67Item 9Changes in and Disagreements With Accountants on Accounting and Financial Disclosure93Item 9AControls and Procedures93Item 9BOther Information94 PART III Item 10Directors, Executive Officers and Corporate Governance95Item 11Executive Compensation95Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters95Item 13Certain Relationships and Related Transactions, and Director Independence95Item 14Principal Accounting Fees and Services95 PART IV Item 15Exhibits, Financial Statement Schedules96 Signatures 2PART IForward-Looking StatementsThis Annual Report on Form 10-K (Annual Report) may contain “forward-looking statements” within the meaning of the federal securities laws madepursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results could differ materially from those anticipatedin these forward-looking statements as a result of various factors, including those set forth below under Part I, Item 1A, “Risk Factors” in this Annual Report.Except as required by law, we assume no obligation to update these forward-looking statements, whether as a result of new information, future events orotherwise. These statements, which represent our current expectations or beliefs concerning various future events that are subject to risks and uncertainties,may contain words such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” or other words indicating future results. Suchstatements may include, but are not limited to, statements concerning the following:•the initiation, cost, timing, progress and results of our research and development activities, preclinical studies and future clinical trials;•our ability to obtain and maintain regulatory approval of our current and future product candidates, and any related restrictions, limitations,and/or warnings in the label of an approved product candidate;•our ability to obtain funding for our operations;•our plans to research, develop and commercialize our future product candidates;•our strategic alliance partners’ election to pursue development and commercialization;•our ability to attract collaborators with development, regulatory and commercialization expertise;•our ability to obtain and maintain intellectual property protection for our future product candidates;•the size and growth potential of the markets for our current and future product candidates, and our ability to serve those markets;•our ability to successfully commercialize our current and future product candidates;•the rate and degree of market acceptance of our current and future product candidates;•our ability to develop sales and marketing capabilities, whether alone or with potential future collaborators;•regulatory developments in the United States and foreign countries;•the performance of our third-party suppliers and manufacturers;•the success of competing therapies that are or become available;•the loss of key scientific or management personnel;•our use of the proceeds from our public offerings; and•the accuracy of our estimates regarding expenses, future revenues, capital requirements and need for additional financing.Market, Industry and Other DataThis Annual Report contains estimates, projections and other information concerning our industry, our business and relevant markets, including dataregarding the estimated size of relevant antiviral markets, patient populations, projected diagnosis rates and the perceptions and preferences of patients andphysicians regarding certain therapies, as well as data regarding market research and estimates. Information that is based on estimates, forecasts, projections,market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events andcircumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports,research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, governmentdata and similar sources that we believe to be reliable. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard,when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph arederived from the same sources, unless otherwise expressly stated or the context otherwise requires.ITEM 1. BUSINESSChimerix OverviewChimerix, Inc. is a biopharmaceutical company committed to discovering, developing and commercializing medicines that improve outcomes forimmunocompromised patients. We were founded in 2000 based on the promise of our proprietary lipid conjugate technology to unlock the potential of someof the most broad-spectrum antivirals by enhancing their antiviral activity and safety profiles in convenient dosing regimens. Our lead compound,brincidofovir (BCV), is in development as an oral and intravenous (IV) formulation for the prevention and treatment of DNA viruses, including smallpox,adenovirus (AdV), and the human herpesviruses. We are also advancing the development of CMX521 for the treatment and prevention of norovirus. Inaddition, we have an active discovery program focusing on viral targets for which limited or no therapies are currently available.3BrincidofovirBrincidofovir is an investigational nucleoside analog that has shown broad-spectrum antiviral activity in vitro against all five families of dsDNA (double-stranded deoxyribonucleic acid) viruses that cause human disease. In over 1,100 patients treated to-date, brincidofovir has been associated with a low risk ofkidney or bone marrow toxicity. Oral and IV formulations of brincidofovir are currently in development, both of which deliver the active antiviral directly tothe site of viral replication.Potential indications for brincidofovir include prevention of serious viral infections in hematopoietic or stem cell transplant recipients (HCT), treatment ofserious AdV infection and disease, treatment of smallpox, and treatment of BK virus (BKV) infection in kidney and HCT transplant recipients.Composition of matter coverage for brincidofovir in the U.S. is currently expected to extend to October 2034.The Company has received three orphan designations from the European Commission in relation to brincidofovir, treatment of AdV infection inimmunocompromised patients, prevention of cytomegalovirus (CMV) disease, and treatment of smallpox. Companies that obtain an orphan designation areeligible for a number of incentives in the European Union (EU), including free of charge scientific advice for each orphan designation received. Compoundsstill meeting the criteria for orphan designation at the time of marketing approval may receive market exclusivity for 10 years from marketing approval, plusan additional two years of market exclusivity for medicines that have complied with the agreed pediatric investigational plan.I.Oral Formulations of BrincidofovirBrincidofovir remains in development as an orally-administered lipid conjugate nucleotide for the treatment of serious AdV infections and as a medicalcountermeasure for the treatment of smallpox.A.Oral Brincidofovir for Treatment of AdVAdV causes gastrointestinal (GI) and upper respiratory infections, including the common cold, in individuals with a functional immune system. However, inpeople with a weakened immune system, AdV can lead to life-threatening infections, including pneumonia and hepatitis. Pediatric and adult patients whohave undergone allogeneic HCT are at especially high risk for serious or fatal AdV infections due to profound immunodeficiency. Mortality rates of 50 to 80percent have been reported in the literature for disseminated AdV disease. AdV infections are more common in pediatric transplant recipients than in adults;many transplant centers now actively screen their pediatric patients for AdV infection. There is currently no approved therapy for AdV infection, andalthough progression to disseminated disease occurs in a small proportion of patients, expected mortality for serious AdV disease is greater than 50 percent inthe first three months after diagnosis.Brincidofovir is a broad-spectrum antiviral that has demonstrated high in vitro potency against all AdV subtypes. Intracellular cleavage of brincidofovirallows cidofovir to be delivered directly to the site of viral replication. Moreover, there is a lower risk of nephrotoxicity and myelotoxicity associated withbrincidofovir as compared to off-label use of intravenous cidofovir.i.AdAPT (Study-999)We initiated the AdAPT study (Adenovirus after Allogeneic Pediatric Transplantation) in December 2017. This study is targeting enrollment of 141 pediatricallogeneic HCT recipients with confirmed AdV infection. Patients are randomized 2:1 to receive short-course oral BCV or local standard-of-care (SOC)treatment at approximately 30 sites in Europe and the United States.The primary endpoint of the study is a comparison of the average AdV viral burden (as measured by AdV DNA levels in blood) over 16 weeks in subjectstreated with short-course oral BCV versus those who receive local SOC. The study is 90% powered to show the superiority of reduced adenoviral burden inbrincidofovir-treated patients compared to SOC. The study will also evaluate the correlation of adenoviral burden (and its clearance) with clinical outcomesincluding survival. We anticipate that enrollment in the study will be completed in 2019.If successful, AdAPT may form the basis of an application for conditional or full marketing approval of brincidofovir in the EU for the treatment of AdVinfection in HCT recipients. A successful trial may also further support potential continued development of oral brincidofovir in the U.S.4ii.Study of Short-Course BCV for AdV in AdultsIn 2018, we plan to initiate a study similar to AdAPT in adult patients. The study is anticipated to be an open-label single-arm study of approximately 20adult patients that are not included in the ongoing pediatric-only AdAPT trial. The adult study is designed to include adult high-risk allogenic HCTrecipients within the first 100 days following HCT with AdV ≥1000 copies/mL. The primary endpoint of the study is an assessment of the average AdV viralburden (as measured by AdV DNA levels in blood) over 16 weeks in subjects treated with short-course oral BCV. The study will evaluate the correlation ofAdV burden (and its clearance) with clinical outcomes, including survival.iii.AdVanceWe have completed AdVance, a study of the current SOC for treatment of AdV in France, Germany, Italy, Netherlands, Spain, the Czech Republic and theUnited Kingdom. We expect data from AdVance to describe the incidence and outcomes associated with SOC of AdV infection, supporting the need for newtherapeutic options. We plan to present final data analysis at the European Bone Marrow Treatment conference in March 2018. We also plan to conduct astudy to capture the practice patterns and incidence of AdV infection in the U.S., called AdVance US, which is anticipated to begin in the second half of2018.B.Oral Brincidofovir for Treatment of SmallpoxWe are collaborating with the Biomedical Advanced Research and Development Authority (BARDA) for the development of brincidofovir as a potentialmedical countermeasure for smallpox. Efficacy is to be demonstrated via two animal models under the U.S. Food and Drug Administration's (FDA’s) AnimalRule. Following completion of the animal efficacy studies, we plan to meet with the FDA to discuss any additional required data for a regulatory decision. In November 2017, we received advice from the European Medicines Agency (EMA) on the development plan for smallpox, in which the submission of amarketing application with data from completed studies, including the large rabbitpox efficacy study, VIR-041, was discussed. This rabbitpox study, aspreviously reported, demonstrated 100% survival in animals with confirmed viral infection treated with BCV, a clinically and statistically significantimprovement compared with <50% survival in animals that received placebo. This study in combination with supportive mousepox study data wasconsidered sufficient for review by EMA. We are in the process of preparing for a marketing application submission to EMA in 2019. Since August of last year, we have been in discussions with FDA regarding study VIR-041. The Agency has determined that study VIR-041 cannot besufficient to stand as pivotal. We are conducting a second, adjunct rabbitpox study that will be conducted in 2018. The data from Study-041 will, however,be submitted and considered among the weight of the evidence in the New Drug Application (NDA) we plan to submit in 2019.Through our continuing development contract with BARDA, we are conducting final studies prior to conducting the pivotal efficacy study in the mousemodel of smallpox infection (ectromelia virus). We believe that efficacy data from this model could serve as the second animal model to support the approvalof brincidofovir in the United States for the treatment of smallpox.We plan to submit a NDA to the FDA for BCV for the treatment of smallpox, contingent upon the results of the animal efficacy studies we intend to conductduring 2018. C.Oral Brincidofovir Expanded Access ProgramWe continue to fulfill requests for orally administered brincidofovir via our expanded access programs. In 2017, we granted almost 350 requests for AdV,highlighting the continued unmet need in this area.II.IV Formulation of BrincidofovirOur ability to provide brincidofovir in oral and IV formulations enables development across multiple indications and populations with the potential for best-in-class efficacy and safety. In 28-day animal studies and single dose administration in healthy subjects, IV BCV has shown the potential for less GI injurycompared to oral brincidofovir, even with higher plasma drug concentrations and longer-term dosing.A.IV Brincidofovir Multiple Ascending Dose Study in Healthy SubjectsIn late 2017, we completed the multiple ascending dose (MAD) study of IV BCV in healthy subjects. This Phase 1 study evaluated the safety, tolerability andpharmacokinetics of IV BCV 10 mg given twice weekly and IV BCV 20 mg given once weekly in5healthy subjects for two to four weeks. IV BCV was well-tolerated at all dose levels, with no dose-limiting clinical adverse events. Importantly, there was nodiarrhea reported for IV BCV 10 mg dosed twice weekly, a dose that provides drug levels equivalent to oral BCV 100 mg which demonstrated antiviralactivity in previous late-stage clinical studies. Non-clinically-relevant elevations in serum transaminases were noted as seen in previous studies of oral BCV.B.Phase 2 Studies Planned to Initiate in 1H2018Studies of IV BCV in virally-infected patients are planned to initiate in the first half of 2018 and are expected to begin providing antiviral data in the secondhalf of 2018. These studies may also provide data on other viral infections such as CMV and/or BKV in patients with multi-viral infections. The studies willevaluate pharmacokinetics (PK) and tolerability of multiple doses of IV BCV in adult HCT recipients. We will also evaluate the relationship between doseand change from baseline in AdV in blood and stool. Data is expected in the second half of 2018 and will inform the dose and dosing regimen for our MultiViral Protection (MVP)-Peds study. Given the broad-spectrum antiviral activity of brincidofovir and the known frequency of multiple DNA viral infections inHCT recipients, we intend to conduct a multi-viral prevention study in high-risk HCT recipients which we plan to discuss with regulators in 2018.Following availability of data from adult patients in the studies described above, we anticipate conducting study(ies) in treatment of BK viremia in order toprevent BK-associated nephropathy in kidney transplant recipients. In addition, the improved drug concentrations in the central nervous system (CNS)achieved with IV brincidofovir in animals could support the study of IV brincidofovir in viral CNS infections such as herpes encephalitis, JC virus infection,and CMV infection, which has recently been described to be associated with glioblastoma.CMX521 for NorovirusCMX521 is a nucleoside analog identified from our proprietary Chemical Library which targets the norovirus polymerase, a part of the virus that is commonto all strains and is required for viral replication. It therefore has the potential to be active against the multiple genetically diverse norovirus strains thatcirculate each year and cause disease in humans. CMX521 is the first antiviral specific for the treatment and/or prevention of norovirus.Chronic norovirus infection is increasingly being diagnosed in immune compromised patients. Approximately 15-20 percent of HCT and solid organtransplant (SOT) recipients are diagnosed with norovirus within the first 1-2 years after transplant, a diagnosis that has been associated with chronic diarrhea,electrolyte disturbances, and graft rejection.In December 2017, we initiated a first-time-in-human study of CMX521. The Phase 1 study is evaluating the pharmacokinetics, safety and tolerability ofCMX521 in up to 50 adult subjects. The study also includes the collection of gut biopsy specimens, which will allow for the determination of active drugconcentrations in the target gut tissue. Study results are expected in mid-2018.CMX157CMX157, our second clinical stage nucleoside analog, uses the same proprietary lipid technology as brincidofovir to deliver high intracellularconcentrations of the potent antiviral drug, tenofovir. Tenofovir, marketed under the brand name Viread® and in multiple fixed-dose combinations, is widelyused for the treatment of HIV and hepatitis B virus (HBV) infection. In December 2014, we entered into a licensing agreement with ContraVirPharmaceuticals (NASDAQ: CTRV) for the development and commercialization of CMX157 for certain antiviral indications. Under the terms of theagreement, ContraVir has sole responsibility with respect to the control of the development and commercialization of CMX157.Lipid Conjugate Technology and Our Chemical LibraryLipid Conjugate TechnologyOur proprietary lipid conjugate technology is used to covalently modify a drug molecule with a lipid side-chain that mimics a naturally occurringphospholipid component of cellular membranes. The lipid mimic can then utilize natural uptake pathways to achieve oral bioavailability, enhance uptakeinto cells, and potentially to avoid many toxicities.We believe that our lipid conjugate technology can be used to develop new drugs from parent molecules having a known mechanism of action butpotentially with an improved safety, efficacy, and/or ADME (absorption/distribution/metabolism/excretion) profile relative to the parent. Preclinical studiesand in vitro assessments of a number of drugs, including some that are approved, have shown specific improvements in biological activity compared with theparent drug.6The most advanced example of our proprietary lipid conjugate technology is brincidofovir, which was developed to improve the efficacy and safety of anapproved drug, cidofovir. Use of cidofovir has been limited by significant toxicities, particularly kidney toxicity. Unlike cidofovir, the lipid-conjugatedbrincidofovir molecule is not actively concentrated in the kidneys, but does effectively deliver the active antiviral to cells. Brincidofovir may have a higherbenefit-risk ratio that allows expanded use relative to cidofovir, for example in prevention of AdV disease, and potentially protection from or treatment ofother DNA viruses.Chimerix Chemical LibraryThe Chimerix Chemical Library contains over 10,000 heterocyclic ring systems and nucleosides, the majority of which were originally synthesized in thelaboratory of Dr. Leroy Townsend at the University of Michigan. This library includes approximately 3,500 nucleoside analog compounds, most of which arecandidates for lipid conjugation. We have an active discovery program focusing on viral diseases in which there is significant unmet medical need. We arecurrently screening the library for activity against multiple viruses including CMV, hepatitis B, and norovirus. Additionally, we are exploring the potentialutility of library compounds for the treatment of cancer.Our StrategyOur strategy is to discover, develop and commercialize novel therapeutics in areas of significant unmet medical need. Our primary initial focus is leveragingthe broad-spectrum profile of brincidofovir to address the multiple DNA viral infections common in transplant recipients and patients with relative immunecompromise.The key components of our strategy are:•Advance Oral and IV Formulations of Brincidofovir for the Prevention and Treatment of Serious DNA Virus Infections. We are conductingAdAPT, a small comparative clinical trial designed to study the effect of brincidofovir versus SOC in pediatric patients with AdV infectionfollowing allogeneic HCT. This study will be conducted at sites in the United States and Europe. If successful, AdAPT may form the basis of anapplication for conditional or full marketing approval of brincidofovir in the EU for the treatment of AdV infection in HCT recipients. Asuccessful trial may also further support potential continued development of oral brincidofovir in the U.S. Assuming the trial is fully enrolled bythe first half of 2019, we expect to receive data from the trial in the second half of 2019 with the potential for an EU approval in 2020.Following completion of the MAD study of IV brincidofovir in healthy subjects, we plan to start a Phase 2 open label dose-ranging studies of IVBCV in patients with active AdV. In this study, we also plan to examine the effect of IV BCV on other viral infections such as CMV. This studywill evaluate PK and tolerability of multiple doses of IV BCV in adult HCT recipients. We will also evaluate the relationship between dose andchange from baseline in AdV in blood and stool. Data from this trial is expected in the second half of 2018 and will inform the dose and dosingregimen for our MVP-Peds study.•Progress Development of Brincidofovir as a Medical Countermeasure for the Treatment of Smallpox. We have conducted efficacy studiesunder the FDA’s Animal Rule to demonstrate the impact of immediate or delayed brincidofovir in a well-characterized model of smallpoxinfection. We are working with the FDA and BARDA on the development of our second, adjunct rabbitpox study as well as a second animalmodel, mousepox. We plan to submit an NDA to the FDA, contingent upon the results of the animal efficacy studies we intend to conductduring 2018. In addition, we received advice from the EMA on the development plan for smallpox, in which the submission of a marketingapplication with data from completed studies, including our earlier completed large rabbitpox efficacy study, was discussed. This study incombination with supportive mousepox study data was considered sufficient for review by EMA. We are in the process of preparing for amarketing application submission to EMA in early 2019. •Develop CMX521 for the Prevention and Treatment of Norovirus. We are currently conducting a first-time-in-human study of CMX521. ThisPhase 1 study is evaluating the pharmacokinetics, safety and tolerability of CMX521 in up to 50 adult subjects. The study also includes thecollection of gut biopsy specimens, which will allow for the determination of active drug concentrations in the target gut tissue. Study resultsare expected in mid-2018.•Discover and Develop Additional Product Candidates to Strengthen our Product Portfolio. We have an active discovery and preclinicaldevelopment program focused on identifying and developing new compounds that can be used to treat diseases for which no current therapeuticoption exists or which otherwise continue to have high unmet medical need. We intend to leverage our knowledge and experience ofnucleoside analogs to advance compounds in the Chimerix Chemical Library through IND-enabling studies and potential clinical developmentand/or7partnerships. In addition, we are exploring other potential product opportunities based on the ability of our proprietary lipid conjugatetechnology to significantly improve the drug profile of molecules with limitations in safety or delivery.•Evaluate external opportunities to strengthen our pipeline. We are looking at business development opportunities as a means to complementour existing pipeline with technologies that will take advantage of our strengths. We are actively seeking opportunities to grow our businessthrough the acquisition of or investment in other companies, through strategic relationships, or through in-licensing of complementarycompounds and products.Significant AgreementsContraVir PharmaceuticalsIn December 2014, we entered into a license agreement with ContraVir Pharmaceuticals (NASDAQ: CTRV) for the development and commercialization ofCMX157 for certain antiviral indications. Under the terms of the agreement, ContraVir has sole responsibility with respect to the control of the developmentand commercialization of CMX157.In exchange for the license to CMX157 rights, we received an upfront payment consisting of 120,000 shares of ContraVir Series B Convertible PreferredStock with a stated value of $1.2 million. In addition, we are eligible to receive up to approximately $20 million in clinical, regulatory and initialcommercial milestones in the United States and Europe, as well as royalties and additional milestones based on commercial sales in those territories. Eitherparty may terminate the license agreement upon the occurrence of a material breach by the other party (subject to standard cure periods), or upon certainevents involving the bankruptcy or insolvency of the other party. ContraVir may also terminate the license agreement without cause on a country-by-countrybasis upon sixty days’ prior written notice.In September 2016, we converted our shares of ContraVir Series B Convertible Preferred Stock into 1,071,429 shares of ContraVir common stock.BARDAIn February 2011, we entered into a contract with BARDA for the advanced development of brincidofovir as a medical countermeasure in the event of asmallpox release. BARDA is a division of the U.S. Department of Health and Human Services (DHHS) in the Office of the Assistant Secretary for Preparednessand Response that supports the advanced research and development, manufacturing, acquisition and stockpiling of medical countermeasures. The scope ofwork for the contract includes preclinical, clinical and manufacturing development activities that fall into the following areas: non-clinical animal efficacystudies; clinical activities; manufacturing activities; and all associated regulatory, quality assurance, management, and administrative activities.Under the contract, BARDA will reimburse our costs, plus pay us a fixed fee, for the research and development of brincidofovir as a treatment of smallpoxinfections. The contract consists of an initial performance period, referred to as the base performance segment which ended on May 31, 2013, plus up to fourextension periods, referred to as option segments, each of which may be exercised at BARDA’s sole discretion. We must complete agreed upon milestonesand deliverables in each discrete work segment before the next option segment is eligible to be exercised. Under the contract as currently in effect, if eachfollow-on option segment is exercised by BARDA, we may receive up to $75.8 million in expense reimbursement and $5.3 million in fees.We substantially completed the first option segment of the contract on August 28, 2014. In September 2014, we were awarded a contract extension for asecond option segment providing an additional $17.0 million. In August 2016, the contract was amended to provide an additional $535,000 and inDecember 2017 the contract was amended to increase funding by an additional $4.1 million for the performance of the second option segment, which isscheduled to end on September 30, 2018. On September 11, 2015, BARDA exercised option segment three, which provided approximately $12.9 million infunding for the performance of the segment. In December 2017, BARDA decreased the scope of this segment by removing a potential second pivotalectromelia virus study which decreased the funding of this option segment by $1.3 million to a total award of $11.6 million; option segment three isscheduled to end on September 30, 2018. The total funding of the contract is approximately $69.4 million and is scheduled to end on September 30, 2018.As of December 31, 2017, we had recognized revenue in aggregate of $56.1 million with respect to the base performance segment and the first three extensionperiods.Pursuant to the contract, Chimerix and the U.S. government share the rights to any inventions made in the performance of our work under the contract.Specifically, the U.S. government retains a nonexclusive, nontransferable, irrevocable, paid up license to any invention made in the performance of our workunder the contract, provided, however, that the U.S. government may, under8certain circumstances, including circumstances involving public health and safety, license such inventions to third parties without our consent. There havebeen no inventions made to date under the BARDA contract.The contract may be terminated by BARDA ten days after giving us notice of a material default which remains uncured for ten days. In addition, BARDA isalso permitted under applicable law to terminate the contract if it is in the U.S. government’s best interest.In April 2015, the DHHS, Office of the Assistant Secretary for Preparedness and Response, BARDA posted a notice of intent to use other than full and opencompetition (Notice of Intent) to award a sole source contract to us for the procurement of brincidofovir for the treatment of smallpox. In July 2015, BARDA issued a RFP entitled “2015 Procurement of a Second Smallpox Antiviral Drug for the Strategic National Stockpile.” In August 2015,we submitted a response to the RFP and we subsequently engaged in discussions with BARDA regarding our response. The issuance of that RFP did notculminate with agreement for the sole source supply of brincidofovir for the Strategic National Stockpile.On February 9, 2018, the DHHS issued a pre-solicitation notice (No. 18-100-SOL-00011) entitled, “Procurement and Late-Stage Development of SmallpoxAntiviral Drug(s).” There are no RFPs for procurement of a smallpox antiviral currently pending.In the event a new RFP is issued we will likely submit a proposal. In the event that our proposal is chosen (potentially among several competing proposals)and before we can enter into a contract we must negotiate its terms, including the price and delivery schedule. In addition, as a governmental agency,BARDA’s ability to enter into a contract is subject to continued funding for this purpose, which can change at any time. We remain in discussions withBARDA regarding the potential to supply brincidofovir to the Strategic National Stockpile, however, there can be no assurances regarding any suchprocurement. The Company continues to receive funding under an advanced research and development contract for the development of brincidofovir for thetreatment of smallpox. We are currently evaluating brincidofovir for efficacy in two different animal models to support potential approval under the FDA’sAnimal rule.The Regents of the University of CaliforniaIn May 2002, we entered into a license agreement with The Regents of the University of California (UC) under which we obtained an exclusive, worldwidelicense to UC’s patent rights in certain inventions (the UC Patent Rights) related to lipid-conjugated antiviral compounds and their use, including certainpatents relating to brincidofovir and CMX157. Under the license agreement, we are permitted to research, develop, manufacture and commercialize productsutilizing the UC Patent Rights for all human and veterinary uses, and to sublicense such rights subject to certain sublicensing fees and royalty payments.In consideration for the rights granted to us under the license agreement, we issued UC an aggregate of 64,788 shares of our common stock. In connection tothe development and commercialization of brincidofovir and CMX157, we could be required to pay UC up to an aggregate of $3.4 million in milestonepayments, assuming the achievement of all applicable milestone events under the license agreement. In addition, upon commercialization of any productutilizing the UC Patent Rights, which would include brincidofovir or CMX157, we will be required to pay low single digit royalties on net sales of suchproduct.The license agreement requires that we diligently develop, manufacture and commercialize compounds that are covered by the UC Patent Rights, and wehave agreed to meet certain development and commercialization milestones. UC may, at its option, either terminate the license agreement or change thelicense granted from an exclusive license to a non-exclusive license if we fail to meet such development and commercialization milestones. We are currentlyin compliance with these milestone requirements.University of MichiganIn 2006, we entered into a license agreement with The Regents of the University of Michigan (UM) under which we obtained an exclusive, worldwide licenseto UM’s patent rights in certain inventions (UM Patent Rights) related to certain compounds originally synthesized in the laboratory of Dr. Leroy Townsendat the University of Michigan. Under the license agreement, we are permitted to research, develop, manufacture and commercialize products utilizing the UMPatent Rights, and to sublicense such rights subject to certain sublicensing fees and royalty payments.In consideration for the rights granted to us under the license agreement, we have paid UM an aggregate of $70,000 in fees and in January 2017 issued UM anaggregate of 33,058 shares of our common stock. In connection with our commercialization or sublicensing of certain products covered by the licenseagreement, including CMX521, we could be required to pay royalties on9net sales of such products ranging from 0.25% to 2%. Beginning in 2024, we are also subject to certain minimum annual royalty payments.The UM license agreement requires that we use commercially reasonable efforts to develop and make commercially available licensed products as soon aspracticable. Specifically, we have agreed to make the first commercial sale of a licensed product by June of 2026. UM may terminate the license agreement ifwe materially breach the license agreement. We are currently in compliance with our milestone requirements.Commercial OperationsWe anticipate that our first commercial indication for brincidofovir may be in the treatment of AdV infections in pediatric allogeneic HCT recipients. Inanticipation of potential regulatory approval and commercial launch of brincidofovir, we are building select commercial functions tied to key milestones.These milestones include the availability of data from our IV brincidofovir studies, and other potential trials or studies, potential submission of marketingapplications for brincidofovir, and anticipated approval (or PDUFA) dates.Patients who undergo an allogeneic HCT are likely to be treated at a small number of major medical centers by specialized teams of physicians andhealthcare providers. There are approximately 200 HCT transplant centers in the U.S. and 300 in the EU-5. The management of therapies for transplantpatients is largely the responsibility of transplant physicians, infectious disease specialists, and clinical pharmacists who oversee post-transplant therapies.These clinicians focus on prevention and management of post-transplant infections as one of their key priorities. Practice patterns for the management oftransplant patients and post-transplant viral infections vary from institution to institution and are highly driven by research activities, data and publications.If brincidofovir is approved for the treatment of AdV infection, we believe it is possible for us to commercialize brincidofovir in the United States. Weanticipate that this would entail a relatively small commercial infrastructure, which may include a contract sales force, partner sales force, or internal team.While our commercialization efforts may initially be focused on health care providers who are responsible for treating AdV, this commercial infrastructurewould serve as the foundation for an expanded commercial presence based on lifecycle indications and other opportunities within the corporate portfolio.Outside of the United States, subject to obtaining necessary marketing approvals, we may seek to commercialize brincidofovir ourselves or throughdistribution or other collaboration arrangements. If we elect to develop brincidofovir for other DNA viral indications, we would plan to do so selectivelyeither on our own or by establishing alliances with one or more pharmaceutical company collaborators, depending on, among other things, the applicableindications, the related development costs, reimbursement complexities and our available resources.CompetitionOur industry is highly competitive and subject to rapid and significant technological change. While we believe that our therapeutic experience, scientificand commercial knowledge provide us with competitive advantages, we will face competition from large and small pharmaceutical, biotechnologycompanies, including specialty pharmaceutical and generic drug companies, and other emerging technologies.We believe that the key competitive factors that will affect the commercial success of brincidofovir and our other product candidates are the efficacy, safetyand tolerability profile and the risk:benefit trade-off compared to alternative therapies or procedures. Securing market access and reimbursement will be animportant element of product uptake and market penetration. Our commercial opportunity could be negatively impacted if our competitors develop or marketproducts or other technologies that are more effective, better tolerated, safer, more convenient or have greater market access than brincidofovir, or obtainregulatory approval for their products more rapidly than we do. In addition, our ability to compete will be affected by the availability of generic products.If approved, brincidofovir would compete with a number of existing products and other product candidates that target serious viral infections, includingdrugs and vaccines which demonstrate efficacy against viruses that affect our target patient populations. We believe brincidofovir has potential benefits overthe competitive products, including the potential to be the first antiviral indicated for treatment of disseminated AdV in allogeneic HCT recipients. Based onmarket research, competing products that are currently used, or being developed for use, to treat AdV include and are not limited to:•Vistide® (cidofovir for injection), marketed by Gilead Sciences, Inc. and generic manufacturers; and•patient-specific T-cell therapies.10Other product candidates currently in development may compete against brincidofovir for the prevention or mitigation of CMV infection in a variety ofsettings, including:•letermovir (marketed under the trade name PREVYMIS), an anti-CMV drug recently approved for the prevention of CMV infections in adultHCT recipients pursuant to an exclusive worldwide license agreement between AiCuris GmbH & Co. KG and Merck & Co., Inc.;•maribavir, an antiviral owned by Shire plc, currently in Phase 3 trials for the treatment of CMV resistant or refractory CMV infections in bothHCT and SOT adult patients, and for preemptive use in adult HCT patients; and•patient-specific T-cell therapies directed at antigens of CMV and other dsDNA viruses.Furthermore, we anticipate that we will face intense and increasing competition as new products enter the market, as advanced technologies become availableand as increasing numbers of generic formulations of currently branded products become available.Changes in the health care system may limit our ability to price brincidofovir or our other product candidates at a level that would allow recovery of ourresearch and development costs and may impede our ability to generate or maintain a profit.We believe that brincidofovir has potential benefits over existing and potential competitive products as described in more detail under“Business - Brincidofovir.” As a result, we believe that brincidofovir should be well positioned to gain market share if we obtain the required regulatoryapproval. However, even with those benefits, we may not be able to make promotional claims that brincidofovir is superior to these competing productswithout conducting additional studies, which delivers differentiated data, and brincidofovir may be unable to compete successfully against these products.See “Risk Factors - Risks Related to Commercialization of Our Product Candidates.”Our Intellectual PropertyWe strive to protect and enhance the proprietary technologies we believe are important to our business, including by seeking and maintaining patentsintended to cover our products and compositions, their methods of use and any other inventions that are important to the development of our business. Wealso rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for commercially important technology,inventions and know-how related to our business, defend and enforce our patents, maintain licenses to our intellectual property owned by third parties,preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties.We believe that we have a strong intellectual property position and substantial know-how relating to the development and commercialization of our lipidconjugate technology platform and the Chimerix Chemical Library.At February 16, 2018, our worldwide patent portfolio included:•146 patents or patent applications that we own or have in-licensed from academic institutions, related to brincidofovir and CMX157, whichrepresented a slight increase over the number of patents in our patent portfolio at the end of fiscal 2016;•This includes 96 US and foreign exclusively and jointly owned patents and 50 US and foreign applications related to brincidofovir andCMX157. Granted European patents are counted as one patent and have been validated throughout Europe;•20 jointly-owned patents or patent applications related to our agreement with the UM regarding our proprietary Chemical Library; and•One US provisional patent application owned exclusively by Chimerix directed to a morphic form of a compound from the Chemical Library.In 2015, U.S. Patent No. 8,962,829 covering a method of synthesis and the commercial morphic form of brincidofovir was issued to Chimerix. With theaddition of this patent, composition of matter coverage for brincidofovir in the U.S. is expected to extend to October 2034.Patents generally have a term of twenty years from the date they are filed. As our patent portfolio has been built over time, the remaining terms of theindividual patents across our patent portfolio vary. We believe that our patents and patent applications are important for maintaining the competitivedifferentiation of our lipid-antiviral-conjugate technology platform and the Chimerix Chemical Library, enhancing our freedom of action to sell ourantivirals, upon appropriate regulatory approvals, in markets in11which we choose to participate, and maximizing our return on research and development investments. No single patent is in itself essential to the conduct ofour business as a whole.We are also open to expanding our intellectual property portfolio through licensing intellectual property from third parties as we deem appropriate. We havegranted and will continue to grant to others licenses under our patents when we consider these arrangements to be in our interest.ManufacturingWe do not own or operate and we do not expect to own or operate facilities for product manufacturing, storage and distribution, or testing. In the past, wehave relied on third-party manufacturers for supply of our lead product candidate, brincidofovir, as well as our other product candidates. We expect that inthe future we will rely on such manufacturers for supply of drug substance and drug product that will be used in clinical trials of brincidofovir, as well as forcommercial purposes should brincidofovir be approved. When produced on a commercial scale, we expect that cost-of-goods-sold relating to brincidofovirwill generally be in-line with that of other small-molecule pharmaceutical compounds.The manufacturing process for brincidofovir drug substance is relatively straight-forward and generally in-line with other small molecule pharmaceuticalcompounds in terms of cost and complexity. The process is robust and reproducible, does not require dedicated reactors or specialized equipment, usescommon synthetic chemistry and readily available materials, including off-the-shelf and made-to-order starting materials, and is readily transferable.Our current drug substance supply chain for brincidofovir involves various contractors that supply the raw materials for the drug substance process, a contractmanufacturer for an intermediate, and a contract manufacturer for the drug substance. We have completed transferring our current commercial drug substancemanufacturing process to our selected contractor that will produce the commercial supply of drug substance and began process validation during 2015.Manufacturers of drug components must meet certain FDA qualifications with respect to manufacturing standards. At present, we have qualified only one firmas a supplier of drug substance. We continually assess our manufacturing needs and may seek to engage additional qualified vendors as circumstancesdictate. Changes in our requirements may require revalidation of the manufacturing process at a different scale and potentially at a different contractordepending on the necessary scale, infrastructure and technical capabilities. To ensure continuity in our supply chain, we plan to establish supplyarrangements with alternative suppliers for certain portions of our supply chain, as appropriate.Our drug products (tablets, oral suspension, intravenous solution or lyophilized powder for solution) are also manufactured under contract. We havecompleted development and transfer of our current commercial suspension and tablet manufacturing process to our selected contractor that will producecommercial supplies. We plan to begin validation of these processes in 2018. The intravenous formulation of brincidofovir is in early-stage development.Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements, which govern record keeping,manufacturing processes and controls, personnel, quality control and quality assurance, among others. Our systems and contractors are required to be incompliance with these regulations, and this is assessed regularly through monitoring of performance and a formal audit program. We have personnel withextensive technical, manufacturing, analytical and quality experience and strong project management discipline to oversee contract manufacturing andtesting activities, and to compile manufacturing and quality information for our regulatory submissions.Pursuant to our license agreement with ContraVir, the manufacture of CMX157 is under the control and direction of ContraVir.Government Regulation and Product ApprovalGovernment authorities in the United States, at the federal, state and local level, and government authorities of member states of the EU and other countriesextensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such as those we aredeveloping. Any product candidate that we develop must be approved by the FDA or EMA before it may be legally marketed in the United States or EU andin other countries by the responsible national regulatory agency before it may be legally marketed.U.S. Drug Development ProcessIn the United States, the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (FDCA), and implementing regulations. Drugs are also subjectto other federal, state and local statutes and regulations. The process of obtaining regulatory12approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial timeand financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, FDA approval processor after FDA approval, may subject an applicant to administrative or judicial civil or criminal sanctions. FDA sanctions could include refusal to approvepending applications, withdrawal of an approval, clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production ordistribution, injunctions, fines, refusals of government contracts, debarment, restitution, disgorgement or civil or criminal penalties. Any agency or judicialenforcement action, whether before or after the FDA approval process, could have a material adverse effect on us. The process required by the FDA before adrug may be marketed in the United States generally involves the following:•completion of nonclinical laboratory tests, animal studies and formulation studies according to good laboratory practices (GLP), or otherapplicable regulations;•submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin;•performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as current goodclinical practices (GCPs), to establish the safety and efficacy of the proposed drug for its intended use;•submission to the FDA of a NDA for a new drug;•satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the drug is produced to assess compliance with theFDA’s current good manufacturing practice standards (cGMP), to assure that the facilities, methods and controls are adequate to preserve thedrug’s identity, strength, quality and purity;•potential FDA inspection of the nonclinical and clinical trial sites that generated the data in support of the NDA; and FDA review of the NDA.The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations require the expenditureof substantial resources and approvals are inherently uncertain.Before testing any compounds with potential therapeutic value in humans, the drug candidate enters the preclinical testing stage. Preclinical tests, alsoreferred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess thepotential safety and activity of the drug candidate. The conduct of the preclinical tests must comply with federal regulations and requirements includingGLP. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data orliterature and a proposed clinical protocol to the FDA as part of the IND. The IND automatically becomes effective 30 days after receipt by the FDA, unlessthe FDA places the clinical trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstandingconcerns before the clinical trial can begin. The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due tosafety concerns or non-compliance. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that,once begun, issues will not arise that suspend or terminate such trial.Clinical trials involve the administration of the drug candidate to healthy subjects or affected patients under the supervision of qualified investigators,generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, theobjectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety. Eachprotocol must be submitted to the FDA as part of the IND. Patients not meeting protocol inclusion and exclusion criteria may be considered for our expandedaccess program under the IND. Clinical trials must be conducted in accordance with the FDA’s regulations comprising the good clinical practicesrequirements. Further, each clinical trial must be reviewed and approved by an independent institutional review board (IRB), at or servicing each institutionat which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whetherthe risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the formand content of the informed consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trialuntil completed.Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:•Phase 1. The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism,distribution and excretion. In the case of some products for severe or life-threatening diseases, especially when the product may be tooinherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.•Phase 2. The drug is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate theefficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.13•Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population atgeographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the product andprovide an adequate basis for product labeling. Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA forapproval of an NDA.Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials are usedto gain additional experience from the treatment of patients in the intended therapeutic indication.Annual progress reports detailing the results of the clinical trials must be submitted to the FDA and written IND safety reports must be promptly submitted tothe FDA and the investigators for serious and unexpected adverse events or any finding from tests in laboratory animals that suggests a significant risk forhuman subjects. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsoror its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients arebeing exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is notbeing conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry andphysical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMPrequirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, mustdevelop methods for testing the identity, strength, quality and purity of the final drug. Additionally, appropriate packaging must be selected and tested andstability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.U.S. Review and Approval ProcessesThe results of product development, nonclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conductedon the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market theproduct. The submission of an NDA is subject to the payment of substantial user fees; a waiver of such fees may be obtained under certain limitedcircumstances.In addition, under the Pediatric Research Equity Act (PREA), an NDA or supplement to an NDA must contain data to assess the safety and effectiveness of thedrug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for whichthe product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREAdoes not apply to any drug for an indication for which orphan designation has been granted (discussed below).The FDA reviews all NDAs submitted to determine if they are substantially complete before it accepts them for filing; this initial review period prior toaccepting the NDA for filing is 2 months in duration. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under thegoals and policies agreed to by the FDA under the Prescription Drug User Fee Act (PDUFA), the FDA has 10 months from the date of accepting the NDA forfiling in which to complete its initial review of a standard NDA and respond to the applicant, and six months for a priority NDA. The FDA does not alwaysmeet its PDUFA goal dates for standard and priority NDAs. The review process and the PDUFA goal date may be extended if the FDA requests or the NDAsponsor otherwise provides additional information or clarification regarding information already provided in the submission without prior agreement reachedat a pre-submission meeting.After the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe andeffective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength,quality and purity. The FDA may refer applications for novel drug or biological products or drug or biological products which present difficult questions ofsafety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as towhether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but itconsiders such recommendations carefully when making decisions. During the drug approval process, the FDA also will determine whether a risk evaluationand mitigation strategy (REMS), is necessary to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submita proposed REMS. The FDA will not approve the NDA without a REMS, if required.Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless itdetermines that the manufacturing processes and facilities are in compliance with cGMP requirements and14adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typicallyinspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND study requirements. If major issues with trialconduct are identified at a site, data collected from that site can be determined to be unacceptable for supporting the application. If the FDA determines thatthe application, manufacturing process or manufacturing facilities are not acceptable it will outline the deficiencies in the submission and often will requestadditional testing or information.The NDA review and approval process is lengthy and difficult and the FDA may refuse to approve an NDA if the applicable regulatory criteria are notsatisfied or may require additional clinical data or other data and information. Even if such data and information is submitted, the FDA may ultimately decidethat the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differentlythan we interpret the same data. The FDA will issue a complete response letter if the agency decides not to approve the NDA. The complete response letterusually describes all of the specific deficiencies in the NDA identified by the FDA. The deficiencies identified may be minor, for example, requiring labelingchanges, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that theapplicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the NDA,addressing all of the deficiencies identified in the letter, or withdraw the application.If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwisebe limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions beincluded in the product labeling. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials testing, whichinvolves clinical trials designed to further assess a drug’s safety and effectiveness and may require testing and surveillance programs to monitor the safety ofapproved products that have been commercialized.Orphan Drug DesignationUnder the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which isgenerally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States andfor which there is no reasonable expectation that the cost of developing and making a drug or biological product available in the United States for this typeof disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting an NDA. After the FDAgrants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan productdesignation does not convey any advantage in or shorten the duration of the regulatory review and approval process.If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, theproduct is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologicalproduct for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphanexclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtainapproval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block theapproval of a product for seven years if a competitor obtains approval of the same drug or biological product as defined by the FDA or if a drug candidate isdetermined to be contained within the competitor’s product for the same indication or disease. If a drug or biological product designated as an orphanproduct receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.Expedited Development and Review ProgramsThe FDA has a number of programs that are intended to expedite or facilitate the process for reviewing new drugs and biological products for seriousconditions that meet certain criteria. Specifically, new drugs and biological products are eligible for Fast Track, Breakthrough Therapy, and/or PriorityReview designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for thecondition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. Breakthrough Therapydesignation is for a drug that is intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantialimprovement on a clinically significant endpoint(s) over available therapies. Unique to Fast Track and Breakthrough Therapy products, the FDA mayconsider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submissionof the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any requireduser fees upon submission of the first section of the NDA.15Any product submitted to the FDA for marketing approval, including Fast Track and Breakthrough Therapy programs, may also be eligible for other types ofFDA programs intended to expedite development and review, such as priority review and accelerated approval. Any product is eligible for priority review if ithas the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment,diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an applicationfor a new drug or biological product designated for priority review in an effort to facilitate the review. Additionally, a product may be eligible for acceleratedapproval. Drug or biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningfultherapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on thebasis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a drugor biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials to establish safety and efficacy forthe approved indication. In addition, the FDA currently requires as a condition for accelerated approval pre-review of promotional materials, which couldadversely impact the timing of the commercial launch of the product. Fast Track, Breakthrough, and Priority Review designations and accelerated approvaldo not change the standards for approval but may expedite the development or approval process.EU Review and Approval Process In the EU, there are two main routes for authorizing the marketing of medicines, a centralized route and a national route. The centralized procedureis compulsory for certain types of medicines, including those that have received orphan designation from the European Commission (Orphan Designation).Under the centralized authorization procedure, pharmaceutical companies submit a single marketing-authorization application to the EMA. EMA’sCommittee for Medicinal Products for Human Use (CHMP) carries out a scientific assessment of the application and makes a recommendation to theEuropean Commission whether the medicine should be marketed or not. If authorization is granted by the European Commission, the centralized marketingauthorization is valid in all EU Member States as well as in the European Economic Area (EEA) countries Iceland, Liechtenstein and Norway.Additionally, medicines that belong to at least one of the below categories may be granted a conditional market authorization (CMA). This regulatorypathway is intended to help speed up patient access to new medicines that are:•aimed at treating, preventing or diagnosing seriously debilitating or life-threatening diseases;•intended for use in emergency situations (also less comprehensive pharmaceutical and non-clinical data may be accepted for such products); and/or•designated as orphan medicines.A CMA may be granted if: (1) the CHMP finds that the benefit-risk balance of the product is positive, (2) it is likely that the applicant will be able to providecomprehensive data, (3) the unmet medical needs will be fulfilled, and (4) the benefit to public health of the medicinal product’s immediate availability onthe market outweighs the risks due to need for further data.CMAs are valid for one year and can be renewed annually. The CMA holder will be required to complete specific obligations (to complete ongoing or newstudies, and in some cases additional activities) with a view to providing comprehensive data confirming that the benefit-risk balance is positive. Oncecomprehensive data on the product have been obtained, the CMA may be converted into a full marketing authorization (not subject to specific obligations).Initially, this is valid for five years, but can be renewed for unlimited validity.Early access programsMany jurisdictions allow the supply of unauthorized medicinal products in the context of strictly regulated and exceptional early access programs, and somecountries may provide reimbursement for drugs provided in the context of such programs. In the European Union, the legal basis for early access programs,also referred to as named-patient and compassionate use programs, is set out in the E.U. legislation regulating the authorization, manufacture, distributionand marketing of medicinal products. Detailed regulatory requirements applicable to early access programs have been adopted and implemented by the E.U.member states in their national laws. The promotion, advertising and marketing of unauthorized medicinal products is generally prohibited, andauthorization for early access programs must generally be obtained from national competent authorities, which might not grant such authorization. Obtainingauthorization for an early access program in one alternative treatment option. To provide expanded access, sponsors must submit detailed regulatoryinformation to the FDA. FDA authorization depends on several different factors,16including whether expanded access will interfere with related clinical trials or drug development. Sponsors may not promote porducts as safe or effective forexpanded-access uses.Orphan Designation in the EUIn order to qualify for Orphan Designation, a medicine must meet the following criteria:•it must be intended for the treatment, prevention or diagnosis of a disease that is life-threatening or chronically debilitating;•the prevalence of the condition in the EU must not be more than 5 in 10,000 or it must be unlikely that marketing of the medicine would generatesufficient returns to justify the investment needed for its development; and•no satisfactory method of diagnosis, prevention or treatment of the condition concerned can be authorized, or, if such a method exists, the medicinemust be of significant benefit to those affected by the condition.EMA is responsible for reviewing applications from sponsors for orphan designation. The EMA’s Committee for Orphan Medicinal Products (COMP),through its network of experts, examines applications for Orphan Designation and issues an opinion to EMA. The evaluation process takes approximately of90 days from validation. Once EMA receives COMP’s opinion, EMA sends it to the European Commission, which is responsible for granting the OrphanDesignation.At the time a sponsor of a marketing application files for marketing authorization for a medicine that has received Orphan Designation, the sponsor must alsosubmit a report on the maintenance of the Orphan Designation in parallel. EMA uses this report to determine whether the medicine can maintain its status asan orphan medicine and benefit from the extended market exclusivity applicable to orphan products. Market exclusivity is linked to the maintenance of theOrphan Designation when the medicine receives a marketing authorization for the indication concerned.If it is determined that a medicine still meets the criteria for Orphan Designation at the time of marketing approval, that medicine may benefit from a period often years market exclusivity in the EU. This incentive is intended to protect orphan medicines from market competition with similar medicines with similarindications once they are approved, and fundamentally to encourage the development of medicines for rare diseases.The applicant is obliged to submit an annual report to the EMA every year after their medicine has been granted orphan designation. The annual report needsprovide information on the status of the development of the medicine, such as a review of ongoing clinical studies, a description of the investigation plan forthe coming year and any anticipated or current problems in the process, difficulties in testing and potential changes that may have an impact on themedicine’s orphan designation.The European Commission is responsible for granting market exclusivity for orphan medicines. Market exclusivity is linked to each specific OrphanDesignation for which a marketing authorization has been granted.The period of market exclusivity is extended by two years for medicines that also have complied with an agreed pediatric investigation plan (PIP). Eachorphan designation for a product linked to a separate orphan condition is eligible for a two-year extension if this is accounted for in the PIP. The extension isgranted by the European Commission based on the positive compliance check from the Pediatric Committee and opinion from the CHMP.Post-Approval RequirementsAny drug products for which we or our strategic alliance partners receive FDA approvals are subject to continuing regulation by the FDA, including, amongother things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacyinformation, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDApromotion and advertising requirements. These promotion and advertising agreements include, among others, standards for direct-to-consumer advertising,promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), industry-sponsoredscientific and educational activities, and promotional activities involving the internet. Failure to comply with FDA requirements can have negativeconsequences, including adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil orcriminal penalties. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-labeluses.We will rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of any products that we maycommercialize. Our strategic alliance partners may also utilize third parties for some or all of a product we are developing with such strategic alliance partner.Manufacturers of our products are required to comply with applicable FDA manufacturing requirements contained in the FDA’s cGMP regulations. cGMPregulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation. Drugmanufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the17FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP andother laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMPcompliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved NDA,including withdrawal of the product from the market. In addition, changes to the manufacturing process generally require prior FDA approval before beingimplemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to furtherFDA review and approval.The FDA also may require post-marketing testing, known as Phase 4 testing, risk minimization action plans and surveillance to monitor the effects of anapproved product or place conditions on an approval that could restrict the distribution or use of the product.U.S. Patent Term Restoration and Marketing ExclusivityDepending upon the timing, duration and specifics of the FDA approval of the use of our drug candidates, some of our United States patents may be eligiblefor limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-WaxmanAmendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during productdevelopment and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and thesubmission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Only one patent applicable to anapproved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The United StatesPatent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future,we may apply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration date, dependingon the expected length of the clinical trials and other factors involved in the filing of the relevant NDA.Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain applications of other companies seeking to referenceanother company’s NDA. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtainapproval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing thesame active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept forreview an abbreviated new drug application (ANDA), or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicantdoes not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains acertification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA also provides threeyears of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that wereconducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages orstrengths of an existing drug. This three-year exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit theFDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity will not delay the submission or approval ofa full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies andadequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Pediatric exclusivity is another type of regulatory marketexclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-monthexclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial inaccordance with an FDA-issued “Written Request” for such a trial.US Health Care LawsOur operations may be subject to federal and state health care laws and regulations including, without limitation: anti-kickback statutes, false claims statutes,patient data privacy and security laws, and physician payment transparency laws and regulations, many of which may become more applicable if our productcandidates are approved and we begin commercialization. If our operations are found to be in violation of any of these laws or regulations, we may be subjectto penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, imprisonment, and exclusion from participation in federalhealthcare programs, and additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement toresolve allegations of non-compliance with these laws, as well as contractual damages, reputational harm, diminished profits and future earnings, and thecurtailment or restructuring of our operations.18ReimbursementSales of pharmaceutical products depend in significant part on the availability of third-party reimbursement. Third-party payers include government healthprograms such as Medicare and Medicaid, managed care providers, private health insurers and other organizations. These third-party payers are increasinglychallenging the price and examining the cost-effectiveness of medical products and services, including prescription drugs. In addition, significantuncertainty exists as to the reimbursement status of newly approved prescription drugs and other healthcare products. We may need to conduct expensivepharmacoeconomic studies in order to demonstrate the cost-effectiveness of any of our products that is successfully developed and approved. Our productcandidates may not be considered cost-effective. It is time consuming and expensive to seek reimbursement from third-party payers. Reimbursement may notbe available or sufficient to allow the sale of any of our products that is successfully developed and approved on a competitive and profitable basis.The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), established the Medicare Part D program to provide a voluntaryprescription drug benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities toprovide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as asupplement to Medicare Advantage plans. Unlike Medicare Parts A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are notrequired to pay for all covered Part D drugs, and each Part D prescription drug plan can develop its own drug formulary that identifies which drugs it willcover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part Ddrugs, although not necessarily all of the drugs within each category or class. Any formulary used by a Part D prescription drug plan must be developed andreviewed by a pharmacy and therapeutic committee.It is not clear what long-term effect the MMA will have on the prices paid for currently approved drugs and the pricing options for newly approved drugs.Government payment for some of the costs of prescription drugs may increase demand for any of our products that is successfully developed and approved.However, any negotiated prices for our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain.Moreover, although the MMA applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and paymentlimitations in setting their own payment rates. Accordingly, any reduction in payment that results from the MMA may result in a similar reduction inpayments from non-governmental payers.We expect that there will continue to be a number of federal and state proposals to implement governmental pricing controls and limit the growth ofhealthcare costs, including the cost of prescription drugs. Currently, Medicare is prohibited from negotiating directly with pharmaceutical companies fordrugs. However, the U.S. Congress may in the future consider legislation that would lift the ban on federal negotiations.The American Recovery and Reinvestment Act of 2009 provides funding for the federal government to compare the effectiveness of different treatments forthe same illness. A plan for the research would be developed by the DHHS, the Agency for Healthcare Research and Quality and the National Institutes ofHealth, and periodic reports on the status of the research and related expenditures would be made to the U.S. Congress. Although the results of thecomparative effectiveness studies are not intended to mandate coverage policies for public or private payers, it is not clear whether research would have anyeffect on the sales of any of our products that is successfully developed and approved, if the product or the condition that it is intended to treat becomes thesubject of a study. It is also possible that comparative effectiveness research demonstrating benefits of a competitor’s product could adversely affect the salesof any of our products that is successfully developed and approved. If third-party payers do not consider our products to be cost-effective compared to otheravailable therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient toallow us to sell our products on a profitable basis.The Patient Protection and Affordable Care Act (ACA), as amended by the Health Care and Education Reconciliation Act of 2010, is expected to have asignificant impact on the health care industry. The ACA is expected to expand coverage for the uninsured while at the same time containing overallhealthcare costs. Among other things, the ACA is expected to expand and increase industry rebates for drugs covered under Medicaid programs and makechanges to the coverage requirements under the Medicare Part D program. We cannot predict the impact of the ACA on pharmaceutical companies becausesome of the ACA’s reforms require the promulgation of detailed regulations to implement the statutory provisions, which has not yet occurred. In addition,there have been judicial and Congressional challenges to certain aspects of the ACA, as well as recent efforts by the Trump administration to repeal andreplace certain aspects of the ACA, and we expect such challenges to continue. Since January 2017, President Trump has signed two Executive Orders andother directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for healthinsurance mandated by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. WhileCongress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA have been enacted. The TaxCuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility19payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to asthe “individual mandate.” Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 thatdelayed the implementation of certain fees mandated by the ACA, including the so-called “Cadillac” tax on certain high-cost employer-sponsored insuranceplans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medicaldevices. Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amends the ACA, effective January 1, 2019, to close the coverage gapin most Medicare drug plans, and also increases in 2019 the percentage that a drug manufacturer must discount the cost of prescription drugs from 50 percentunder current law to 70 percent. Congress also could consider additional legislation to repeal or repeal and replace other elements of the ACA. At this time,the full effect that the ACA will have on our business in the future remains unclear.The Physician Payment Sunshine Act (Sunshine Act), which was enacted as part of ACA, requires covered manufacturers of drugs covered under Medicare,Medicaid or the Children’s Health Insurance Program to report annually to the Secretary of the DHHS payments or other transfers of value made by thatentity, or by a third party as directed by that entity, to physicians and teaching hospitals, or to third parties on behalf of physicians or teaching hospitals,during the course of the preceding calendar year. The final rule implementing the Sunshine Act, published on February 8, 2013, requires data collection onpayments to begin on August 1, 2013. Failure to submit required information may result in civil monetary penalties of up to $150,000 per year (up to $1million per year for “knowing failures”) for all payments, transfers of value or ownership or investment interests not reported in an annual submission.If not preempted by the ACA, several states require pharmaceutical manufacturers to report expenses relating to the marketing and promotion ofpharmaceutical products and to report gifts and payments to individual physicians in the states. Other states prohibit providing various other marketingrelated activities. Still other states require the posting of information relating to clinical studies and their outcomes. In addition, some states, such asCalifornia, Nevada and Massachusetts, require pharmaceutical manufacturers to implement compliance programs or marketing codes. Currently, severaladditional states are considering similar proposals. Compliance with these laws is difficult and time consuming, and companies that do not comply with thesestate laws face civil penalties.In January, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislation thatwould repeal portions of the ACA. The Budget Resolution is not a law, however, it is widely viewed as the first step toward the passage of legislation thatwould repeal certain aspects of the ACA. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authoritiesand responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose afiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress alsocould consider subsequent legislation to replace elements of the ACA that are repealed.In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricingvary widely from country to country. For example, the EU provides options for its member states to restrict the range of medicinal products for which theirrespective national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state mayapprove a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placingthe medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceuticalproducts will allow favorable reimbursement and pricing arrangements for any of our products for which we receive marketing approval. Historically, theprice structures for products launched in the EU do not follow those of the United States and tend to be significantly lower.Europe / Rest of World Government RegulationIn addition to regulations in the United States, we and our strategic alliance partners will be subject to a variety of regulations in other jurisdictionsgoverning, among other things, clinical trials and any commercial sales and distribution of our products.Whether or not we or our collaborators obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreigncountries prior to the commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have asimilar process that requires the submission of a clinical trial application prior to the commencement of human clinical trials. In the EU, for example, aclinical trial application (CTA), must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA andIRB, respectively. Once the CTA is approved in accordance with a country’s requirements, the particular clinical trial may proceed.20The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In allcases, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin inthe Declaration of Helsinki.To obtain regulatory approval of an investigational drug or biological product under EU regulatory systems, we or our strategic alliance partners must submita marketing authorization application. The application used to file the NDA or a Biologics License Application in the United States is similar to theapplication dossier (eCTD) required in the EU.For other countries outside of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials,product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted in accordance with GCP andthe applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.If we or our strategic alliance partners fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines,suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.Environmental, Health and Safety RegulationsWe are subject to various environmental, health and safety regulations, including those governing laboratory procedures and the handling, use, storage,treatment and disposal of hazardous substances. From time to time, and in the future, our operations may involve the use of hazardous materials.EmployeesAs of December 31, 2017, we had 82 full-time employees. Of these employees, 58 employees are engaged in research and development activities and 24employees are engaged in marketing, finance, legal, human resources, facilities and general management. We have no collective bargaining agreements withour employees and we have not experienced any work stoppages. We consider our relations with our employees to be good.Corporate InformationWe were incorporated in the State of Delaware in April 2000. Our corporate headquarters are located at 2505 Meridian Parkway, Suite 100, Durham, NorthCarolina 27713 in a facility we lease encompassing approximately 24,862 square feet of office space. The leases for this facility expire in February 2021. Weseparately lease laboratory space in Durham and Research Triangle Park, North Carolina, encompassing a total of approximately 10,274 square feet. Theleases for this laboratory space in Durham and Research Triangle Park expire in July 2021 and August 2018, respectively.Our corporate website address is www.chimerix.com. Our filings with the Securities and Exchange Commission are available free of charge through ourwebsite as soon as reasonably practicable after being electronically filed with or furnished to the SEC. The information contained on, or that can be accessedthrough, our website is not part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only.ITEM 1A. RISK FACTORSExcept for the historical information contained herein or incorporated by reference, this Annual Report and the information incorporated by referencecontains forward-looking statements that involve risks and uncertainties. These statements include projections about our research, development andcommercialization efforts, our accounting and finances, plans and objectives for the future, future operating and economic performance and otherstatements regarding future performance. These statements are not guarantees of future performance or events. Our actual results may differ materially fromthose discussed here. Factors that could cause or contribute to differences in our actual results include those discussed in the following section, as well asthose discussed in Part II, Item 7 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewherethroughout this Annual Report and in any other documents incorporated by reference into this Annual Report. You should consider carefully the followingrisk factors, together with all of the other information included or incorporated in this Annual Report. Each of these risk factors, either alone or takentogether, could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in ourcommon stock. There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also impair ourbusiness and financial position.21An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following information about these risks,together with the other information appearing elsewhere in this Annual Report, before deciding to invest in our common stock. The occurrence of any of thefollowing risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In thesecircumstances, the market price of our common stock could decline, and you may lose all or part of your investment.Risks Related To Our Financial Condition and Need For Additional CapitalWe have incurred significant losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future, and wemay never achieve or maintain profitability.We are a biopharmaceutical company focused primarily on developing our lead product candidate, brincidofovir. We have incurred significant net losses ineach year since our inception, including net losses of $71.0 million, $76.4 million and $117.4 million for the twelve months ended December 31, 2017, 2016and 2015, respectively. As of December 31, 2017, we had an accumulated deficit of approximately $486.8 million.To date, we have financed our operations primarily through the sale of equity securities and, to a lesser extent, through government funding, licensing feesand debt. We have devoted most of our financial resources to research and development, including our preclinical development activities and clinical trials.We have not completed development of any product candidates. We expect to continue to incur losses and negative cash flows for the foreseeable future. Thesize of our losses will depend, in part, on the rate of future expenditures and our ability to generate revenues. In particular, we expect to incur substantial andincreased expenses as we seek to:•continue the development of our lead product candidate, brincidofovir, for the treatment of AdV infection;•advance the development of an IV formulation of brincidofovir;•continue the development of brincidofovir for the prevention or treatment of CMV, AdV, BK virus, and other viral indications in HCTrecipients, solid organ transplant recipients and other patient populations;•continue the development of brincidofovir for the treatment of smallpox as a medical countermeasure;•obtain regulatory approvals for brincidofovir;•scale-up manufacturing capabilities to commercialize brincidofovir for any indications for which we receive regulatory approval;•advance the development of CMX521 for norovirus;•expand our research and development activities and advance our clinical programs;•maintain, expand and protect our intellectual property portfolio;•continue our research and development efforts and seek to discover additional product candidates; and•add operational, financial and management information systems and personnel, including personnel to support our product development andcommercialization efforts and operations as a public company.To become and remain profitable, we must succeed in developing and eventually commercializing products with significant market potential. This willrequire us to be successful in a range of challenging activities, including discovering product candidates, completing preclinical testing and clinical trials ofour product candidates, obtaining regulatory approval for these product candidates, and manufacturing, marketing and selling those products for which wemay obtain regulatory approval. We are only in the preliminary stages of some of these activities.To date, we have not obtained regulatory approval for any of our product candidates, and none of our product candidates have been commercialized. We maynever succeed in developing or commercializing any of our product candidates. If our product candidates are not successfully developed or commercialized,or if revenues from any products that do receive regulatory approvals are insufficient, we will not achieve profitability and our business may fail. Even if wesuccessfully obtain regulatory approval to market our product candidates in the United States, our revenues are also dependent upon the size of marketsoutside of the United States, as well as our ability to obtain market approval and achieve commercial success outside of the United States.Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remainprofitable would depress the value of our company and could impair our ability to raise capital, expand our business, diversify our product offerings orcontinue our operations. A decline in the value of our company could cause you to lose all or part of your investment.22Our ability to generate future revenues from product sales is uncertain and depends upon our ability to successfully develop, obtain regulatory approvalfor, and commercialize our product candidates.Our ability to generate revenue and achieve profitability depends on our ability, alone or with collaborators, to successfully complete the development,obtain the necessary regulatory approvals and commercialize our product candidates. We do not anticipate generating revenues from sales of our productcandidates for the foreseeable future. Our ability to generate future revenues from product sales depends heavily on our success in:•obtaining favorable results for and advancing the development of brincidofovir and our other product candidates, including successfullycompleting clinical development of IV and oral formulations of brincidofovir;•obtaining United States and foreign regulatory approval(s) for brincidofovir;•launching and commercializing brincidofovir, including establishing a sales force and/or collaborating with third party providers of salesorganizations;•achieving broad market acceptance of brincidofovir in the medical community and with third-party payers;•delivering a competitive value proposition compared to established competition and/or competitors who will enter the market before or afterany of our product candidates, including brincidofovir; and•generating, licensing or otherwise acquiring a pipeline of product candidates which progress to clinical development, regulatory approval, andcommercialization.Conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may nevergenerate the necessary data required to obtain regulatory approval and achieve product sales. Our anticipated development costs would likely increase if wedo not obtain favorable results or if development of our product candidates is delayed. In particular, we would likely incur higher costs than we currentlyanticipate if development of our product candidates is delayed because we are required by the FDA or foreign regulatory authorities to perform studies ortrials in addition to those that we currently anticipate, or we decide to conduct additional studies or trials for strategic reasons. For example, in December2015 we announced that in the SUPPRESS trial brincidofovir did not prevent clinically significant CMV infection through Week 24 after HCT to a greaterextent than occurred on placebo, the primary endpoint of the trial. Since that time, we have revised our overall development plan for brincidofovir. We havedesigned and are conducting multiple trials with the goal of attaining FDA and/or foreign regulatory approval of brincidofovir for commercial indications.Furthermore, while our development of BCV as a potential countermeasure for smallpox continues in collaboration with BARDA. On August 4, 2017, wereceived correspondence from the FDA that indicated that we will need to conduct a second rabbitpox study of brincidofovir for the treatment of smallpox.We are working with the FDA and BARDA on the design and conduct of this adjunct study as well as a study in our second animal model, ectromelia.Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict with certainty the timing oramount of any increase in our anticipated development costs that will result should any additional trials be necessary.In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of productsthat we do not expect to be commercially available for a number of years, if at all. Even if one or more of our product candidates is approved for commercialsale, we anticipate incurring significant costs in connection with commercialization. As a result, we cannot assure you that we will be able to generaterevenues from sales of any approved product candidates, or that we will achieve or maintain profitability even if we do generate sales.If we fail to obtain additional financing, we could be forced to delay, reduce or eliminate our product development programs, seek corporate partners forthe development of our product development programs or relinquish or license on unfavorable terms, our rights to technologies or product candidates.Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process thattakes years to complete. We believe that our existing capital available to fund operations will enable us to fund our current operating expenses and capitalrequirements for at least the next twelve months. Having finalized our 2018 plans for both oral and IV brincidofovir, as well as for CMX521 for norovirus, wecurrently expect research and development expenses to increase for the full year 2018 as compared to the full year 2017. In addition, we presently continue toprovide brincidofovir for the treatment of AdV infection through our expanded access trial (Study 351) in the US and through the Named Patient Program inthe EU. Changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate. For example, our clinicaltrials may encounter technical, enrollment or other difficulties that could increase our development costs more than we expected, or because the FDA orforeign regulatory authorities requires us to perform studies or trials in addition to those that we currently anticipate. We may need to raise additional funds ifwe choose to initiate clinical23trials for our product candidates other than brincidofovir. In any event, we will require additional capital to commercialize our lead product candidate,brincidofovir.Securing additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop andcommercialize our product candidates, including brincidofovir. In addition, we cannot guarantee that future financing will be available in sufficient amountsor on terms acceptable to us, if at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to:•significantly delay, scale back or discontinue the development or commercialization of our product candidates, including brincidofovir;•seek corporate partners for brincidofovir or any of our other product candidates at an earlier stage than otherwise would be desirable or on termsthat are less favorable than might otherwise be available; or•relinquish or license on unfavorable terms, our rights to technologies or product candidates that we otherwise would seek to develop orcommercialize ourselves.If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing development andcommercialization efforts, which will have a material adverse effect on our business, operating results and prospects and on our ability to develop our productcandidates. Risks Related To Clinical Development and Regulatory ApprovalWe depend on the success of our lead product candidate, brincidofovir, which is still under clinical development, and may not obtain regulatory approvalor be successfully commercialized.We have not marketed, distributed or sold any products. The success of our business depends upon our ability to develop and commercialize our lead productcandidate, brincidofovir. In December 2015, we announced that in the SUPPRESS trial, brincidofovir did not prevent clinically significant CMV infectionthrough Week 24 after transplant to a greater extent than occurred on placebo, the primary endpoint of the trial. In addition, overall mortality forbrincidofovir and for placebo were not statistically different, but numerically higher for the patients who were randomized to receive brincidofovir.Our AdVise study of brincidofovir for the treatment of AdV infection in allogeneic HCT recipients and other immunocompromised individuals is completeand in light of an absence of a mortality benefit observed, when results were compared to data from Study 305, our historical matched control study, we areconducting additional trials of brincidofovir in AdV.On August 4, 2017, we received correspondence from the FDA that indicated that we will need to conduct a second rabbitpox study of brincidofovir for thetreatment of smallpox. The Company is working with the FDA and BARDA on the design and conduct of this adjunct rabbitpox study. Through ourcontinuing development contract with BARDA, we are conducting final confirmatory studies prior to conducting the pivotal efficacy study in the mousemodel of smallpox infection (ectromelia virus). We believe that efficacy data from this model could serve as the second animal model to support the approvalof brincidofovir for the treatment of smallpox.There is no guarantee that our current or future clinical trials, including any Phase 3 trials, will be approved by regulators, and no guarantee that they will becompleted or, if completed, will be successful, or if successful, will result in an approval for the sale of any of our product candidates. The success ofbrincidofovir will depend on several factors, including the following:•successful conduct of required trial(s) of oral brincidofovir for the treatment of adenovirus;•successful conduct of a second efficacy study of oral brincidofovir in an animal model of smallpox infection, and acceptance of data from theseanimal model studies by the FDA and foreign regulatory bodies;•development of an IV formulation and/or alternate drug formulations;•receipt of marketing approvals from the FDA and corresponding regulatory authorities outside the United States;•establishing commercial manufacturing capabilities;•launching commercial sales of the product, whether alone or in collaboration with others;•acceptance of the product by patients, the medical community and third-party payers;•effectively competing with other therapies;•a continued acceptable safety profile of the product following approval;•obtaining, maintaining, enforcing and defending intellectual property rights and claims; and•establishing distribution channels in the EU and U.S.If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfullycommercialize brincidofovir, which would materially harm our business.24We have never obtained regulatory approval for a drug and we may be unable to obtain, or may be delayed in obtaining, regulatory approval forbrincidofovir.We have never obtained regulatory approval for a drug. It is possible that the FDA and/or foreign health authorities, such as the EMA, may refuse to acceptour NDA (or corresponding foreign application) for substantive review or may conclude after review of our data that our application is insufficient to obtainregulatory approval of brincidofovir.In light of the numerical difference in mortality observed in SUPPRESS and the absence of a mortality benefit observed when results from our AdVise studywere compared to data from Study 305, our historical matched control study, we are conducting additional studies of brincidofovir in patients with AdV.We have not yet reached agreement with the FDA or foreign regulators regarding the adequacy of these planned studies with respect to a potential approvalfor marketing. We may be required to conduct additional clinical, nonclinical or manufacturing validation studies and submit those data beforereconsideration of our application occurs. Depending on the extent of these or any other required studies, approval of any NDA or application that we submitmay be delayed by several years, or may require us to expend more resources than we have available. It is also possible that additional studies, if performedand completed, may not be considered sufficient by the FDA and/or foreign health authorities to approve our NDA or foreign application.On August 4, 2017, we received correspondence from the FDA that indicated that we will need to conduct a second rabbitpox study of brincidofovir for thetreatment of smallpox. The Company is working with the FDA and BARDA on the design and conduct of this adjunct rabbitpox study. Through ourcontinuing development contract with BARDA, we are conducting final confirmatory studies prior to conducting the pivotal efficacy study in the mousemodel of smallpox infection (ectromelia virus). We believe that efficacy data from this model could serve as the second animal model to support the approvalof brincidofovir for the treatment of smallpox.Any delay in obtaining, or an inability to obtain, regulatory approvals would prevent us from commercializing brincidofovir, generating revenues andachieving and sustaining profitability. If any of these outcomes occur, we may be forced to abandon our development efforts for brincidofovir, which wouldhave a material adverse effect on our business and could potentially cause us to cease operations.It is our intention to continue development of brincidofovir for the treatment of smallpox through assessment of efficacy in animal models of orthopox virusinfections.We depend on the successful completion of animal efficacy studies for brincidofovir for the treatment of smallpox. The positive efficacy results obtainedfor brincidofovir for the treatment of rabbitpox in the rabbit animal model may not be repeated in future animal efficacy studies.Before obtaining regulatory approval for brincidofovir for the treatment of smallpox, we must conduct efficacy studies of brincidofovir in animal models oflethal orthopox infections. These studies are expensive and difficult to design and conduct, can take years to complete, and are uncertain as to outcome. Werely on a limited number of research organizations which conduct orthopox infection studies. A failure of one or more of our trials can occur at any stage oftesting. The outcome of prior efficacy studies of brincidofovir may not be predictive of the success of later animal efficacy studies. Results of these studies aresusceptible to varying interpretation.On August 4, 2017, we received correspondence from the FDA that indicated that we will need to conduct a second rabbitpox study of brincidofovir for thetreatment of smallpox. The Company is in process of working with the FDA and BARDA on the design and conduct of this adjunct rabbitpox study. Throughour continuing development contract with BARDA, we are conducting final confirmatory studies prior to conducting the pivotal efficacy study in the mousemodel of smallpox infection (ectromelia virus). We believe that efficacy data from this model could serve as the second animal model to support the approvalof brincidofovir for the treatment of smallpox.We depend on the successful completion of clinical trials for our product candidates, including brincidofovir. The positive clinical results obtained for ourproduct candidates in prior clinical studies may not be repeated in future clinical studies.Before obtaining regulatory approval for the sale of our product candidates, including brincidofovir, we must conduct extensive clinical trials to demonstratethe safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to completeand is uncertain as to outcome. A failure of one or more of our clinical trials can occur at any stage of testing. The outcome of preclinical testing and earlyclinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.Moreover, preclinical25and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performedsatisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.We may experience a number of unforeseen events during, or as a result of, clinical trials or animal efficacy studies for our product candidates, includingbrincidofovir, that could adversely affect the completion of our clinical trials, including:•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;•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;•animal efficacy studies of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require usto conduct additional animal efficacy studies or abandon development programs;•we might be required to change one of our clinical research organizations (CROs) during ongoing clinical programs;•the number of subjects required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trialsmay be insufficient or slower than we anticipate or subjects 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;•we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the subjects are beingexposed to unacceptable health risks;•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;•the cost of clinical trials of our product candidates may be greater than we anticipate;•we may encounter agency or judicial enforcement actions which impact our clinical trials;•the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may beinsufficient or inadequate; or•our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators to suspend orterminate the trials.In light of the numerical difference in mortality observed in SUPPRESS and the absence of a mortality benefit observed when results from our AdVise studywere compared to data from Study 305, our historical matched control study, we are conducting additional studies of brincidofovir in patients with AdV.We do not know whether any clinical trials we may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market ourproduct candidates, including brincidofovir. If later stage clinical trials do not produce favorable results, our ability to obtain regulatory approval for ourproduct candidates, including brincidofovir, may be adversely impacted.We are developing brincidofovir to treat patients who are extremely ill, and patient deaths that occur in our clinical trials could negatively impact ourbusiness even if they are not shown to be related to brincidofovir.It is our intention to further develop our lead product candidate, brincidofovir, for the treatment of AdV infection through clinical trials, and for theprevention or treatment of other DNA viral infections. Many of these patients receive an HCT as a potential cure or remission for many cancers and geneticdisorders. For example, patients that were enrolled in AdVise were often extremely sick and had a high likelihood of experiencing adverse outcomes as aresult of their infection or due to other significant risks including relapse of their underlying malignancy. To prepare for an HCT, patients receive a pre-transplant conditioning regimen, which involves high-dose chemotherapy and may also include radiation therapy. The conditioning regimen suppresses thepatient's immune system in order to prevent it from attacking the new bone marrow.We are currently assessing the possibility of conducting additional clinical trials for oral or IV brincidofovir for other indications, including in the solidorgan transplant setting. In this or other transplant settings, immunosuppressive therapies are administered to decrease the risk of organ rejection and aregenerally tapered after the first few months; the risk of severe viral infection is highest in the first few months. Generally, patients remain at high risk duringthe first 100 to 200 days following their transplant and are at increased risk of infections during that period, which can be serious, which may cause loss of thenew organ, and which may be life-threatening due to their weakened immune systems.As a result, it is likely that we will observe severe adverse outcomes during our clinical trials for brincidofovir, including patient death. If a significantnumber of study subject deaths were to occur, regardless of whether such deaths are attributable to brincidofovir, our ability to obtain regulatory approvaland/or achieve commercial acceptance for brincidofovir may be adversely impacted and our business could be materially harmed.26Delays in clinical trials are common and have many causes, and any delay could result in increased costs to us and jeopardize or delay our ability toobtain regulatory approval and commence product sales.Clinical testing is expensive, difficult to design and implement, can take many years to complete, and is uncertain as to outcome. We may experience delaysin clinical trials at any stage of development and testing of our product candidates. Our planned clinical trials may not begin on time, have an effectivedesign, enroll a sufficient number of subjects, or be completed on schedule, if at all.Events which may result in a delay or unsuccessful completion of clinical trials, including our currently planned or future clinical trials for brincidofovir,include:•inability to raise funding necessary to initiate or continue a trial;•delays in obtaining, or failure to obtain, regulatory approval of Investigational New Drug applications or to commence a trial;•delays in reaching agreement with the FDA and foreign health authorities on final trial design;•imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities;•delays caused by disagreements with existing CROs and/or clinical trial sites;•delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;•delays in obtaining, or failure to obtain, required IRB or ethics committee (EC) approvals covering each site;•delays in recruiting suitable patients to participate in a trial;•delays in having subjects complete participation in a trial or return for post-treatment follow-up;•delays caused by subjects dropping out of a trial due to side effects or otherwise;•clinical sites declining to participate or dropping out of a trial to the detriment of enrollment;•agency or judicial enforcement actions against us;•time required to add new clinical sites; and•delays by our contract manufacturers to produce and deliver sufficient supply of clinical trial materials.For example, due to the specialized indication and patient populations studied in our past and future clinical trials of brincidofovir, the number of study sitesavailable to us is relatively limited, and therefore enrollment of suitable patients to participate in the trial may take longer than is typical for studiesinvolving other indications. This may result in a delay or unsuccessful completion of our clinical trials.If initiation or completion of any of our clinical trials for our product candidates, including brincidofovir, are delayed for any of the above reasons, ourdevelopment costs may increase, our approval process could be delayed, any periods during which we may have the exclusive right to commercialize ourproduct candidates may be reduced and our competitors may have more time to bring products to market before we do. Any of these events could impair ourability to generate revenues from product sales and impair our ability to generate regulatory and commercialization milestones and royalties, all of whichcould have a material adverse effect on our business.Our product candidates may cause adverse effects or have other properties that could delay or prevent their regulatory approval or limit the scope of anyapproved label or market acceptance.Adverse events (AEs) caused by our product candidates could cause us, other reviewing entities, clinical study sites or regulatory authorities to interrupt,delay or halt clinical studies and could result in the denial of regulatory approval. For example, subjects enrolled in our clinical trials for brincidofovir haveexperienced gastrointestinal AEs and liver-related safety laboratory value changes. In addition, brincidofovir is related to the approved drug cidofovir, acompound which has been shown to result in significant renal toxicity and impairment following use. There is also a risk that our other product candidatesmay induce AEs, many of which may be unknown at this time. If an unacceptable frequency and/or severity of AEs are reported in our clinical trials for ourproduct candidates, our ability to obtain regulatory approval for product candidates, including brincidofovir, may be negatively impacted. We anticipate thatwe will need to conduct one or more additional clinical trials in order to attain FDA and/or foreign regulatory approval of brincidofovir.If any of our approved products cause serious or unexpected side effects prior to or after receiving market approval, a number of potentially significantnegative consequences could result, including:•regulatory authorities may approve the product only with a REMS, potentially with restrictions on distribution and other elements to assure safeuse (ETASU);27•regulatory authorities may withdraw their approval of the product or impose restrictions on its distribution in a form of a modified REMS;•regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;•we may be required to change the way the product is administered or to conduct additional clinical studies;•we could be sued and held liable for harm caused to patients; and•our reputation may suffer.Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase thecosts of commercializing our product candidates.After the completion of our clinical trials, we cannot predict whether or when we will obtain regulatory approval to commercialize brincidofovir and wecannot, therefore, predict the timing of any future revenue from brincidofovir.We cannot commercialize our product candidates, including brincidofovir, until the appropriate regulatory authorities have reviewed and approved theproduct candidate. The regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approvalfor brincidofovir. Additional delays in the United States may result if brincidofovir is brought before an FDA advisory committee, which could recommendrestrictions on approval or recommend non-approval of the product candidate. In the EU context, an Oral Explanation during MAA review could extendapproval timelines and result in a Negative Opinion. A re-examination procedure is available in the EU whereby a Negative Opinion could be over-turnedand become a Positive Opinion. New rapporteurs would be selected for the product. In addition, we may experience delays or rejections based uponadditional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of productdevelopment, clinical studies and the review process. As a result, we cannot predict when, if at all, we will receive any future revenue from commercializationof any of our product candidates, including brincidofovir.Even if we obtain regulatory approval for brincidofovir and our other product candidates, we will still face extensive regulatory requirements and ourproducts may face future development and regulatory difficulties.Even if we obtain regulatory approval, the granting authority may still impose significant restrictions on the indicated uses, distribution or marketing of ourproduct candidates, including brincidofovir, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. Forexample, the labeling ultimately approved for our product candidates, including brincidofovir, will likely include restrictions on use due to the specificpatient population and manner of use in which the drug was evaluated and the safety and efficacy data obtained in those evaluations. In addition, thedistribution of brincidofovir may be tightly controlled through a REMS with ETASU, which are required medical interventions or other actions healthcareprofessionals need to execute prior to prescribing or dispensing the drug to the patient. Some actions may also be required in order for the patient to continueon treatment. In addition, the label for brincidofovir may be required to include a boxed warning, or “black box,” regarding brincidofovir being carcinogenic,teratogenic and impairing fertility in animal studies, as well as a contraindication in patients who have had a demonstrated clinically significanthypersensitivity reaction to brincidofovir or cidofovir or any component of the formulation. The brincidofovir labeling may also include warnings or blackboxes pertaining to gastrointestinal AEs or liver-related safety laboratory value changes.Brincidofovir and our other product candidates will also be subject to additional ongoing regulatory requirements governing the labeling, packaging,storage, distribution, safety surveillance, advertising, promotion, record-keeping and reporting of safety and other post-market information. In the UnitedStates, the holder of an approved NDA is obligated to monitor and report AEs and any failure of a product to meet the specifications in the NDA. The holderof an approved NDA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, productlabeling or manufacturing process. If a REMS is required, the NDA holder may be required to monitor and evaluate those in the healthcare system who areresponsible for implementing ETASU measures. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, inaddition to other potentially applicable federal and state laws. Moreover, EU and member countries impose strict restrictions on the promotion and marketingof drug products. The off-label promotion of medicinal products is prohibited in the U.S., EU and in other territories. The promotion of medicinal productsthat are not subject to a marketing authorization is also prohibited in the EU. Violations of the rules governing the promotion of medicinal products in theEU and in other territories could be penalized by administrative measures, fines and imprisonment.In addition, manufacturers of drug products and their facilities are subject to payment of user fees and continual review and periodic inspections byregulatory authorities for compliance with cGMP, and adherence to commitments made in the application. If we, or a regulatory agency, discover previouslyunknown problems with a product, such as quality issues or AEs of unanticipated severity or frequency, or problems with the facility where the product ismanufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requiring recall or withdrawal ofthe product from the market or suspension of manufacturing.28If we fail to comply with applicable regulatory requirements following approval of our product candidate, a regulatory agency may:•issue an untitled or warning letter asserting that we are in violation of the law;•seek an injunction or impose civil or criminal penalties or monetary fines;•suspend or withdraw regulatory approval;•suspend any ongoing clinical trials;•refuse to approve a pending application or supplements to an application submitted by us;•recall and/or seize product; or•refuse to allow us to enter into supply contracts, including government contracts.Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negativepublicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize brincidofovir and our other product candidatesand inhibit our ability to generate revenues.Obtaining FDA approval for brincidofovir or any of our other products in the United States does not mean we will ever obtain approval for orcommercialize brincidofovir or any of our other products outside of the United States, nor does approval of brincidofovir or any of our other productsoutside the United States mean we will ever obtain approval for or commercialize brincidofovir or any of our other products inside the United States, all ofwhich could limit our ability to realize their full market potential.In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions. Inaddition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one countrydoes not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing andvalidation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs for us and requireadditional preclinical studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to countryand could delay or prevent the introduction of our products in those countries. We do not have any product candidates approved for sale in any jurisdiction,including international markets, and we do not have experience in obtaining regulatory approval in any markets. If we fail to comply with regulatoryrequirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our targetmarket will be reduced and our ability to realize the full market potential of our products will be unrealized.Conversely, approval by regulatory authorities outside the United States, such as the European Commission, does not ensure approval by the FDA. Moreover,clinical trials conducted outside the United States may not be accepted by the FDA.There is no guarantee that brincidofovir or any other of our product candidates will be eligible for or receive certain regulatory incentives, such as orphandrug designation, and even if they do, we may never actually realize some or all of the associated benefits, such as market exclusivity.There are a variety of incentives made available by regulatory authorities in the United States, the EU, and other countries, such as orphan drug designation,which may benefit companies developing medicines in areas of unmet need. There is no guarantee, however, that brincidofovir or any of our other productcandidates will be eligible for or receive such incentives. For example, even though the Company has received orphan designation for brincidofovir in theEU for the treatment of AdV in immunocompromised patients, prevention of CMV disease, and treatment of smallpox, the European Commission mustdetermine that brincidofovir still meets the mandatory criteria for each of these orphan designations at the time of marketing approval, which may nothappen.29Our relationships with investigators, health care professionals, consultants, third-party payers, and customers are subject to applicable anti-kickback,fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages,reputational harm and diminished profits and future earnings.Healthcare providers, physicians and others play a primary role in the recommendation and prescribing of any products for which we obtain marketingapproval. Our current business operations and future arrangements with investigators, healthcare professionals, consultants, third-party payers and customersmay expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financialarrangements and relationships through which we research, market, sell and distribute our products for which we obtain marketing approval. Restrictionsunder applicable federal and state healthcare laws and regulations, include, but are not limited to, the following:•the federal healthcare anti-kickback statute which prohibits, among other things, persons or entities from knowingly and willfully soliciting,offering, receiving or paying remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or inkind, to induce or reward either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item orservice, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid;•the federal civil and criminal false claims laws and civil monetary penalties, including civil whistleblower or qui tam actions, which prohibit,among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, claims forpayment or approval that are false or fraudulent or from knowingly making a false statement to improperly avoid, decrease or conceal anobligation to pay money to the federal government;•the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) which, among other things, imposes criminal liability forknowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or to obtain, by means of falseor fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcarebenefit program, regardless of the payer (e.g., public or private) and knowingly or willfully falsifying, concealing or covering up by any trick ordevice a material fact or making any materially false statement in connection with the delivery of, or payment for, healthcare benefits, items orservices relating to healthcare matters;•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and its implementing regulations,and as amended again by the final HIPAA omnibus rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach NotificationRules Under HITECH and the Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in January 2013, whichimposes certain obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission ofindividually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans,clearinghouses and certain healthcare providers, as well as their business associates;•the EU Data Privacy Directive, along with any related national legislation, and the General Data Protection Regulation (GDPR), which allimpose obligations on companies in relation to the handling of personal data of individuals within the EU;•mandated physician payments reporting laws and/or requirements throughout global jurisdictions, including EU member states, in which weconduct research and development and/or other business activities;•the FDCA which prohibits, among other things, the adulteration or misbranding of drugs and devices;•the federal transparency law, enacted as part of the Patient Protection and Affordable Care Act and Health Care and Education ReconciliationAct of 2010 (collectively, the ACA), and its implementing regulations, which requires manufacturers of drugs, devices, biologicals and medicalsupplies to report to the U.S. Department of Health and Human Services information related to payments and other transfers of value made tophysicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and•analogous state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, includingbut not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed bystate governmental and non-governmental third-party payers, including private insurers; state laws that require pharmaceutical companies tocomply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federalgovernment; and state laws and regulations that require manufacturers to file reports relating to pricing and marketing information, whichrequires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities.Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations, agencyguidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any ofthese or any other health regulatory laws or any other30governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement,additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring ofour operations, any of which could adversely affect our ability to operate our business and our financial results. Any action against us for violation of theselaws, even if we successfully defend against it, could cause us to incur significant legal expenses or divert our management’s attention from the operation ofour business. If any of the physicians or other providers or entities with whom we expect to do business are found to be not in compliance with applicablelaws, they also may be subject to criminal, civil or administrative sanctions, including, but not limited to, exclusions from government funded healthcareprograms, which could also materially affect our business.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 regarding thehealthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our abilityto profitably sell any products for which we obtain marketing approval.In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Modernization Act) changed the wayMedicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a newreimbursement methodology based on average sales prices for physician-administered drugs. In addition, this legislation provided authority for limiting thenumber of drugs that will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this legislation could decrease the coverageand price that we receive for any approved products. While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, privatepayers often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursementthat results from the Medicare Modernization Act may result in a similar reduction in payments from private payers.More recently, in March 2010, the ACA was enacted to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhanceremedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the healthindustry and impose additional health policy reforms. The ACA revises the definition of “average manufacturer price” for reporting purposes, which couldincrease the amount of Medicaid drug rebates to states. Further, the new law imposes a significant annual fee on companies that manufacture or importbranded prescription drug products. New provisions affecting compliance have also been enacted, which may affect our business practices with health carepractitioners. However, there have been judicial and Congressional challenges to certain aspects of the ACA, as well as recent efforts by the Trumpadministration to repeal and replace certain aspects of the ACA, and we expect such challenges to continue. Since January 2017, President Trump has signedtwo Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of therequirements for health insurance mandated by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or partof the ACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA havebeen enacted. The Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility paymentimposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the“individual mandate.” Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayedthe implementation of certain fees mandated by the ACA, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans,the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices.Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amends the ACA, effective January 1, 2019, to close the coverage gap in mostMedicare drug plans, and also increases in 2019 the percentage that a drug manufacturer must discount the cost of prescription drugs from 50 percent undercurrent law to 70 percent. Congress also could consider additional legislation to repeal or repeal and replace other elements of the ACA.Although it is too early to determine the effect of the ACA, the new law appears likely to continue the pressure on pharmaceutical pricing, especially underthe Medicare 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 for pharmaceuticalproducts.Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically,at the federal level there have been several recent U.S. Congressional inquiries and proposed and enacted legislation designed to, among other things, bringmore transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patientprograms, and reform government program31reimbursement methodologies for drugs. Further, the Trump administration’s budget proposal for fiscal year 2019 contains additional drug price controlmeasures that could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare Part Dplans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid and to eliminate costsharing for generic drugs for low-income patients. While any proposed measures will require authorization through additional legislation to becomeeffective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to controldrug costs. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical andbiological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing costdisclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.Healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria, lower reimbursement, and additional downwardpressure on the price that we receive for any future approved product. We cannot predict what healthcare reform initiatives may be adopted in the future.Risks Related to Our Reliance on Third PartiesWe rely on third-party manufacturers to produce our preclinical and clinical drug supplies, and we intend to rely on third parties to produce commercialsupplies of any approved product candidates.We do not own or operate, and we do not expect to own or operate, facilities for product manufacturing, storage and distribution, or testing. In the past, wehave relied on third-party manufacturers for supply of our preclinical and clinical drug supplies. We expect that in the future we will continue to rely on suchmanufacturers for drug supply that will be used in clinical trials of our product candidates, including brincidofovir, and for commercialization of any of ourproduct candidates that receive regulatory approval.Our reliance on third-party manufacturers entails risks, including:•inability to meet our product specifications and quality requirements consistently;•delay or inability to procure or expand sufficient manufacturing capacity;•manufacturing and product quality issues related to scale-up of manufacturing;•costs and validation of new equipment and facilities required for scale-up;•failure to comply with cGMP and similar foreign standards;•inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;•termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;•reliance on a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure asufficient supply of these product components, we will be unable to manufacture and sell our product candidates in a timely fashion, insufficient quantities or under acceptable terms;•lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier;•operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including thebankruptcy of the manufacturer or supplier;•carrier disruptions or increased costs that are beyond our control; and•failure to deliver our products under specified storage conditions and in a timely manner.Any of these events could lead to clinical study delays, failure to obtain regulatory approval or impact our ability to successfully commercialize ourproducts. Some of these events could be the basis for FDA or equivalent foreign regulator action, including injunction, recall, seizure, or total or partialsuspension of production.We rely on limited sources of supply for the drug component for our lead product candidate, brincidofovir, and any disruption in the chain of supply maycause delay in developing and commercializing brincidofovir.Manufacturing of drug components is subject to certain FDA and comparable foreign qualifications with respect to manufacturing standards. We are currentlyvalidating the drug substance manufacturing process at our selected contractor that will produce the commercial supply of drug substance and have selectedcommercial tablet and suspension manufacturers to optimize tablet and suspension formulation production to meet forecasted commercial demand. There canbe no assurance that such transfer to the selected vendors will be successful. It is our expectation that only one supplier of drug substance and one supplier ofdrug product will be qualified as vendors with the FDA. If supply from an approved vendor is interrupted, there could be a significant disruption incommercial supply of brincidofovir. An alternative vendor would need to be qualified through an NDA supplement which could32result in further delay. The FDA or other regulatory agencies outside of the United States may also require additional studies if a new drug substance or drugproduct supplier is relied upon for commercial production.These factors could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of brincidofovir, and cause us to incuradditional costs. Furthermore, if our suppliers fail to deliver the required commercial quantities of active pharmaceutical ingredient on a timely basis and atcommercially reasonable prices, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, ourclinical trials for brincidofovir may be delayed, which could inhibit our ability to generate revenues.Manufacturing issues may arise that could increase product and regulatory approval costs or delay commercialization of brincidofovir.We have a validated process for drug substance production for brincidofovir at a scale that is well in excess of our anticipated commercial scale. We arecurrently revalidating our drug substance process, and will begin revalidating our drug product processes, using our current commercial processes at ourintended commercial scale with our intended commercial manufacturers.The validation processes, along with ongoing stability studies and analyses we are conducting, may reveal difficulties in our processes which could requireresolution in order to proceed with our planned clinical trials and obtain regulatory approval for the commercial marketing of brincidofovir. In the future, wemay identify significant impurities, which could result in increased scrutiny by the regulatory agencies, delays in clinical program and regulatory approvalfor brincidofovir, increases in our operating expenses, or failure to obtain or maintain approval for brincidofovir.We depend on the continuation of our current collaboration with ContraVir Pharmaceuticals, who is currently responsible for developing andcommercializing CMX157.In 2014, we entered into a licensing arrangement with ContraVir, whereby ContraVir is responsible for the future development and commercialization ofCMX157. Under this arrangement, ContraVir is responsible for conducting preclinical studies and clinical trials, obtaining required regulatory approvals forCMX157, and manufacturing and commercializing CMX157. Our right to receive milestone and royalty payments under the licensing agreement depends onthe achievement of certain development, regulatory and commercial milestones by ContraVir.The development and commercialization of CMX157 and our ability to receive potential milestones and royalty payments under the license agreement withContraVir, would be adversely affected if ContraVir:•lacks or does not devote sufficient time and resources to the development and commercialization of CMX157;•lacks or does not devote sufficient capital to fund the development and commercialization of CMX157;•develops, either alone or with others, products that compete with CMX157;•fails to gain the requisite regulatory approvals for CMX157;•does not successfully commercialize CMX157;•does not conduct its activities in a timely manner;•terminates its license with us;•does not effectively pursue and enforce intellectual property rights relating to CMX157; or•merges with a third-party that wants to terminate the collaboration.We have limited or no control over the occurrence of any of the foregoing. Furthermore, disagreements with ContraVir could lead to litigation or arbitration,which could be time-consuming and expensive. If any of these issues arise, it may delay the development and commercialization milestones and royaltiesbased on further development and sales of CMX157.We rely on third parties to conduct, supervise and monitor our clinical studies and related data, and if those third parties perform in an unsatisfactorymanner, it may harm our business.We rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials. While we have agreements governing their activities,we have limited influence over their actual performance. We have relied and plan to continue to rely upon CROs to monitor and manage data for our ongoingclinical programs for brincidofovir and our other product candidates, as well as the execution of nonclinical studies. We control only certain aspects of ourCROs’ activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal,regulatory and scientific standards and our reliance on CROs does not relieve us of our regulatory responsibilities.We and our CROs are required to comply with the FDA’s guidance for clinical trials conducted within the jurisdiction of the United States (or the foreignregulatory authority equivalent for clinical trials conducted outside the jurisdiction of the United States),33which follows the International Conference on Harmonization Good Clinical Practice (ICH GCP), which are regulations and guidelines enforced by the FDAfor all of our product candidates in clinical development. The FDA enforces the ICH GCP through periodic inspections of trial sponsors, principalinvestigators and clinical trial sites. If we or our CROs fail to comply with the ICH GCP, the clinical data generated in our clinical trials may be deemedunreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications. In addition, our Phase 3 clinicaltrials for brincidofovir will require a sufficiently large number of test subjects to evaluate the safety and effectiveness of brincidofovir. Accordingly, if ourCROs fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may be required to repeat these Phase 3 clinical trials, whichwould delay the regulatory approval process.Our CROs are not our employees, and we cannot control whether or not they devote sufficient time and resources to our ongoing clinical and nonclinicalprograms. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinicalstudies, or other drug development activities which could harm our competitive position. We face the risk of potential unauthorized disclosure ormisappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potential competitors to access andexploit our proprietary technology.If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinicaldata they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trialsmay be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize brincidofovir or our otherproduct candidates. Disagreements with our CROs over contractual issues, including performance, compliance or compensation could lead to termination ofCRO agreements and/or delays in our clinical program and risks to the accuracy and usability of clinical data. As a result, our financial results and thecommercial prospects for brincidofovir and any other product candidates that we develop would be harmed, our costs could increase, and our ability togenerate revenues could be delayed.Risks Related to Commercialization of Our Product CandidatesThe commercial success of brincidofovir and our other product candidates will depend upon the acceptance of these products by the medical community,including physicians, patients, pharmacists and health care payers.If any of our product candidates, including brincidofovir, receive marketing approval, they may nonetheless not gain sufficient market acceptance byphysicians, patients, healthcare payers and others in the medical community. If these products do not achieve an adequate level of market acceptance, wemay not generate significant product revenues and we may not become profitable. The degree of market acceptance of any of our product candidates,including brincidofovir, will depend on a number of factors, including:•demonstration of clinical safety and efficacy in our clinical trials;•relative convenience, ease of administration and acceptance by physicians, patients, pharmacists and health care payers;•prevalence and severity of any AEs;•limitations or warnings contained in the FDA-approved labeling from Regulatory Authorities such as the FDA and EMA for the relevant productcandidate;•availability, efficacy and safety of alternative treatments;•price and cost-effectiveness;•effectiveness of our or any future collaborators’ or competitor’s sales and marketing strategies;•ability to obtain hospital formulary approval;•ability to ensure availability for product through appropriate channels;•ability to maintain adequate inventory; and•ability to obtain and maintain sufficient third-party coverage and reimbursement, which may vary from country to country.If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, wemay be unable to generate any revenue.We currently do not have an organization for the sales and distribution of pharmaceutical products. The cost of establishing and maintaining such anorganization may exceed the cost-effectiveness of doing so. In order to market any products that may be approved, including brincidofovir, we must establishour sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. We may enter intostrategic partnerships with third parties to commercialize our product candidates, including brincidofovir.34Our strategy for brincidofovir is to establish a specialty sales force and/or collaborate with third parties to promote the product to healthcare professionals andthird-party payers in the United States and elsewhere. We may elect to launch with a contract sales organization and utilize accompanying commercialsupport services provided by a contract sales organization. Our future collaboration partners, if any, may not dedicate sufficient resources to thecommercialization of our product candidates or may otherwise fail in their commercialization due to factors beyond our control. If we are unable to establisheffective collaborations to enable the distribution and sale of our product candidates to healthcare professionals and in geographical regions, including theUnited States, that are not covered by our own marketing and sales force, or if our potential future collaboration partners do not successfully commercializeour product candidates, our ability to generate revenues from product sales, including sales of brincidofovir, will be adversely affected.Establishing an internal or contract sales force involves many challenges, including:•recruiting and retaining talented people;•training employees that we recruit;•establishing compliance standards;•setting the appropriate system of incentives;•managing additional headcount;•ensuring that appropriate support functions are in place to support sales force organizational needs; and•integrating a new business unit into an existing corporate architecture.If we are unable to establish our own sales force or negotiate a strategic partnership for the commercialization of brincidofovir in any markets, we may beforced to delay the potential commercialization of brincidofovir in those markets, reduce the scope of our sales or marketing activities for brincidofovir inthose markets or undertake the commercialization activities for brincidofovir in those markets at our own expense. If we elect to increase our expenditures tofund commercialization activities ourselves, we will need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If wedo not have sufficient funds, we will not be able to bring brincidofovir to market or generate product revenue. Limited or lack of funding will impede ourability to achieve successful commercialization.If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able togenerate sufficient product revenue and may not become profitable. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable tocompete successfully against these more established companies.In addition, there are risks involved with both establishing our own sales and marketing capabilities and 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, marketing and market access personnel.If we obtain approval to commercialize any products outside of the United States, a variety of risks associated with international operations couldmaterially adversely affect our business.If our product candidates are approved for commercialization, we may enter into agreements with third parties to market those product candidates outside theUnited States, including brincidofovir. We expect that we will be subject to additional risks related to entering into international business relationships,including:•different regulatory requirements for drug approvals in the EU and other foreign countries;•reduced protection for intellectual property rights;•unexpected changes in tariffs, trade barriers and regulatory and labor requirements;•economic weakness, including inflation, or political instability in particular foreign economies and markets;•compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;•foreign taxes, including withholding of payroll taxes;•foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doingbusiness in another country;•workforce uncertainty in countries where labor unrest is more common than in the United States;•production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;•business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons,floods and fires; and35•regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview ofthe U.S. Foreign Corrupt Practices Act, its books and records provisions or its anti‑bribery provisions, or similar anti‑bribery or anti‑corruptionlaws and regulations.We have limited experience in these areas. In addition, there are complex regulatory, tax, labor and other legal requirements imposed by both the EU andmany of the individual countries in Europe with which we will need to comply. Many U.S.-based biopharmaceutical companies have found the process ofmarketing their own products outside the United States to be very challenging.We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to competeeffectively.The biotechnology and pharmaceutical industries are intensely competitive. We have competitors both in the United States and internationally, includingmajor multinational pharmaceutical companies, biotechnology companies and universities and other research institutions.Based on market research, competing products that are currently used to treat AdV and/or CMV include and are not limited to:•Vistide® (cidofovir for injection), marketed by Gilead Sciences, Inc. and generic manufacturers;•oral and intravenous ganciclovir, a drug that is sold by generic manufacturers;•Valcyte® (valganciclovir), a prodrug of ganciclovir that is marketed by Genentech, Inc. and generic manufacturers;•foscarnet sodium for injection available through generic manufacturers;•acyclovir, a drug that is sold by generic manufacturers;•letermovir (marketed under the trade name PREVYMIS), an anti-CMV drug being developed pursuant to an exclusive worldwide licenseagreement between AiCuris GmbH & Co. KG and Merck & Co., Inc.; and•investigational patient-specific T-cell therapies.Other product candidates currently in development or under regulatory review may compete against brincidofovir for the prevention or mitigation of AdVand/or CMV infection in a variety of settings, including:•maribavir (SHP620) from Shire for CMV infections in transplant recipients; and•patient-specific T-cell therapies directed at antigens of CMV and other DNA viruses, including AdV.Many of our competitors have substantially greater financial, technical, commercial and other resources, such as larger research and development staff,stronger intellectual property portfolios and experienced marketing and manufacturing organizations and established sales forces. Additional mergers andacquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors.Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment inthese industries. Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, drug products that are more effective or lesscostly than brincidofovir or any other drug candidate that we are currently developing or that we may develop.We will face competition from other drugs currently approved or that will be approved in the future for the same indications. Therefore, our ability tocompete successfully will depend largely on our ability to:•discover and develop medicines that are superior to other products in the market;•demonstrate through our clinical trials that our product candidates, including brincidofovir, are differentiated from existing and futuretherapies;•evaluate new potential indications across the lifecycle of brincidofovir;•attract qualified scientific, product development and commercial personnel;•obtain and successfully defend and enforce patent and/or other proprietary protection for our medicines and technologies;•obtain required regulatory approvals;•successfully collaborate with pharmaceutical companies in the discovery, development and commercialization of new medicines;•deliver a competitive value proposition compared to established competition and/or competitors who will enter the market before or after any ofour product candidates, including brincidofovir; and•negotiate competitive pricing and reimbursement with third-party payers.36The availability of our competitors’ products could limit the demand, and the price we are able to charge, for brincidofovir and any other product candidatewe develop. We will not achieve our business plan if the acceptance of brincidofovir is inhibited by price competition or reimbursement issues or thereluctance of physicians to switch from existing drug products to brincidofovir, or if physicians switch to other new drug products or choose to reservebrincidofovir for use in limited circumstances. The inability to compete with existing or subsequently introduced drug products would have a materialadverse impact on our business, financial condition and prospects.Established pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compoundsthat could make our product candidates, including brincidofovir, less competitive. In addition, any new product that competes with an approved productmust demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commerciallysuccessful. Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA approval or discovering, developing andcommercializing medicines before we do, which would have a material adverse impact on our business.New technologies or procedures could be developed that would change or restrict the number of patients undergoing hematopoietic cell or solid organtransplants. A reduction in the number of transplants could negatively impact our commercial business by decreasing sales of our products and limiting peaksales potential.Hospital formulary approval and reimbursement may not be available for brincidofovir and our other product candidates, which could make it difficultfor us to sell our products profitably.Obtaining hospital formulary approval can be an expensive and time-consuming process. We cannot be certain if and when we will obtain formularyapproval to allow us to sell our product candidates, including brincidofovir, into our target markets. Failure to obtain timely formulary approval will limit ourcommercial success.Furthermore, market acceptance and sales of brincidofovir, or any other product candidates that we develop, will depend in part on the extent to whichreimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and otherorganizations. Government healthcare programs and third-party payers, such as private health insurers, hospitals and health maintenance organizations,decide which drugs they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment.Government authorities and these third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for particularmedications. Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with products administeredunder the supervision of a physician. We cannot be sure that reimbursement will be available for brincidofovir, or any other product candidates.Also, reimbursement amounts may reduce the demand for, or the price of, our products. If reimbursement is not available, or is available only to limitedlevels, we may not be able to successfully commercialize brincidofovir, or any other product candidates that we develop.There have been a number of legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions thatcould affect our ability to sell any future products profitably. These legislative and regulatory changes may negatively impact the reimbursement for anyfuture products, following approval. The availability of generic treatments may also substantially reduce the likelihood of reimbursement for any futureproducts, including brincidofovir. The application of user fees to generic drug products will likely expedite the approval of additional generic drugtreatments. We expect to experience pricing pressures in connection with the sale of brincidofovir and any other product candidate that we develop, due tothe trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. In addition, there maybe significant delays in obtaining reimbursement for approved products, and coverage may be more limited than the purposes for which the product isapproved by the FDA or regulatory authorities in other countries. Moreover, eligibility for reimbursement does not imply that any product will be paid for inall cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new products, ifapplicable, may also not be sufficient to cover our costs and may not be made permanent. Payment rates may vary according to the use of the product and theclinical setting in which it is used, may be based on payments allowed for lower cost products that are already reimbursed, and may be incorporated intoexisting payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programsor private payers and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices than inthe United States. Third-party payers often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies.Our inability to promptly obtain coverage and profitable payment rates from both government funded and private payers for any of our product candidates,including brincidofovir, could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and ouroverall financial condition.37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.The success of our business depends primarily upon our ability to identify, develop and commercialize product candidates. Because we have limitedfinancial and managerial resources, we focus on research programs and product candidates for specific indications. As a result, we may forego or delay pursuitof opportunities with other product candidates or other indications that later prove to have greater commercial potential.Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical developmentfor a number of reasons, including:•our research methodology or that of our collaboration partners may be unsuccessful in identifying potential product candidates;•our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the productsunmarketable or unlikely to receive marketing approval; and•our collaboration partners may change their development profiles for potential product candidates or abandon a therapeutic area.If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect onour business and could potentially cause us to cease operations. Research programs to identify new product candidates require substantial technical, financialand human resources. We may focus our research efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to thatproduct candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to retain soledevelopment and commercialization rights.Risks Related to Our Intellectual PropertyIf we are unable to obtain or protect intellectual property rights related to our products and product candidates, we may not be able to compete effectivelyin our market.We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our products andproduct candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can beuncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover the products in the United States or inother countries. If this were to occur, early generic competition could be expected against brincidofovir and any other product candidates in development.There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patentor prevent a patent from issuing based on a pending patent application. Even if patents do successfully issue, third parties may challenge their validity,enforceability, scope or ownership, which may result in such patents, or our rights to such patents, being narrowed or invalidated.Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others fromdesigning around our claims. If the patent applications we hold or license with respect to brincidofovir fail to issue or if their breadth or strength of protectionis threatened, it could dissuade companies from collaborating with us to develop, and threaten our ability to commercialize, our products. We cannot offerany assurances about which, if any, patents will issue or whether any issued patents will be found not invalid and not unenforceable, will go unthreatened bythird parties or will adequately protect our products and product candidates. Further, if we encounter delays in regulatory approvals, the period of time duringwhich we could market brincidofovir under patent protection could be reduced. Since patent applications in the United States and most other countries areconfidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file any patentapplication related to brincidofovir or our other product candidates. Furthermore, if third parties have filed such patent applications, an interferenceproceeding in the United States can be provoked by a third party or instituted by us to determine who was the first to invent any of the subject matter coveredby the patent claims of our applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license it from theprevailing party, which may not be possible. In addition to the protection afforded by patents, we rely on trade secret protection and confidentialityagreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and other elements of our drugdiscovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Although we expect allof our employees to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietaryknow-how, information or technology to enter into38confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed, that such agreements provide adequateprotection and will not be breached, that our trade secrets and other confidential proprietary information will not otherwise be disclosed or that competitorswill not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. If we are unable to preventmaterial disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any suchenforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could materially adverselyaffect our business, results of operations and financial condition.Further, the laws of some foreign countries do not protect patents and other proprietary rights to the same extent or in the same manner as the laws of theUnited States. As a result, we may encounter significant problems in protecting and defending our intellectual property abroad. We may also fail to pursue orobtain patents and other intellectual property protection relating to our products and product candidates in all foreign countries.Finally, certain of our activities and our licensors’ activities have been funded, and may in the future be funded, by the U.S. federal government. When newtechnologies are developed with U.S. federal government funding, the government obtains certain rights in any resulting patents, including a nonexclusivelicense authorizing the government to use the invention for non-commercial purposes. These rights may permit the government to disclose our confidentialinformation to third parties and to exercise “march-in” rights to use or allow third parties to use our patented technology. The government can exercise itsmarch-in rights if it determines that action is necessary because we fail to achieve practical application of the U.S. government-funded technology, becauseaction is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S. industry. In addition, U.S.government-funded inventions must be reported to the government, U.S. government funding must be disclosed in any resulting patent applications, and ourrights in such inventions may be subject to certain requirements to manufacture products in the United States.Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts or otherwise affect ourbusiness.Our commercial success depends in part on our avoiding infringement and other violations of the patents and proprietary rights of third parties. There is asubstantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology andpharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter party reexamination proceedings before the UnitedStates Patent and Trademark Office (U.S. PTO) and its foreign counterparts. Numerous U.S. and foreign issued patents and pending patent applications, whichare owned by third parties, exist in the fields in which we and our collaborators are developing product candidates. As the biotechnology and pharmaceuticalindustries expand and more patents are issued, and as we gain greater visibility and market exposure as a public company, the risk increases that our productcandidates or other business activities may be subject to claims of infringement of the patent and other proprietary rights of third parties. Third parties mayassert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims tomaterials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of brincidofovir and/or our other productcandidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issuedpatents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringesupon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our productcandidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block ourability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire.Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methodsof use, including combination therapy, the holders of any such patent may be able to block our ability to develop and commercialize the applicable productcandidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or atall. In addition, we may be subject to claims that we are infringing other intellectual property rights, such as trademarks or copyrights, or misappropriating thetrade secrets of others, and to the extent that our employees, consultants or contractors use intellectual property or proprietary information owned by others intheir work for us, disputes may arise as to the rights in related or resulting know-how and inventions.Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop andcommercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense andwould be a substantial diversion of employee resources from our business. In the event of a successful infringement or other intellectual property claimagainst us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses fromthird parties, pay royalties or redesign our affected products, which may be impossible or require substantial time and monetary expenditure. We cannotpredict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in39the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, andwe have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would beunable to further develop and commercialize one or more of our product candidates, which could harm our business significantly. We cannot provide anyassurances that third-party patents do not exist which might be enforced against our products or product candidates, resulting in either an injunctionprohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.We license certain key intellectual property from third parties, and the loss of our license rights could have a materially adverse effect on our business.We are a party to a number of technology licenses that are important to our business and expect to enter into additional licenses in the future. For example,we rely on an exclusive license to certain patents, proprietary technology and know-how from UC, which we believe cover brincidofovir. We also have anexclusive license to certain patents covering inventions of the UM. If we fail to comply with our obligations under our license agreements, or we are subjectto a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by thelicense, including in the case of the UC license, brincidofovir, or in the case of the UM license, CMX521, either of which would have a materially adverseeffect on our business.We may be involved in lawsuits to protect or enforce our patents, the patents of our licensors or our other intellectual property rights, which could beexpensive, time consuming and unsuccessful.Competitors may infringe or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. Tocounter infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time-consuming. In addition, in aninfringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party fromusing the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defenseproceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of notissuing. The initiation of a claim against a third party may also cause the third party to bring counter-claims against us.We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws maynot protect those rights as fully as in the United States. Our business could be harmed if in a litigation the prevailing party does not offer us a license oncommercially reasonable terms. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result insubstantial costs and distract our management and other employees.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of ourconfidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results ofhearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have amaterial adverse effect on the price of our common stock.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.Periodic maintenance fees on any issued patent are due to be paid to the U.S. PTO and foreign patent agencies in several stages over the lifetime of the patent.The U.S. PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and othersimilar provisions during the patent application process.While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situationsin which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in therelevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to,failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we orour licensors that control the prosecution and maintenance of our licensed patents fail to maintain the patents and patent applications covering our productcandidates, we may lose our rights and our competitors might be able to enter the market, which would have a material adverse effect on our business.40Risks Related to Our United States Government Contracts and GrantsAll of our immediately foreseeable future revenues to support the development of brincidofovir for the treatment of smallpox are dependent upon ourcontract with the Biomedical Advanced Research and Development Authority (BARDA), and if we do not receive all of the funds under the BARDAcontract we anticipate that we will suspend or terminate our smallpox program.Substantially all of our revenues that support the development of brincidofovir for the treatment of smallpox have been derived from prior government grantsand our current development contract with BARDA. Our contract with BARDA is for the development of brincidofovir for the treatment of smallpox. It isdivided into a base segment and four option segments. We substantially completed performance under the first option segment of the contract in August2014 and are currently performing under the second and third option segments of the contract which are scheduled to end in September 2018. Subsequentoption segments are not subject to automatic renewal and are not exercisable at our discretion. There can be no assurance that we will reach agreement withBARDA on the most appropriate development pathway or that the FDA will ultimately agree with the experiments which we perform or the appropriatenessof the results of these experiments for approval of brincidofovir for smallpox. In addition, there can be no assurance that any of the subsequent optionsegments will be exercised or that we will continue to receive revenues under this contract once the current option segment is completed. We do notanticipate continuing this program without ongoing support from BARDA.Additionally, the contract provides for reimbursement of the costs of the development of brincidofovir for the treatment of smallpox that are allowable underthe Federal Acquisition Regulation (FAR), plus the payment of a fixed fee. It does not include the manufacture of brincidofovir for the Strategic NationalStockpile. There can be no assurances that this contract will continue, that BARDA will extend the contract for additional option segments, that any suchextension would be on favorable terms, or that we will be able to enter into new contracts with the United States government to support our smallpoxprogram. Changes in government budgets and agendas may result in a decreased and de-prioritized emphasis on supporting the discovery and developmentof brincidofovir for the treatment of smallpox. In such event, BARDA is not required to continue funding our existing contract. Any such reduction in ourrevenues from BARDA or any other government contract could materially adversely affect our financial condition and results of operations. In addition, if wedo not receive all of the funds under the BARDA contract, we anticipate that we will suspend or terminate our program for the development of brincidofovirfor the treatment of smallpox.There can be no assurances that we will be able to enter into a contract with BARDA to act as the sole supplier for the procurement of brincidofovir for thetreatment of smallpox.In April 2015, BARDA posted a notice of intent to use other than full and open competition to award a sole source contract to us for the procurement ofbrincidofovir for the treatment of smallpox. In May 2015, BARDA posted an approved justification for the use of other than full and open competition for thecontract. In July 2015, BARDA issued a RFP entitled “2015 Procurement of a Second Smallpox Antiviral Drug for the Strategic National Stockpile.” InAugust 2015, we submitted a response to the RFP and we subsequently engaged in discussions with BARDA regarding our response. The issuance of thatRFP did not culminate with agreement for the sole source supply of brincidofovir for the Strategic National Stockpile. On February 9, 2018, the DHHS issueda pre-solicitation notice (No. 18-100-SOL-00011) entitled, “Procurement and Late-Stage Development of Smallpox Antiviral Drug(s).” There are no RFPs forprocurement of a smallpox antiviral currently pending.In the event a new RFP is issued we will likely submit a proposal. In the event that our proposal is chosen (potentially among several competing proposals)and before we can enter into a contract we must negotiate its terms, including the price and delivery schedule. In addition, as a governmental agency,BARDA’s ability to enter into a contract is subject to continued funding for this purpose, which can change at any time. We remain in discussions withBARDA regarding the potential to supply brincidofovir to the Strategic National Stockpile, however, there can be no assurances regarding any suchprocurement. We continue to receive funding under an advanced research and development contract for the development of brincidofovir for the treatment ofsmallpox. We are currently evaluating brincidofovir for efficacy in two different animal models to support potential approval under the FDA’s animal rule.On August 4, 2017, we received correspondence from the FDA that indicated that we will need to conduct a second rabbitpox study of brincidofovir for thetreatment of smallpox. We are in process of working with the FDA and BARDA on the design and conduct of this adjunct rabbitpox study. Through ourcontinuing development contract with BARDA, we are conducting final confirmatory studies prior to conducting the pivotal efficacy study in the mousemodel of smallpox infection (ectromelia virus). We believe that efficacy data from this model could serve as the second animal model to support the approvalof brincidofovir for the treatment of smallpox.41Unfavorable provisions in government contracts, including our contract with BARDA, may harm our business, financial condition and operating results.United States government contracts typically contain unfavorable provisions and are subject to audit and modification by the government at its solediscretion, which will subject us to additional risks. For example, under our contract with BARDA, the U.S. government has the power to unilaterally:•audit and object to any BARDA contract-related costs and fees on grounds that they are not allowable under the FAR, and require us toreimburse all such costs and fees;•suspend or prevent us for a set period of time from receiving new contracts or extending our existing contract based on violations or suspectedviolations of laws or regulations;•claim nonexclusive, nontransferable rights to product manufactured and intellectual property developed under the BARDA contract and may,under certain circumstances, such as circumstances involving public health and safety, license such inventions to third parties without ourconsent;•cancel, terminate or suspend our BARDA contract based on violations or suspected violations of laws or regulations;•terminate our BARDA contract in whole or in part for the convenience of the government for any reason or no reason, including if funds becomeunavailable to the applicable governmental agency;•reduce the scope and value of our BARDA contract;•decline to exercise an option to continue the BARDA contract;•direct the course of a development program in a manner not chosen by the government contractor;•require us to perform the option segments even if doing so may cause us to forego or delay the pursuit of other opportunities with greatercommercial potential;•take actions that result in a longer development timeline than expected; and•change certain terms and conditions in our BARDA contract.The U.S. government also has the right to terminate the BARDA contract if termination is in the government’s interest, or if we default by failing to performin accordance with the milestones set forth in the contract. Termination-for-convenience provisions generally enable us to recover only our costs incurred orcommitted (plus a portion of the agreed fee) and settlement expenses on the work completed prior to termination. Except for the amount of services receivedby the government, termination-for-default provisions do not permit recovery of fees.In addition, we must comply with numerous laws and regulations that affect how we conduct business with the United States government. Among the mostsignificant government contracting regulations that affect our business are:•FAR, and agency-specific regulations supplements to the FAR, which comprehensively regulate the procurement, formation, administration andperformance of government contracts and implement federal procurement policy in numerous areas, such as employment practices, protection ofthe environment, accuracy and retention periods of records, recording and charging of costs, treatment of laboratory animals and human subjectresearch;•business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict thegranting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act and the ForeignCorrupt Practices Act;•export and import control laws and regulations; and•laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and theexportation of certain products and technical data.Furthermore, we may be required to enter into agreements and subcontracts with third parties, including suppliers, consultants and other third-partycontractors, in order to satisfy our contractual obligations pursuant to our agreements with the U.S. government. Negotiating and entering into sucharrangements can be time-consuming and we may not be able to reach agreement with such third parties. Any such agreement must also be compliant with theterms of our government contract. Any delay or inability to enter into such arrangements or entering into such arrangements in a manner that is non-compliant with the terms of our contract, may result in violations of our contract.As a result of these unfavorable provisions, we must undertake significant compliance activities. The diversion of resources from commercial programs tothese compliance activities, as well as the exercise by the U.S. government of any rights under these provisions, could materially harm our business.42Our business is subject to audit by the U.S. government, including under our contract with BARDA, and a negative audit could adversely affect ourbusiness.United States government agencies, such as the DHHS, routinely audit and investigate government contractors and recipients of federal grants, including ourcontract with BARDA. These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulationsand standards.The DHHS can also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’spurchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allocated to a specific contract willnot be reimbursed, while such costs already reimbursed must be refunded. If an audit uncovers improper or illegal activities, we may be subject to civil andcriminal penalties and administrative sanctions, including:•termination of contracts;•forfeiture of profits;•suspension of payments;•fines; and•suspension or prohibition from conducting business with the U.S. government.In addition, we could suffer serious reputational harm if allegations of impropriety were made against us by the U.S. government, which could adverselyaffect our business.Agreements with government agencies may lead to claims against us under the Federal False Claims Act, and these claims could result in substantial finesand other penalties.The biopharmaceutical industry is, and in recent years has been, under heightened scrutiny as the subject of government investigations and enforcementactions. Our BARDA contract is subject to substantial financial penalties under the Federal Civil Monetary Penalties Act and the Federal Civil False ClaimsAct (False Claims Act). The False Claims Act imposes liability on any person who, among other things, knowingly presents, or causes to be presented, a falserecord or statement material to a false or fraudulent claim paid or approved by the government. Under the False Claims Act’s “whistleblower” provisions,private enforcement of fraud claims against businesses on behalf of the U.S. government has increased due in part to amendments to the False Claims Act thatencourage private individuals to sue on behalf of the government. These whistleblower suits, known as qui tam actions, may be filed by private individuals,including present and former employees. The False Claims Act provides for treble damages and up to $11,000 per false claim. If our operations are found tobe in violation of any of these laws, or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminalpenalties, damages, fines, exclusion from the Medicare and Medicaid programs, and the curtailment or restructuring of our operations. Any penalties,damages, fines, exclusions, curtailment, or restructuring of our operations could adversely affect our ability to operate our business and our financial results.Risks Related to Our Business Operations and IndustryIncreasing demand for compassionate use of our unapproved therapies could result in losses.We are developing brincidofovir for life-threatening illnesses for which there are currently limited to no available therapeutic options. During 2014, we werethe target of an active and disruptive social media campaign related to a request for access to our unapproved drug, brincidofovir. If we experience similarsocial media campaigns in the future, we may experience significant disruption to our business which could result in losses.Recent media attention to individual patients' expanded access requests has resulted in the introduction of legislation at the local and national level referredto as "Right to Try" laws which are intended to give patients access to unapproved therapies. New and emerging legislation regarding expanded access tounapproved drugs for life-threatening illnesses could negatively impact our business in the future.A possible consequence of both activism and legislation in this area is the need for us to initiate an unanticipated expanded access program or to makebrincidofovir more widely available sooner than anticipated. We are a small company with limited resources and unanticipated trials or access programscould result in diversion of resources from our primary goals.In addition, patients who receive access to unapproved drugs through compassionate use or expanded access programs have life-threatening illnesses andhave exhausted all other available therapies. The risk for serious adverse events in this patient population is high which could have a negative impact on thesafety profile of brincidofovir, which could cause significant delays or an43inability to successfully commercialize brincidofovir, which could materially harm our business. We may also need to restructure or pause ongoingcompassionate use and/or expanded access programs in order to perform the controlled clinical trials required for regulatory approval and successfulcommercialization of brincidofovir, which could prompt adverse publicity or other disruptions related to current or potential participants in such programs.If we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased costs, delays in thedevelopment of our product candidates, penalties and a loss of business.Our activities, and the activities of our collaborators, partners and third-party providers, are subject to extensive government regulation and oversight both inthe United States and in foreign jurisdictions. The FDA and comparable agencies in other jurisdictions directly regulate many of our most critical businessactivities, including the conduct of preclinical and clinical studies, product manufacturing, advertising and promotion, product distribution, adverse eventreporting and product risk management. States increasingly have been placing greater restrictions on the marketing practices of healthcare companies. Inaddition, pharmaceutical and biotechnology companies have been the target of lawsuits and investigations alleging violations of government regulations,including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended toinfluence the referral of federal or state healthcare business, submission of false claims for government reimbursement, antitrust violations, violations of theForeign Corrupt Practices Act, or violations related to environmental matters. Violations of governmental regulation may be punishable by criminal and civilsanctions, including fines and civil monetary penalties and exclusion from participation in government programs, including Medicare and Medicaid. Inaddition to penalties for violation of laws and regulations, we could be required to delay or terminate the development of our product candidates, or we couldbe required to repay amounts we received from government payers, or pay additional rebates and interest if we are found to have miscalculated the pricinginformation we have submitted to the government. Whether or not we have complied with the law, an investigation into alleged unlawful conduct couldincrease our expenses, damage our reputation, divert management time and attention and adversely affect our business.Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.We are highly dependent on the principal members of our executive team. While we have entered into employment agreements or offer letters with each ofour executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees. To help attract, retain, andmotivate qualified employees, we use share-based incentive awards such as employee stock options and restricted stock units. Due to the decline in our stockprice that occurred in December 2015, a large percentage of the options held by our employees are underwater. As of December 31, 2017, approximately 93%of all outstanding options had an exercise price above the closing price of the stock on that date. As a result, the current situation provides a considerablechallenge to maintaining employee motivation, as well as creating a serious threat to retention until a recovery commences. If our share-based compensationceases to be viewed as a valuable benefit, our ability to attract, retain, and motivate employees could be weakened, which could harm our results ofoperations.We do not maintain “key person” insurance for any of our executives or other employees. Recruiting and retaining other qualified employees for ourbusiness, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of appropriately skilled executives inour industry, which is likely to continue. We also experience competition for the hiring of scientific and clinical personnel from universities and researchinstitutions. As a result, competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel onacceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. In addition, failure of any ofour clinical studies may make it more challenging to recruit and retain qualified personnel. The inability to recruit or loss of the services of any executive orkey employee may adversely affect the progress of our research, development and commercialization objectives.In addition, 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, which could also adversely affect the progress of our research, development andcommercialization objectives.Potential product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we maydevelop.The use of our product candidates, including brincidofovir, in clinical studies and the sale of any products for which we obtain marketing approval exposesus to the risk of product liability claims. Product liability claims might be brought against us by consumers, health care providers, pharmaceutical companiesor others selling or otherwise coming into contact with our products. On occasion, large judgments have been awarded in class action lawsuits based on drugsthat had unanticipated adverse effects. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. Inaddition, regardless44of merit or eventual outcome, product liability claims may result in:•impairment of our business reputation and significant negative media attention;•withdrawal of participants from our clinical studies;•significant costs to defend the related litigation and related litigation;•distraction of management’s attention from our primary business;•substantial monetary awards to patients or other claimants;•inability to commercialize our product candidates, including brincidofovir; and•decreased demand for our product candidates, if approved for commercial sale.We currently carry $15 million in product liability insurance covering our clinical trials. Our current product liability insurance coverage may not besufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and in the future wemay not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If and when weobtain marketing approval for our product candidates, we intend to expand our insurance coverage to include the sale of commercial products; however, wemay be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. A successful product liability claim or seriesof claims brought against us could cause our stock price to decline and, if judgments exceed our insurance coverage, could adversely affect our results ofoperations and business.Risks associated with expanding our operations to Europe could adversely affect our business.We currently have limited operations in Europe and plan to expand the scope of development activities taking place there. We have limited experience withconducting activities outside of the United States. International operations and business expansion plans are subject to numerous additional risks, including:•multiple, conflicting and changing laws and regulations such as tax laws, privacy regulations, export and import restrictions, employment,immigration and labor laws, regulatory requirements, and other governmental approvals, permits and licenses;•difficulties in staffing and managing foreign operations;•risks associated with obtaining and maintaining, or the failure to obtain or maintain, regulatory approvals for the sale or use of our products invarious countries;•complexities associated with managing government payer systems, multiple payer-reimbursement regimes or patient self-pay systems;•financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable and exposure to foreigncurrency exchange rate fluctuations;•general political and economic conditions in the countries in operate, including terrorism and political unrest, curtailment of trade and otherbusiness restrictions;•regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview ofthe U.S. Foreign Corrupt Practices Act, its books and records provisions or its anti-bribery provisions, or similar anti-bribery or anti-corruptionlaws and regulations.Any of these risks, if encountered, could significantly increase our costs of operating internationally, prevent us from operating in certain jurisdictions, orotherwise significantly harm our future international expansion and operations, which could have a material adverse effect on our business, financialcondition and results of operations.Risks Related To Our Common StockThe market price of our common stock is likely to be volatile, and you may not be able to resell your shares at or above your purchase price.Prior to our initial public offering (IPO) in 2013, there was no public market for our common stock. The trading price of our common stock has been volatile,and is likely to continue to be volatile for the foreseeable future. Our stock price is subject to wide fluctuations in response to a variety of factors, includingthe following:•results of clinical trials of our product candidates or those of our competitors;•any delay in filing an application for any of our product candidates and any adverse development or perceived adverse development withrespect to regulatory review of that application;•failure to successfully develop and commercialize our product candidates, including brincidofovir;•termination of any of our license or collaboration agreements;•any agency or judicial enforcement actions against us;45•inability to obtain additional funding;•regulatory or legal developments in the United States and other countries applicable to our product candidates;•adverse regulatory decisions;•changes in the structure of healthcare payment systems;•inability to obtain adequate product supply for our product candidates, or the inability to do so at acceptable prices;•introduction of new products, services or technologies by our competitors;•failure to meet or exceed financial projections we provide to the public;•failure to meet or exceed the estimates and projections of the investment community;•changes in the market valuations of similar companies;•market conditions in the pharmaceutical and biotechnology sectors, and the issuance of new or changed securities analysts’ reports orrecommendations;•announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;•significant lawsuits (including patent or stockholder litigation), and disputes or other developments relating to proprietary rights (includingpatents, litigation matters and our ability to obtain patent protection for our technologies);•additions or departures of key scientific or management personnel;•sales of our common stock by us or our stockholders in the future;•trading volume of our common stock;•general economic, industry and market conditions; and•the other factors described in this “Risk Factors” section.In addition, the stock market in general, and The NASDAQ Global Market in particular, have experienced extreme price and volume fluctuations that haveoften been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect themarket price of our common stock, regardless of our actual operating performance.Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject tostockholder approval.Based upon shares of common stock outstanding as of December 31, 2017, our executive officers, directors, 5% stockholders (known to us through availableinformation) and their affiliates beneficially owned approximately 48% of our voting stock. Therefore, these stockholders have the ability to substantiallyinfluence us through this ownership position. For example, these stockholders, if they choose to act together, may be able to influence the election ofdirectors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This concentration ofvoting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.Failure to establish and maintain adequate finance infrastructure and accounting systems and controls could impair our ability to comply with thefinancial reporting and internal controls requirements for publicly traded companies.As a public company, we operate in an increasingly demanding regulatory environment, which requires us to comply with the Sarbanes-Oxley Act of 2002,and the related rules and regulations of the Securities and Exchange Commission, expanded disclosure requirements, accelerated reporting requirements andmore complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing and maintaining corporate oversight andadequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for us to produce reliablefinancial reports and are important to help prevent financial fraud.Our compliance with Section 404 of the Sarbanes-Oxley Act has required and will continue to require that we incur substantial accounting expense andexpend significant management efforts. In this or future years, our testing, or the subsequent testing by our independent registered public accounting firm,may reveal deficiencies in our internal controls that we would be required to remediate in a timely manner so as to be able to comply with the requirements ofSection 404 of the Sarbanes-Oxley Act each year. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timelymanner each year, we could be subject to sanctions or investigations by the Securities and Exchange Commission, the NASDAQ Stock Market or otherregulatory authorities which would require additional financial and management resources and could adversely affect the market price of our common stock.Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could loseconfidence in our reported financial information.46Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result inadditional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.We expect that significant additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital byissuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securitiesin one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securitiesin more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existingstockholders, and new investors could gain rights superior to our existing stockholders.Pursuant to our 2013 Equity Incentive Plan (the 2013 Plan), our management is authorized to grant stock options to our employees, directors and consultants.The number of shares available for future grant under our 2013 Plan will automatically increase on January 1st each year, through January 1, 2023, by anamount equal to 4.0% of all shares of our capital stock outstanding as of December 31st of the preceding calendar year, subject to the ability of our board ofdirectors to take action to reduce the size of such increase in any given year. In addition, our board of directors may grant or provide for the grant of rights topurchase shares of our common stock pursuant to the terms of our 2013 Employee Stock Purchase Plan (ESPP). The number of shares of our common stockreserved for issuance under our ESPP will automatically increase on January 1st each year, through January 1, 2023, by an amount equal to the lesser of422,535 shares or one percent of all shares of our capital stock outstanding as of December 31st of the preceding calendar year, subject to the ability of ourboard of directors to take action to reduce the size of such increase in any given year. Unless our board of directors elects not to increase the number of sharesunderlying our 2013 Plan and ESPP each year, our stockholders may experience additional dilution, which could cause our stock price to fall.We have broad discretion in the use of the net proceeds from our financing transactions and may not use them effectively.Our management has broad discretion in the application of the net proceeds from our financing transactions. Because of the number and variability of factorsthat will determine our use of the net proceeds from our financing transactions, their ultimate use may vary substantially from their currently intended use.The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business,cause the price of our common stock to decline and delay the development of our product candidates. Pending their use, we have invested the net proceedsfrom our financing transactions in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to ourstockholders.Volatility in our stock price could subject us to securities class action litigation.In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk isespecially relevant for us because pharmaceutical companies have experienced significant stock price volatility in recent years, and also because our stockprice decreased significantly following announcement of results from our Phase 3 SUPPRESS trial. If we face such litigation, it could result in substantialcosts and a diversion of management’s attention and resources, which could harm our business.The recently passed comprehensive tax reform bill could adversely affect our business and financial condition.On December 22, 2017, President Trump signed into law new legislation that significantly revises the Internal Revenue Code of 1986, as amended. Thenewly enacted federal income tax law, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax ratefrom a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain smallbusinesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, onetime taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certainimportant exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying orrepealing many business deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax lawis uncertain and our business and financial condition could be adversely affected. In addition, it is uncertain if and to what extent various states will conformto the newly enacted federal tax law. The impact of this tax reform on holders of our common stock is also uncertain and could be adverse. We urge ourstockholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding ourcommon stock.47Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts.Our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate. In preparing our financial statements, weestimate the amount of tax that will become payable in each of such places. Nevertheless, our effective tax rate may be different than experienced in the pastdue to numerous factors, including passage of the newly enacted federal income tax law, the results of examinations and audits of our tax filings, our inabilityto secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and changes in tax laws. Any of these factors couldcause us to experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations inexcess of amounts accrued in our financial statements.Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than50 percent change (by value) in its equity ownership over a three year period, the corporation’s ability to use its pre-change net operating loss carryforwardsand other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We have determined that a Section 382ownership change occurred in 2002 and 2007 resulting in limitations of at least $64,000 and $762,000, respectively, of losses incurred prior to the respectiveownership change dates. In addition, we have determined that another Section 382 ownership change occurred in 2013 with our IPO, our most recent privateplacement and other transactions that have occurred since 2007, resulting in a limitation of at least $6.7 million of losses incurred prior to the ownershipchange date. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. Furthermore, under the newlyenacted federal income tax law, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility ofsuch federal net operating losses is limited. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law. As a result, ifwe earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset United States federal taxable income may be subject tolimitations, which could potentially result in increased future tax liability.Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, would be your solesource of gain.We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development,operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. As a result, capitalappreciation, if any, of our common stock would be your sole source of gain on an investment in our common stock for the foreseeable future.Provisions in our corporate charter documents and under Delaware law could make it more difficult for a third party to acquire us or increase the cost ofacquiring us, even if doing so would benefit our stockholders and may prevent attempts by our stockholders to replace or remove our current management.Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if anacquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management. Theseprovisions include:•authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued withoutstockholder approval which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostileacquirer, effectively preventing acquisitions that have not been approved by our board of directors;•allowing the authorized number of our directors to be changed only by resolution of our board of directors;•limiting the removal of directors;•creating a staggered board of directors;•requiring that stockholder actions must be effected at a duly called stockholder meeting and prohibiting stockholder actions by written consent;•eliminating the ability of stockholders to call a special meeting of stockholders; and•establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted uponat duly called stockholder meetings.The amendment of any of these provisions, with the exception of the ability of our board of directors to issue shares of preferred stock and designate anyrights, preferences and privileges thereto, would require the affirmative vote of the holders of at least 66 2/3 percent of the voting power of all of our thenoutstanding common stock.48These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult forstockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, we are subject toSection 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of businesscombinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unlesssuch transactions are approved by our board of directors. This provision could have the effect of delaying or preventing a change of control, whether or not itis desired by or beneficial to our stockholders. Further, other provisions of Delaware law may also discourage, delay or prevent someone from acquiring us ormerging with us.Risks Related to Information TechnologySignificant disruptions of information technology systems or breaches of data security could adversely affect our business.Our business is increasingly dependent on critical, complex, and interdependent information technology (IT) systems, including Internet-based systems, tosupport business processes as well as internal and external communications. The size and complexity of our IT systems make us potentially vulnerable to ITsystem breakdowns, malicious intrusion, and computer viruses, which may result in the impairment of our ability to operate our business effectively.In addition, our systems are potentially vulnerable to data security breaches-whether by employees or others-which may expose sensitive data tounauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property, or could lead to the public exposure ofpersonal information (including sensitive personal information) of our employees, clinical trial patients, customers, business partners and others.Any such disruption or security breach could result in legal proceedings, liability under laws that protect the privacy of personal information, regulatorypenalties, disruptions to our operations and collaborations, and damage to our reputation, which could harm our business and results of operations.Increasing use of social media could give rise to liability, breaches of data security, or reputational damage.We and our employees are increasingly utilizing social media tools as a means of communication both internally and externally. Despite our efforts tomonitor evolving social media communication guidelines and comply with applicable rules, there is risk that the use of social media by us or our employeesto communicate about our products or business may cause us to be found in violation of applicable requirements. In addition, our employees may knowinglyor inadvertently make use of social media in ways that may not comply with our social media policy or other legal or contractual requirements, which maygive rise to liability, lead to the loss of trade secrets or other intellectual property, or result in public exposure of personal information of our employees,clinical trial patients, customers, and others. Furthermore, negative posts or comments about us or our products in social media could seriously damage ourreputation, brand image, and goodwill.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESOur corporate headquarters are located at 2505 Meridian Parkway, Suite 100, Durham, North Carolina 27713 in a facility we lease encompassingapproximately 24,862 square feet of office space. The leases for this facility expire in February 2021.We separately lease laboratory space in Durham andResearch Triangle Park, North Carolina, encompassing a total of approximately 10,274 square feet. The leases for this laboratory space in Durham andResearch Triangle Park expire in July 2021 and August 2018, respectively.We believe that our property and equipment are generally well maintained and in good operating condition.ITEM 3. LEGAL PROCEEDINGSNone.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.49PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES Market InformationOur common stock began trading on The NASDAQ Global Market on April 11, 2013 under the symbol “CMRX.” Prior to such time, there was no publicmarket for our common stock. The following table sets forth the high and low sales prices per share of our common stock as reported on The NASDAQ GlobalMarket for the periods indicated. Such quotations represent inter-dealer prices without retail markup, markdown or commission and may not necessarilyrepresent actual transactions. Year Ended December 31, 2017 High LowFirst Quarter$6.64 $4.33Second Quarter$6.57 $4.28Third Quarter$5.60 $4.30Fourth Quarter$5.54 $4.17 Year Ended December 31, 2016 High LowFirst Quarter$9.72 $4.36Second Quarter$6.47 $3.50Third Quarter$5.96 $3.71Fourth Quarter$5.64 $3.66Stock Performance Graph(1) The following graph shows a comparison from April 11, 2013 through December 31, 2017 of the cumulative total return for our common stock, the NASDAQBiotechnology Index (NBI) and the NASDAQ Composite Index (CCMP). The graph assumes as initial investment of $100 on April 11, 2013. Thecomparisons in the graph below are based upon historical data and are not intended to forecast or be indicative of possible future performance of our commonstock or Indexes. Comparison of Cumulative Total Return*Among Chimerix, Inc., the NASDAQ Biotechnology Index and the NASDAQ Composite Index(1) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under theSecurities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.* Assuming the investment of $100 on 4/11/2013 (and the reinvestment of dividends thereafter) in each of (i) Chimerix, Inc.’s common stock, (ii) theNASDAQ Biotechnology Index and (iii) the NASDAQ Composite Index.50StockholdersAs of February 22, 2018, there were 36 stockholders of record of our common stock, which excludes stockholders whose shares were held in nominee or streetname by brokers. The actual number of common stockholders is greater than the number of record holders, and includes stockholders who are beneficialowners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whoseshares may be held in trust by other entities. Dividend PolicyWe have never declared or paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to supportour operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeablefuture. Any future determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among otherfactors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our board of directorsmay deem relevant. Recent Sales of Unregistered SecuritiesNone. Securities Authorized for Issuance Under Equity Compensation PlansInformation about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. Purchases of Equity Securities by the Issuer and Affiliated PurchasersWe did not purchase any of our securities during the period covered by this Annual Report.ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data should be read together with our consolidated financial statements and related notes and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report. The selected financial data in thissection are not intended to replace our consolidated financial statements and the related notes. Our historical results are not necessarily indicative of theresults that may be expected in the future. We derived the following selected Consolidated Statement of Operations and Comprehensive Loss Data for the years ended December 31, 2017, 2016, and2015 and the selected consolidated balance sheet data as of December 31, 2017 and 2016 from our audited consolidated financial statements and relatednotes appearing elsewhere in this Annual Report. 51 Years Ended December 31,Consolidated Statement of Operations and ComprehensiveLoss Data2017 2016 2015 2014 2013Revenues: Contract revenue$4,494 $5,702 $9,214 $4,040 $4,370 Collaboration and licensing revenue— — 1,548 — — Total revenues4,494 5,702 10,762 4,040 4,370Operating expenses: Research and development49,448 58,647 97,717 45,379 24,662 General and administrative27,148 25,007 31,296 17,527 8,327 Total operating expenses76,596 83,654 129,013 62,906 32,989 Loss from operations(72,102) (77,952) (118,251) (58,866) (28,619)Other (expense) income: Other-than-temporary impairment of investment(1,160) — — — — Interest income (expense), net2,278 1,562 879 (446) (1,236)Fair value adjustments to preferred stock warrant liability— — — — (6,590) Net loss(70,984) (76,390) (117,372) (59,312) (36,445)Accretion of redeemable convertible preferred stock— — — — (34,108)Net loss attributable to common shareholders$(70,984) $(76,390) $(117,372) $(59,312) $(70,553)Net loss per share, basic and diluted$(1.51) $(1.65) $(2.67) $(1.80) $(3.65)Weighted-average shares outstanding, basic and diluted46,963,430 46,267,064 43,878,326 33,003,714 19,307,422 Years Ended December 31,Consolidated Balance Sheet Data2017 2016 2015 2014 2013Cash and cash equivalents$18,548 $51,463 $20,605 $128,462 $109,976Short-term investments, available-for-sale (1)132,972 180,558 199,729 106,114 —Working capital143,337 226,360 208,658 220,390 102,802Long-term investments (1)76,731 47,407 124,040 52,973 —Total assets235,230 286,770 355,992 291,878 113,387Loan payable, net, current portion (2)— — — 4,296 5,573Loan payable, net, less current portion (2)— — — — 4,294Accumulated deficit(486,788) (415,804) (339,414) (222,042) (162,730)Total stockholders’ equity (deficit)$221,810 $276,224 $335,459 $274,636 $98,539 (1)Further details of investments is available in "Notes to Consolidated Financial Statements, Note 1. Fair Value of Financial Instruments" in Item 8 ofthis Annual Report.(2)Loan payable is net of debt discount.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis should be read in conjunction with “Selected Financial Data” and our financial statements and related notesincluded elsewhere in this Annual Report. This discussion and analysis and other parts of this Annual Report contain forward-looking statements basedupon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives,expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in theseforward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report. You shouldcarefully read the “Risk Factors” section of this Annual Report to gain an understanding of the important factors that could cause actual results to differmaterially from our forward-looking statements. Please also see the section entitled “Forward-Looking Statements.” 52Overview Chimerix, Inc. is a biotechnology company committed to discovering, developing and commercializing medicines that address significant, unmet medicalneeds. We were founded in 2000 based on the promise of our proprietary lipid conjugate technology to unlock the potential of some of the most broad-spectrum antivirals by enhancing their antiviral activity and safety profiles in convenient dosing regimens. Our lead compound, brincidofovir (BCV), is indevelopment as an oral and intravenous (IV) formulation for the prevention and treatment of DNA viruses, including smallpox, adenoviruses, and the humanherpesviruses. We are also advancing the development of CMX521 for the treatment and prevention of norovirus. In addition, we have an active discoveryprogram focusing on viral targets for which limited or no therapies are currently available.Recent DevelopmentsInitiation of AdAPT Study of Oral Brincidofovir in AdenovirusWe initiated the AdAPT Study (Adenovirus after Allogeneic Pediatric Transplantation) in December 2017. This study is targeting enrollment of 141 pediatricallogeneic hematopoietic or stem cell transplant (HCT) recipients with confirmed adenovirus (AdV) infection. Patients are randomized 2:1 to receive short-course oral BCV or local standard-of-care (SOC) treatment at approximately 30 sites in Europe and the United States.The primary endpoint of the study is a comparison of the average AdV viral burden (as measured by AdV DNA levels in blood) over 16 weeks in subjectstreated with short-course oral BCV versus those who receive local SOC. The study is 90% powered to show the superiority of reduced adenoviral burden inbrincidofovir-treated patients compared to SOC. The study will also evaluate the correlation of adenoviral burden (and its clearance) with clinical outcomes,including survival. We anticipate that enrollment in the study will be completed in 2019.If successful, AdAPT may form the basis of an application for conditional or full marketing approval of brincidofovir in the European Union (EU) for thetreatment of AdV infection in HCT recipients. A successful trial may also further support potential continued development of oral brincidofovir in the U.S.Oral Treatment for SmallpoxWe are collaborating with the Biomedical Advanced Research and Development Authority (BARDA) for the development of brincidofovir as a potentialmedical countermeasure for smallpox. Efficacy is to be demonstrated via two animal models under the U.S. Food and Drug Administration’s (FDA’s) AnimalRule. Following completion of the animal efficacy studies, we plan to meet with the FDA to discuss any additional required data for a regulatory decision.In November 2017, we received advice from the European Medicines Agency (EMA) on the development plan for smallpox, in which the submission of amarketing application with data from completed studies, including the large rabbitpox efficacy study, VIR-041, was discussed. This rabbitpox study, aspreviously reported, demonstrated 100% survival in animals with confirmed viral infection treated with BCV, a clinically and statistically significantimprovement compared with <50% survival in animals that received placebo. This study in combination with supportive mousepox study data wasconsidered sufficient for review by EMA. We are in the process of preparing for a marketing application submission to EMA in 2019.Since August of last year, we have been in discussions with FDA regarding study VIR-041. The Agency has determined that study VIR-041 cannot besufficient to stand as pivotal. We are conducting a second, adjunct rabbitpox study that will be conducted in 2018. The data from Study-041 will however besubmitted and considered among the weight of the evidence in the NDA we plan to submit in 2019.Through our continuing development contract with BARDA, we are conducting final studies prior to conducting the pivotal efficacy study in the mousemodel of smallpox infection (ectromelia virus). We believe that efficacy data from this model could serve as the second animal model to support the approvalof brincidofovir in the United States for the treatment of smallpox.We plan to submit a New Drug Application (NDA) to the FDA for BCV for the treatment of smallpox, contingent upon the results of the animal efficacystudies we intend to conduct during 2018.IV Brincidofovir Progresses to Phase 2 StudiesIn late 2017, we completed the multiple ascending dose (MAD) study of IV BCV in healthy subjects. This Phase 1 study evaluated the safety, tolerability andpharmacokinetics of IV BCV 10 mg given twice weekly and IV BCV 20 mg given once weekly in53healthy subjects for two to four weeks. IV BCV was well-tolerated at all dose levels, with no dose-limiting clinical adverse events. Importantly, there was nodiarrhea reported for IV BCV 10 mg dosed twice weekly, a dose that provides drug levels equivalent to oral BCV 100 mg which demonstrated antiviralactivity in previous late-stage clinical studies. Non-clinically-relevant elevations in serum transaminases were noted as seen in previous studies of oral BCV.Studies of IV BCV in virally-infected patients are initiating and are expected to begin providing antiviral data in the second half of 2018. These studies mayalso provide data on other viral infections such as CMV and/or BKV in patients with multi-viral infections. The studies will evaluate pharmacokinetics (PK)and tolerability of multiple doses of IV BCV in adult HCT recipients. We will also evaluate the relationship between dose and change from baseline in AdV.Data are expected in the second half of 2018 and will inform the dose and dosing regimen for our Multi Viral Protection (MVP)-Peds study. Given the broad-spectrum antiviral activity of brincidofovir and the known frequency of multiple DNA viral infections in HCT recipients, we intend to conduct a multi-viralprevention study in high-risk HCT recipients which we plan to discuss with regulators in 2018.Following availability of data from adult patients in the studies described above, we anticipate conducting study(ies) in treatment of BK viremia in order toprevent BK-associated nephropathy in kidney transplant recipients. In addition, the improved drug concentrations in the central nervous system (CNS)achieved with IV brincidofovir in animals could support the study of IV brincidofovir in viral CNS infections such as herpes encephalitis, JC virus infection,and CMV infection, which has recently been described to be associated with glioblastoma.Our ability to provide brincidofovir in oral and IV formulations enables development across multiple indications and populations with the potential for best-in-class efficacy and safety. In 13-week animal studies and single dose administration in healthy subjects, IV BCV has shown the potential for less GI injurycompared to oral brincidofovir, even with higher plasma drug concentrations and longer-term dosing.CMX521 for NorovirusCMX521 is a nucleoside analog identified from our proprietary Chemical Library which targets the norovirus polymerase, a part of the virus that is commonto all strains and is required for viral replication. It therefore has the potential to be active against the multiple genetically diverse norovirus strains thatcirculate each year and cause disease in humans. CMX521 is the first antiviral specific for the treatment and/or prevention of norovirus.Chronic norovirus infection is increasingly being diagnosed in immune compromised patients. Approximately 15-20 percent of HCT and solid organtransplant (SOT) recipients are diagnosed with norovirus within the first 1-2 years after transplant, a diagnosis that has been associated with chronic diarrhea,electrolyte disturbances, and graft rejection.In December 2017, we initiated a first-time-in-human study of CMX521. The Phase 1 study is evaluating the pharmacokinetics, safety and tolerability ofCMX521 in up to 50 adult subjects. The study also includes the collection of gut biopsy specimens, which will allow for the determination of active drugconcentrations in the target gut tissue. Study results are expected in mid-2018.AdVance StudyWe have completed AdVance, a study of the current standard-of-care for treatment of AdV in France, Germany, Italy, Netherlands, Spain, the Czech Republicand the United Kingdom. We expect data from AdVance to describe the incidence and outcomes associated with standard-of-care treatment of AdV infection,supporting the need for new therapeutic options. Final data analysis will be presented at the European Bone Marrow Treatment conference in March 2018.We also plan to conduct a study to capture the practice patterns and incidence of AdV infection in the U.S., called AdVance US the second half of 2018. Brincidofovir Expanded Access ProgramWe continue to receive requests for BCV via our expanded access and named patient programs. During 2017, we granted almost 350 requests for AdV,highlighting the continued unmet need in this area.Financial OverviewRevenuesTo date, we have not generated any revenue from product sales. All of our revenue to date has been derived from a government grant and contract and thereceipt of up-front proceeds under our collaboration and license agreements.54In February 2011, we entered into a contract with BARDA, a U.S. governmental agency that supports the advanced research and development, manufacturing,acquisition, and stockpiling of medical countermeasures. The contract originally consisted of an initial performance period, referred to as the baseperformance segment, which ended on May 31, 2013, plus up to four extension periods, referred to as option segments. Subsequent option segments to thecontract are not subject to automatic renewal and are not exercisable at Chimerix’s discretion. The contract is a cost plus fixed fee development contract.Under the contract as currently in effect, we may receive up to $75.8 million in expense reimbursement and $5.3 million in fees if all remaining optionsegments are exercised. We are currently performing under the second and third option segments of the contract during which we may receive up to a total of$21.6 million and $11.6 million in expense reimbursement and fees, respectively. The second option and third option segment is scheduled to end onSeptember 30, 2018. As of December 31, 2017, we had recognized revenue in aggregate of $56.1 million with respect to the base performance segment andthe first three option periods.On December 17, 2014, we entered into a collaboration and licensing agreement with ContraVir Pharmaceuticals (NASDAQ: CTRV). In exchange for thelicense to CMX157 rights, we received an upfront payment consisting of 120,000 shares of ContraVir Series B Convertible Preferred Stock with a statedvalue of $1.2 million. In addition, we are eligible to receive clinical, regulatory and initial commercial milestones in the United States and Europe, as well asroyalties and additional milestones based on commercial sales in those territories. We recognized the upfront license fee payment from ContraVir as deferredrevenue for the year ended December 31, 2014, and during the second quarter of 2015 we completed our performance obligations and recorded $1.5 millionin revenue. In September 2016, we converted our shares of ContraVir Series B Convertible Preferred Stock into 1,071,429 shares of ContraVir common stock.In the future, we may generate revenue from a combination of product sales, license fees, milestone payments and royalties from the sales of productsdeveloped under licenses of our intellectual property. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timingand amount of license fees, milestone and other payments, and the amount and timing of payments that we receive upon the sale of our products, to the extentany are successfully commercialized. If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval forthem, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected. Research and Development ExpensesSince our inception, we have focused our resources on our research and development activities, including conducting preclinical studies and clinical trials,manufacturing development efforts and activities related to regulatory filings for our product candidates. We recognize research and development expensesas they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks usinginformation and data provided to us by our vendors. We cannot determine with certainty the duration and completion costs of the current or future clinicalstudies of our product candidates. Our research and development expenses consist primarily of:•fees paid to consultants and contract research organizations (CROs), including in connection with our preclinical and clinical trials, and otherrelated clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trialmaterial management and statistical compilation and analysis;•salaries and related overhead expenses, which include stock option, restricted stock unit (RSU) and employee stock purchase programcompensation and benefits, for personnel in research and development functions;•payments to third-party manufacturers, which produce, test and package our drug substance and drug product (including continued testing ofprocess validation and stability);•costs related to legal and compliance with regulatory requirements; and•license fees for and milestone payments related to licensed products and technologies.From our inception through December 31, 2017, we have incurred approximately $404.8 million in research and development expenses, of which $360.0million relates to our development of brincidofovir. These costs were largely related to the conduct of our clinical trials of brincidofovir. The table below summarizes our research and development expenses for the periods indicated (in thousands). Our direct research and development expensesconsist primarily of external costs, such as fees paid to investigators, consultants, central laboratories and CROs, in connection with our clinical trials,preclinical development, and payments to third-party manufacturers of drug substance and drug product. We typically use our employee and infrastructureresources across multiple research and development programs.55 Years Ended December 31, 2017 2016 2015Direct research and development expenses$24,734 $31,415 $70,348Research and development personnel costs - excluding stock-based compensation13,490 15,035 16,691Research and development personnel costs - stock-based compensation7,047 7,137 5,578Indirect research and development expenses4,177 5,060 5,100 Total research and development expenses$49,448 $58,647 $97,717The successful development of our clinical and preclinical product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature,timing or costs of the efforts that will be necessary to complete the remainder of the development of any of our clinical or preclinical product candidates orthe period, if any, in which material net cash inflows from these product candidates may commence. This is due to the numerous risks and uncertaintiesassociated with the development of our product candidates, including:•the uncertainty of the scope, rate of progress and expense of our ongoing, as well as any additional, clinical trials and other research anddevelopment activities;•the potential benefits of our candidates over other therapies;•the ability to market, commercialize and achieve market acceptance for any of our product candidates that we are developing or may develop inthe future;•the results of ongoing or future clinical trials;•the timing and receipt of any regulatory approvals; and•the filing, prosecuting, defending and enforcing of patent claims and other intellectual property rights, and the expense of doing so.A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs andtiming associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conductclinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate in the UnitedStates or in Europe, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additionalfinancial resources and time with respect to the development of that product candidate.BrincidofovirThe majority of our research and development resources has been focused on completing our Phase 3 trial of brincidofovir for prevention of CMV in HCTrecipients (SUPPRESS), our trial of brincidofovir as a treatment for AdV (AdVise), our recently initiated AdAPT study in pediatric HCT recipients and ourother clinical and preclinical studies and other work needed to provide sufficient data supporting the safety, tolerability and efficacy of brincidofovir forapproval in the United States and equivalent health authority approval outside the United States.In addition, pursuant to our contract with BARDA, we are evaluating brincidofovir for the treatment of smallpox. During the base performance segment of thecontract, we incurred significant expense in connection with the development of orthopox virus animal models, the demonstration of efficacy andpharmacokinetics of brincidofovir in the animal models, the conduct of an open label clinical safety study for subjects with DNA viral infections, and themanufacture and process validation of bulk drug substance and brincidofovir 100 mg tablets. During the first option segment of the contract, we performedadditional animal testing of brincidofovir. In September 2014, we initiated performance under the second option segment of the contract with BARDA andperformed additional animal testing of brincidofovir. In September 2015, we initiated performance under the third option segment which focuses onbrincidofovir chemistry, manufacturing and controls at large scale.Due to the early stage of development of the IV formulation of brincidofovir, CMX521 for norovirus, and our ongoing BARDA activities, research anddevelopment expenses decreased in 2017 compared to 2016. In 2018, as these programs move into clinical trials and we conduct our registrational AdAPTtrial, we expect an increase in research and development expenses.General and Administrative ExpensesGeneral and administrative expenses consist primarily of salaries and related costs for employees in executive, finance, marketing, investor relations,information technology, legal, human resources and administrative support functions, including share-based compensation expenses and benefits. Othersignificant general and administrative expenses include the pre-launch activities for56brincidofovir, accounting and legal services, cost of various consultants, director and officer liability insurance, occupancy costs and information systems.We anticipate that our general and administrative expenses will continue to increase slightly in the future to support continued research and developmentactivities, potential commercialization of our drug candidates and costs of operating as a public company.Interest Income (Expense), NetInterest income consists of interest earned on our cash, cash equivalents, short-term investments and long-term investments.Interest expense consists primarily of interest accrued or paid on amounts outstanding under our Loan and Security Agreement (LSA) with Silicon ValleyBank (SVB) and MidCap Financial SBIC, LP (MidCap). In January 2012, we borrowed $3.0 million under the LSA, and in September 2012, we borrowed anadditional $12.0 million. In October 2015, the loan was paid in full.Other-than-temporary Impairment of InvestmentOther-than-temporary impairment of investment consists of the write-down in value of our investment in ContraVir common stock which was determined tobe other-than-temporarily impaired as of December 31, 2017.Share-based CompensationThe Financial Accounting Standards Board (FASB) authoritative guidance requires that share-based payment transactions with employees be recognized inthe financial statements based on their fair value and recognized as compensation expense over the vesting period. Total consolidated share-basedcompensation expense of $16.1 million, $16.2 million and $13.0 million was recognized in the years ended December 31, 2017, 2016 and 2015,respectively. The share-based compensation expense recognized included expense for stock options, RSUs and our employee stock purchase plan purchaserights. We estimate the fair value of our share-based awards to employees and directors using the Black-Scholes pricing model. This estimate is affected by our stockprice as well as assumptions including the expected volatility, expected term, risk-free interest rate, expected dividend yield, expected rate of forfeiture andthe fair value of the underlying common stock on the date of grant. For performance-based RSUs, we begin to recognize the expense when it is deemed probable that the performance-based goal will be met. We evaluate theprobability of achieving performance-based goals on a quarterly basis.Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our audited consolidated financial statements, whichhave been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The preparation of theseconsolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions that we believeto be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets andliabilities and the recording of revenues and expenses that are not readily apparent from other sources. Actual results and experiences may differ materiallyfrom these estimates. In addition, our reported financial condition and results of operations could vary if new accounting standards are enacted that areapplicable to our business. Our significant accounting policies are described in Note 1 to our audited consolidated financial statements for the year ended December 31, 2017 includedin this Annual Report. We believe that our accounting policies relating to revenue recognition, research and development prepaids and accruals, investmentsand share-based compensation are the most critical to understanding and evaluating our reported financial results. We have identified these policies ascritical because they both are important to the presentation of our financial condition and results of operations and require us to make judgments andestimates on matters that are inherently uncertain and may change in future periods. For more information regarding these policies, you should refer to Note 1to our audited consolidated financial statements included in this Annual Report. Revenue RecognitionWe derive our revenues from two sources: contracts and grants, and collaborations and licensing. Contract and grant revenue is revenue generated pursuant tofederal contracts and other awarded grants. Collaboration and licensing revenue is revenue related to license and collaboration agreements. We recognizerevenue in accordance with the criteria outlined in the Securities and57Exchange Commission (SEC)’s Topic 13 and Accounting Standards Codification (ASC) 605-25 and by the Financial Accounting Standards Board.Following these accounting pronouncements, revenue is recognized when all four of the following criteria are met: (i) persuasive evidence of an arrangementexists; (ii) delivery of the products and/or services has occurred and risk of loss has passed; (iii) the selling price is fixed or determinable; and (iv)collectability is reasonably assured. For arrangements that involve the delivery of more than one element, each product, service and/or right to use assets is evaluated to determine whether itqualifies as a separate unit of accounting. This determination is based on whether the deliverable has “stand-alone value” to the customer. The considerationthat is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling prices of each deliverable. The considerationallocated to each unit of accounting is recognized as the related goods and services are delivered, limited to the consideration that is not contingent uponfuture deliverables. If the arrangement constitutes a single unit of accounting, the revenue recognition policy must be determined for the entire arrangementand the consideration received is recognized over the period of inception through the date the last deliverable within the single unit of accounting isexpected to be delivered. Revisions to the estimated period of recognition are reflected in revenue prospectively.Non-refundable upfront fees are recorded as deferred revenue and recognized into revenue as license fees from collaborations on a straight-line basis over theestimated period of our substantive performance obligations. If we do not have substantive performance obligations, we recognize non-refundable upfrontfees into revenue through the date the deliverable is satisfied. Analyzing the arrangement to identify deliverables requires the use of judgment, and eachdeliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. Milestone payments are recognized when earned, provided that (i) the milestone event is substantive, (ii) there is no ongoing performance obligation relatedto the achievement of the milestone earned, and (iii) it would result in additional payments. Milestone payments are considered substantive if all of thefollowing conditions are met: the milestone payment is non-refundable; achievement of the milestone was not reasonably assured at the inception of thearrangement; substantive effort is involved to achieve the milestone; and the amount of the milestone appears reasonable in relation to the effort expended,the other milestones in the arrangement and the related risk associated with the achievement of the milestone. Contingent based event payments we mayreceive under a license or collaboration agreement will be recognized when received. From our inception through December 31, 2017, we have not generated any revenue from product sales. For the same period, we have generated $93.6million in grant and contract revenue. We recognize revenue under government grants and contracts as qualifying research activities are conducted based oninvoices received from company vendors. Any amounts received in advance of performance are recorded as deferred revenue until earned.On December 17, 2014, we entered into a collaboration and license agreement with ContraVir Pharmaceuticals. In exchange for the license to CMX157rights, we received an upfront payment consisting of 120,000 shares of ContraVir Series B Convertible Preferred Stock with a stated value of $1.2 million. Inaddition, we are eligible to receive up to approximately $20 million in clinical, regulatory and initial commercial milestones in the United States and Europe,as well as royalties and additional milestones based on commercial sales in those territories. The upfront payment of 120,000 shares of ContraVir Series BConvertible Preferred Stock was valued at $1.5 million at the time of the agreement. We recorded this amount as deferred revenue, and upon completion ofthe transfer of the IND and technical know-how related to CMX157 in April 2015, we recognized the $1.5 million upfront payment as revenue. In September2016, we converted our shares of ContraVir Series B Convertible Preferred Stock into 1,071,429 shares of ContraVir common stock.Research and Development Prepaids and AccrualsAs part of the process of preparing financial statements, we are required to estimate our expenses resulting from our obligation under contracts with vendorsand consultants and clinical site agreements in connection with our research and development efforts. The financial terms of these contracts are subject tonegotiations which vary contract to contract and may result in payment flows that do not match the periods over which materials or services are provided tous under such contracts.Our objective is to reflect the appropriate research and development expenses in our financial statements by matching those expenses with the period inwhich services and efforts are expended. We account for these expenses according to the progress of our research and development efforts. We determineprepaid and accrual estimates through discussion with applicable personnel and outside service providers as to the progress or state of communication ofclinical trials, or other services completed. We adjust our rate of research and development expense recognition if actual results differ from our estimates. Wemake estimates of our prepaid and accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known at thattime. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of status and timing of servicesperformed relative to the actual status and timing of services performed may vary and may result58in us reporting amounts that are too high or too low for any particular period. Through December 31, 2017, there had been no material adjustments to ourprior period estimates of prepaid and accruals for research and development expenses. Our research and development prepaids and accruals are dependentupon the timely and accurate reporting of contract research organizations and other third-party vendors.InvestmentsInvestments consist primarily of brokered certificates of deposit, U.S. Treasury securities and stock of a U.S. corporation. We invest in high-credit qualityinvestments in accordance with our investment policy which minimizes the probability of loss.Available-for-sale securities are carried at fair value as determined by quoted market prices, with the unrealized gains and losses, net of tax, reported as aseparate component of stockholders deficit. Realized gains and losses are determined using the specific identification method and transactions are recordedon a settlement date basis in interest income or expense, net. Investments with original maturities beyond three months at the date of purchase and whichmature on, or less than twelve months from, the balance sheet date are classified as short-term. Investments with a maturity beyond twelve months from thebalance sheet date are classified as long-term. We periodically review available-for-sale securities for other-than-temporary declines in fair value below thecost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate, among otherthings, the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and any changes thereto; and ourintent to sell, or whether we will more likely than not be required to sell, the security before recovery of our amortized cost basis. Any such declines in valuejudged to be other-than-temporary on available-for-sale securities are reported in other-than-temporary impairment of investment. For the year endedDecember 31, 2017, we determined the decline in value for our investment in ContraVir common stock to be other-than temporary. As such, during the fourthquarter of 2017, we reclassified a loss of $1.2 million from accumulated other comprehensive loss, net in the Consolidated Balance Sheets to other-than-temporary impairment of investment in the Consolidated Statements of Operations and Comprehensive Loss. There were no such declines in value for theyears ended December 31, 2016 and 2015.Valuation of Share-Based CompensationWe record the fair value of share-based awards issued as of the grant date as compensation expense. We recognize compensation expense over the requisiteservice period, which is equal to the vesting period.Share-based compensation expense includes stock options, RSUs and employee stock purchase plan purchase rights and has been reported in ourConsolidated Statements of Operations and Comprehensive Loss as follows: Years Ended December 31, 2017 2016 2015Income Statement Classification: Research and development expense$7,047 $7,137 $5,578General and administrative expense9,063 9,086 7,381 Total stock-based compensation expense$16,110 $16,223 $12,959RSU compensation expense is based on the grant-date fair value of our common stock.We calculate the fair value of share-based compensation awards using the Black-Scholes option-pricing model. The Black-Scholes option-pricing modelrequires the use of subjective assumptions, including volatility of our common stock, the expected term of our stock options, the risk-free interest rate for aperiod that approximates the expected term of our stock options and the fair value of the underlying common stock on the date of grant. In applying theseassumptions, we considered the following factors:•We have limited operating history to estimate the volatility of our common stock price. We calculate expected volatility based on a blend ofcompany specific historical data and a group of similar publicly traded companies for which the historical information is available. For thepurpose of identifying peer companies, we consider characteristics such as industry, length of trading history, similar vesting terms and in-the-money option status. We plan to continue to use the guideline peer group volatility information until the historical volatility of our commonstock is relevant to measure expected volatility for future option grants.•We use historical exercise data to estimate expected term.•We determine the risk-free interest rate by reference to implied yields available from U.S. Treasury securities with a remaining term equal to theexpected life assumed at the date of grant.•The assumed dividend yield is based on our expectation of not paying dividends for the foreseeable future.59•We estimate forfeitures based on our historical analysis of actual stock option forfeitures.The assumptions used in the Black-Scholes option-pricing model for the years ended December 31, 2017, 2016, and 2015 are set forth below:Stock Options Years Ended December 31, 2017 2016 2015Expected volatility85.51% 85.16% 66.89%Expected term (in years)5.9 6.0 6.0Weighted-average risk-free interest rate2.02% 1.70% 1.53%Expected dividend yield—% —% —%Weighted-average fair value per option$3.71 $5.62 $25.18Employee Stock Purchase Plan Years Ended December 31, 2017 2016 2015Expected volatility77.18% 111.57% 57.77%Expected term (in years)0.97 1.37 1.15Weighted-average risk-free interest rate0.99% 0.75% 0.43%Expected dividend yield—% —% —%Weighted-average option value per share$2.65 $3.20 $22.10Utilization of Net Operating Loss CarryforwardsAt December 31, 2017, we had net operating loss carryforwards for federal and state tax purposes of approximately $408.1 million and $319.9 million,respectively. At December 31, 2016, we had net operating loss carryforwards for federal and state tax purposes of approximately $356.1 million and $287.2million, respectively. In addition, we had tax credit carryforwards for federal tax purposes of approximately $16.6 million as of December 31, 2017, whichbegin to expire in 2022. The future utilization of net operating loss and tax credit carryforwards may be limited due to changes in ownership. In general, if weexperience a greater than 50 percent aggregate change in ownership of certain significant stockholders or groups over a three-year period (a Section 382ownership change), utilization of our pre-change net operating loss carryforwards is subject to an annual limitation under Section 382 of the Code (andsimilar state laws). The annual limitation generally is determined by multiplying the value of our stock at the time of such ownership change (subject tocertain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the pre-change net operating losscarryforwards before utilization and may be substantial. We have determined that a Section 382 ownership change occurred in 2002 and 2007 resulting inlimitations of at least $64,000 and $762,000, respectively, of losses incurred prior to the respective ownership change dates. In addition, we have determinedthat another Section 382 ownership change occurred in 2013 with our initial public offering, our private placements and other transactions that haveoccurred since 2007, resulting in a limitation of at least $6.7 million of losses incurred prior to the ownership change date. We may also experienceownership changes in the future as a result of subsequent shifts in our stock ownership. Furthermore, under the newly enacted federal income tax law, federalnet operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses islimited. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law. As a result, if we earn net taxable income, ourability to use our pre-change net operating loss carryforwards to offset United States federal taxable income may be subject to limitations, which couldpotentially result in increased future tax liability to us.60RESULTS OF OPERATIONS Comparison of the Years Ended December 31, 2017 and December 31, 2016The following table summarizes our results of operations for the years ended December 31, 2017 and December 31, 2016, together with the changes in thoseitems in dollars and percentage (in thousands, except percentages): Years Ended December 31, Dollar Change % Change 2017 2016 Increase/(Decrease)Contract revenue$4,494 $5,702 $(1,208) (21.2)%Operating expenses: Research and development49,448 58,647 (9,199) (15.7)% General and administrative27,148 25,007 2,141 8.6 % Total operating expenses76,596 83,654 (7,058) (8.4)% Loss from operations(72,102) (77,952) 5,850 (7.5)%Other (expense) income: Other-than-temporary impairment of investment(1,160) — (1,160) * Interest income2,278 1,562 716 45.8 % Net loss$(70,984) $(76,390) $5,406 (7.1)%* Not meaningful or not calculableContract RevenueFor the year ended December 31, 2017, contract revenue decreased to $4.5 million compared to $5.7 million for the year ended December 31, 2016. Thedecrease of $1.2 million, or 21.2%, was related to a decrease in reimbursable expenses associated with our contract with BARDA.Research and Development ExpensesFor the year ended December 31, 2017, our research and development expenses decreased to $49.4 million compared to $58.6 million for the year endedDecember 31, 2016. The decrease of $9.2 million, or 15.7%, was primarily related to the following:•a decrease in oral brincidofovir clinical expenses of $6.2 million, which is comprised primarily of an $8.7 million decrease related to thecompletion of our Phase 3 SUPPRESS and AdVise trials and the closeout of our SUSTAIN and SURPASS trials, and a $0.6 million decrease inour expanded access programs, primarily offset by an increase of $1.8 million related to start-up activities for our AdAPT study and an increaseof $1.2 million related to conduct of the AdVance study;•a decrease of $1.4 million in oral brincidofovir drug manufacturing costs;•a decrease of $1.9 million related to compensation expense;•a decrease of $0.9 million related to reimbursable BARDA contract expenses; and•a decrease of $0.8 million in supporting research and development expenses; offset by•an increase of approximately $2.4 million mainly related to our development of an IV formulation of brincidofovir, development of CMX521,our clinical candidate for norovirus, and other early stage compounds.General and Administrative ExpensesFor the year ended December 31, 2017, our general and administrative expenses increased to $27.1 million compared to $25.0 million for the year endedDecember 31, 2016. The increase of $2.1 million, or 8.6%, was primarily related to the following:•an increase of $2.0 million in global commercial readiness costs;•an increase of $1.0 million in costs related to an indemnification claim; offset by•a decrease of $0.6 million related to compensation expense.61Interest IncomeFor the year ended December 31, 2017, our interest income was $2.3 million compared to interest income of $1.6 million for the year ended December 31,2016. The increase of $0.7 million was attributable to higher interest rates.Other-than-temporary Impairment of InvestmentFor the year ended December 31, 2017, other-than-temporary impairment of investment was $1.2 million related to the write-down in value of our investmentin ContraVir common stock. We recorded no other-than-temporary impairment of investment for the year ended December 31, 2016.Comparison of the Years ended December 31, 2016 and December 31, 2015The following table summarizes the results of our operations for the years ended December 31, 2016 and December 31, 2015, together with the year-over-yearchanges in those items in dollars (in thousands, except for percentages): Years Ended December 31, Dollar Change % Change 2016 2015 Increase/(Decrease)Revenues: Contract revenue$5,702 $9,214 $(3,512) (38.1)% Collaboration and licensing revenue— 1,548 (1,548) (100)% Total revenues5,702 10,762 (5,060) (47.0)%Operating expenses: Research and development58,647 97,717 (39,070) (40.0)% General and administrative25,007 31,296 (6,289) (20.1)% Total operating expenses83,654 129,013 (45,359) (35.2)% Loss from operations(77,952) (118,251) 40,299 (34.1)%Other (expense) income: Interest income, net1,562 879 683 77.7 % Net loss$(76,390) $(117,372) $40,982 (34.9)% Contract RevenueFor the year ended December 31, 2016, contract revenue decreased to $5.7 million compared to $9.2 million for the year ended December 31, 2015. Thedecrease of $3.5 million, or 38.1%, was related to a decrease in reimbursable expenses related to our contract with BARDA.Collaboration and Licensing RevenueFor the year ended December 31, 2016, we did not have any collaboration and licensing revenue. For the year ended December 31, 2015, total collaborationand licensing revenue was $1.5 million related to our collaboration and licensing agreement with ContraVir Pharmaceuticals. Research and Development ExpensesFor the year ended December 31, 2016, our research and development expenses decreased to $58.6 million compared to $97.7 million for the year endedDecember 31, 2015. The decrease of $39.1 million, or 40.0%, was primarily related to the following:•a decrease of $31.0 million in oral BCV clinical expenses, comprised primarily of a decrease related to the completion of our Phase 3 SUPRESSand AdVise clinical trials and the closeout of our SUSTAIN and SURPASS clinical trials;•a decrease of $3.1 million in costs related to the development of oral BCV drug manufacturing; and•a decrease in other research and development expenses; offset by•increase in costs of approximately $3.6 million related to the development of an IV formulation of brincidofovir and development of CMX521,our asset for norovirus62General and Administrative ExpensesFor the year ended December 31, 2016, our general and administrative expenses decreased to $25.0 million compared to $31.3 million for the year endedDecember 31, 2015. The decrease of $6.3 million, or 20.1%, was primarily related to the following:•a decrease of $7.1 million as we delayed our commercialization readiness activities for brincidofovir;•a decrease of $1.2 million in operational support costs as part of our cost-saving efforts; offset by•a net increase in compensation and other employee related costs of $1.9 million, consisting of an increase of $1.7 million of share-basedcompensation and an increase of $0.2 million of compensation and benefits.Interest Income, NetFor the year ended December 31, 2016, our interest income, net was $1.6 million compared to interest income, net of $0.9 million for the year endedDecember 31, 2015. The increase of $0.7 million was attributable to increased interest earned on higher cash and investment balances over prior year and areduction in interest expense as our debt was paid in full in October 2015.LIQUIDITY AND CAPITAL RESOURCESWe have incurred losses since our inception in 2000 and, as of December 31, 2017, we had an accumulated deficit of $486.8 million. We anticipate that wewill continue to incur losses for at least the next several years. In connection with the closing of our prior clinical trials for brincidofovir, we have seen areduction in expenses. However, we currently expect both research and development expenses and general and administrative expenses to trend upward in2018, and we will need additional capital in the future to fund our operations, which we may obtain through one or more of equity offerings, debt financings,government or other third-party funding, strategic alliances and licensing or collaboration arrangements.On June 16, 2015, we completed an underwritten public offering of 4,341,250 shares of common stock, including 566,250 shares sold pursuant to the fullexercise of an option granted to the underwriters to purchase additional shares of common stock. All of the shares were offered by us at a price to the public of$39.75 per share. The net proceeds from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by us,were approximately $161.9 million. The securities described above were offered by us pursuant to an automatic shelf registration statement whichimmediately became effective by rule of the SEC on June 9, 2015.We have an effective shelf registration statement on file with the SEC which allows us to issue shares of our common stock and preferred stock, various seriesof debt securities and warrants to purchase any of such securities from time to time for an aggregate initial offering price of up to $250 million, includingshares of our common stock, having aggregate gross proceeds of up to $75 million, that we may offer and sell, from time to time at our sole discretionpursuant to an at the market issuance sales agreement with Cowen and Company, LLC. As of December 31, 2017, we had not sold any shares of our commonstock pursuant to the shelf registration statement.We cannot assure you that adequate funding will be available on terms acceptable to us, if at all. Any additional equity financings will be dilutive to ourstockholders and any additional debt may involve operating covenants that may restrict our business. If adequate funds are not available through thesemeans, we may be required to curtail significantly one or more of our research or development programs, our pre-launch expenses, and any launch and othercommercialization expenses for any of our products that may receive marketing approval. We cannot assure you that we will successfully develop orcommercialize our products under development or that our products, if successfully developed, will generate revenues sufficient to enable us to earn a profit.We believe that our existing cash, cash equivalents, short-term investments, and long-term investments will enable us to fund our current operating expensesand capital requirements for at least the next 12 months. Such operating and capital requirements do not contemplate incremental expenses associated with afull scale commercial launch of brincidofovir. However, changing circumstances beyond our control may cause us to consume capital more rapidly than wecurrently anticipate.Since our inception through December 31, 2017, we have funded our operations principally with $595.5 million (net of issuance costs of $23.9 million) fromthe sale of common stock and preferred stock, $37.4 million of research funding from our various National Institute of Allergy and Infectious Diseases awards,$56.1 million in revenue from our BARDA contract, debt financings totaling $21.0 million, $17.5 million of licensing revenue, and $14.1 million from stockoption and warrant exercises and purchases under our Employee Stock Purchase Plan (ESPP). As of December 31, 2017, we had capital available to fundoperations of approximately $227.9 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with aview to liquidity and capital preservation.63During 2012, we entered into a loan and security agreement with SVB and MidCap allowing for borrowing up to $15 million. In January 2012, we borrowed$3 million under this agreement which had an interest only period for twelve months, followed by a thirty month principal and interest period at a rate of8.25%. In September 2012, we borrowed an additional $12 million under this agreement which had an interest only period of six months, followed with athirty-two month principal interest period at a rate of 8.25%. As of October 14, 2015, the principal balance of the loan was paid in full and no amounts remainoutstanding.Cash FlowsThe following table sets forth the significant sources and uses of cash for the periods (in thousands): Years Ended December 31,Cash sources and uses:2017 2016 2015 Net cash used in operating activities$(50,125) $(63,815) $(99,708) Net cash provided by (used in) investing activities16,431 94,065 (169,496) Net cash provided by financing activities779 608 161,347 Net (decrease) increase in cash and cash equivalents$(32,915) $30,858 $(107,857)Operating ActivitiesNet cash used in operating activities of $50.1 million for the year ended December 31, 2017 was primarily the result of our $71.0 million net loss, offset bythe change in operating assets and liabilities and the add-back of non-cash expenses of $16.1 million for stock based compensation, $1.2 million for animpairment loss on financial assets and $1.1 million of depreciation of property and equipment. The change in operating assets and liabilities includes anincrease in accounts payable and accrued liabilities of $3.1 million, offset by an increase in prepaid expenses and other assets of $0.2 million and an increaseof $0.1 million in accounts receivable.Net cash used in operating activities of $63.8 million for the year ended December 31, 2016 was primarily the result of our $76.4 million net loss and thechange in operating assets and liabilities, offset by the add-back of non-cash expenses of $16.2 million for stock based compensation, $1.2 million ofamortization of premiums on investments and $1.1 million of depreciation of property and equipment. The change in operating assets and liabilities includesa decrease in accounts payable and accrued liabilities of $10.1 million, offset by a decrease in prepaid expenses and other assets of $3.2 million and adecrease of $0.9 million in accounts receivable due to a decrease in reimbursable expenses related to our contract with BARDA.Net cash used in operating activities of $99.7 million for the year ended December 31, 2015 was primarily the result of our $117.4 million net loss, offset bythe add-back of non-cash expenses of $13.0 million for stock based compensation and $1.6 million of amortization of premiums on investments. The changein operating assets and liabilities includes an increase in accounts payable and accrued liabilities of $7.7 million primarily related to increased research anddevelopment activities for our Phase 3 SUPPRESS clinical trial, offset by an increase in prepaid expenses and other assets of $3.0 million and an increase of$2.4 million in accounts receivable due to an increase in reimbursable expenses related to our contract with BARDA.Investing ActivitiesNet cash provided by investing activities of $16.4 million during the year ended December 31, 2017 was primarily the result of maturities and sale of short-term investments, offset by purchases of long-term investments. Net cash provided by investing activities of $94.1 million during the year endedDecember 31, 2016 was primarily the result of maturities of short-term investments, offset by purchases of short-term and long-term investments. Net cashused in investing activities of $169.5 million during the year ended December 31, 2015 was primarily the result of purchases of short-term and long-terminvestments, offset by sales and maturities of short-term and long-term investments.Financing ActivitiesNet cash provided by financing activities of $0.8 million for the year ended December 31, 2017 was primarily the result of $0.8 million from the exercise ofstock options and purchases under the ESPP. Net cash provided by financing activities of $0.6 million for the year ended December 31, 2016 was primarilythe result of $0.6 million from the exercise of stock options and purchases under the ESPP. Net cash provided by financing activities of $161.3 million for theyear ended December 31, 2015 was primarily the result of approximately $161.9 million in net proceeds from the completion of a public offering of ourcommon stock and $4.2 million from the exercise of stock options, warrants and purchases under the ESPP, offset by $4.7 million in debt repayment and fees.64On June 16, 2015, we completed an underwritten public offering of 4,341,250 shares of common stock, including 566,250 shares sold pursuant to the fullexercise of an option granted to the underwriters to purchase additional shares of common stock. All of the shares were offered by us at a price to the public of$39.75 per share. The net proceeds from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by us,were approximately $161.9 million. The securities described above were offered by us pursuant to an automatic shelf registration statement whichimmediately became effective by rule of the SEC on June 9, 2015.Future Funding RequirementsTo date, we have not generated any revenue from product sales. We do not know when, or if, we will generate any revenue from product sales. We do notexpect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize brincidofovir or any of ourother product candidates. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as wecontinue the research, development and clinical trials of, and seek regulatory approval for, our product candidates. Furthermore, subject to obtainingregulatory approval of any of our product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturingand distribution. We anticipate that we will need substantial additional funding in connection with our continuing operations. Based upon our currentoperating plan, we believe that our existing cash, cash equivalents and short-term investments, will enable us to fund our operating expenses and capitalrequirements for at least the next 12 months. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capitalresources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of ourproduct candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development ofour product candidates.Our future capital requirements will depend on many factors, including:•the willingness of the FDA and/or foreign regulators to accept the results from Study 999, as well as our other completed and plannedclinical and preclinical studies and other work, as the basis for review and approval of brincidofovir for the treatment of AdV infection;•the progress, costs, results and timing of future clinical trials of brincidofovir for other potential indications, including prevention ofmultiple DNA virus infections and treatment of AdV, BKV and smallpox;•the willingness of the FDA and/or foreign regulators to accept clinical and preclinical studies and other work, as the basis for review andapproval of brincidofovir for other potential indications;•the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals;•the ability to continue to receive government funding;•the achievement of milestones under our agreement with ContraVir;•the number and characteristics of product candidates that we pursue, including our product candidates in preclinical development;•the ability of our product candidates to progress through clinical development successfully;•our need to expand our research and development activities;•the costs associated with securing, establishing and maintaining commercialization and manufacturing capabilities;•the costs of acquiring, licensing or investing in businesses, products, product candidates and technologies;•our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of anypayments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense andenforcement of any patents or other intellectual property rights;•our need and ability to hire additional management and scientific and medical personnel;•the effect of competing technological and market developments;•our need to implement additional internal systems and infrastructure, including financial and reporting systems; and•the economic and other terms, timing and success of our existing licensing arrangements and any collaboration, licensing or otherarrangements into which we may enter in the future.Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equityofferings, debt financings, government or other third-party funding, marketing and distribution arrangements, or other collaborations, strategic alliances orlicensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of ourcommon stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of ourcommon stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific65actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government or otherthird-party funding, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we mayhave to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that maynot be favorable to us.CONTRACTUAL OBLIGATIONS AND COMMITMENTSThe following table summarizes our contractual obligations at December 31, 2017 (in thousands): Total Less Than 1Year 1 – 3 Years 3 – 5 Years More Than 5 YearsOperating leases (1)$2,347 $735 $1,430 $182 $—Total$2,347 $735 $1,430 $182 $—(1)Consists of our corporate headquarters lease encompassing 24,862 square feet of office space that expires in February 2021, and our laboratoryleases encompassing a total of approximately 10,274 square feet which are located in Durham and Research Triangle Park, North Carolina andexpire in July 2021 and August 2018, respectively.In addition to the amounts set forth in the table above, we have payment obligations under license agreements that are contingent upon future events such asour achievement of specified development, regulatory and commercial milestones. Under our license agreement with UC, we made milestone and sublicensepayments totaling approximately $1.2 million through December 31, 2017. We will be required to make additional payments when certain milestones areachieved and we are obligated to pay royalties based on future product sales. As of December 31, 2017, we were unable to estimate the timing or likelihoodof achieving the milestones or making future product sales and, therefore, any related payments are not included in the table above. In connection with thedevelopment and commercialization of brincidofovir and CMX157 (which we have licensed to ContraVir Pharmaceuticals), in addition to royalties onproduct sales, we could be required to pay UC up to an aggregate of $3.4 million in milestone payments, assuming the achievement of all applicablemilestone events under the license agreement. Under our license agreement with the University of Michigan, we are required to pay minimum royalties from2024 through the expiration of the last licensed issued patent (which we estimate to be $20,000 in the year 2024), but any additional royalties that may bepayable under the University of Michigan agreement are not estimable. Additionally, we enter into contracts in the normal course of business with CROs for clinical trials and clinical supply manufacturing and with vendors forpreclinical research studies and other services and products for operating purposes, which generally provide for termination or cancellation within 30 days ofnotice, and therefore are not included in the table above. We also have agreements with our executive officers that require the funding of specific payments, ifcertain events occur, such as a change in control or the termination of employment without cause. These potential payment obligations are not included inthe table above.Off-Balance Sheet ArrangementsDuring the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-termduration of our investment portfolio and the low risk profile of our investments, an immediate 10.0% change in interest rates would not have a material effecton the fair market value of our portfolio. Accordingly, we would not expect our operating results or cash flows to be affected to any significant degree by theeffect of a sudden change in market interest rates on our investment portfolio.We do not believe that our cash, cash equivalents and available-for-sale investments have significant risk of default or illiquidity. While we believe our cashand cash equivalents and available-for-sale investments do not contain excessive risk, we cannot provide absolute assurance that in the future ourinvestments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or morefinancial institutions that are in excess of federally insured limits.Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material effect on our results ofoperations for the years ended December 31, 2017 or 2016.66ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReports of Independent Registered Public Accounting Firm68Consolidated Balance Sheets as of December 31, 2017 and 201670Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2017, 2016 and 201571Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2017, 2016 and 201572Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 201573Notes to Consolidated Financial Statements7467REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Stockholders of Chimerix, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Chimerix, Inc. (the “Company”) as of December 31, 2017 and 2016, the relatedconsolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the three years in the period endedDecember 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operationsand its cash flows for each of the three years in the period ended December 31, 2017, in conformity with US generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2018 expressed an unqualifiedopinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion.We have served as the Company's auditor since 2008. /s/ Ernst & Young LLPRaleigh, North CarolinaMarch 1, 201868REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Stockholders of Chimerix, Inc.Opinion on Internal Control over Financial ReportingWe have audited Chimerix, Inc.’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In ouropinion, Chimerix, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, basedon the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of Chimerix, Inc. (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensiveloss, stockholders‘ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and our reportdated March 1, 2018 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards ofthe PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financialreporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing therisk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, andperforming such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ Ernst & Young LLPRaleigh, North CarolinaMarch 1, 201869CHIMERIX, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data) December 31, 2017 2016ASSETS Current assets: Cash and cash equivalents$18,548 $51,463 Short-term investments, available-for-sale132,972 180,558 Accounts receivable1,682 1,599 Prepaid expenses and other current assets3,331 2,845 Total current assets156,533 236,465Long-term investments76,731 47,407Property and equipment, net of accumulated depreciation1,894 2,843Other long-term assets72 55 Total assets$235,230 $286,770LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable$3,812 $3,890 Accrued liabilities9,384 6,215 Total current liabilities13,196 10,105Lease-related obligations224 441 Total liabilities13,420 10,546Stockholders’ equity: Preferred stock, $0.001 par value, 10,000,000 shares authorized at December 31, 2017 and 2016; no shares issuedand outstanding as of December 31, 2017 and 2016— —Common stock, $0.001 par value; 200,000,000 shares authorized at December 31, 2017 and 2016; 47,505,532 and46,522,475 shares issued and outstanding at December 31, 2017 and 2016, respectively47 46 Additional paid-in capital709,514 692,422 Accumulated other comprehensive loss, net(963) (440) Accumulated deficit(486,788) (415,804) Total stockholders’ equity221,810 276,224 Total liabilities and stockholders’ equity$235,230 $286,770The accompanying notes are an integral part of the consolidated financial statements.70CHIMERIX, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(in thousands, except share and per share data) Years Ended December 31, 2017 2016 2015Revenues: Contract revenue$4,494 $5,702 $9,214 Collaboration and licensing revenue— — 1,548 Total revenues4,494 5,702 10,762Operating expenses: Research and development49,448 58,647 97,717 General and administrative27,148 25,007 31,296 Total operating expenses76,596 83,654 129,013 Loss from operations(72,102) (77,952) (118,251)Other (expense) income: Other-than-temporary impairment of investment(1,160) — — Interest income, net2,278 1,562 879 Net loss(70,984) (76,390) (117,372)Other comprehensive loss: Unrealized (loss) gain on investments, net(523) 324 (799) Comprehensive loss$(71,507) $(76,066) $(118,171)Per share information: Net loss, basic and diluted$(1.51) $(1.65) $(2.67) Weighted-average shares outstanding, basic and diluted46,963,430 46,267,064 43,878,326The accompanying notes are an integral part of the consolidated financial statements.71CHIMERIX, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(in thousands, except share and per share data) CommonStock AdditionalPaid-in Capital Accumulated OtherComprehensiveGain (Loss) AccumulatedDeficit Total Stockholders’Equity (Deficit)Balance, December 31, 201441 496,602 35 (222,042) 274,636Share-based compensation— 12,959 — — 12,959Exercise of stock options— 2,107 — — 2,107Exercise of warrants1 1,000 — — 1,001Employee stock purchase plan purchases— 1,048 — — 1,048Issuance of 4,341,250 shares of common stock at $39.75 per share, netof issuance cost of $10,6854 161,875 — — 161,879Comprehensive loss: Unrealized loss on investments, net— — (799) — (799)Net loss— — — (117,372) (117,372)Total comprehensive loss (118,171)Balance, December 31, 201546 675,591 (764) (339,414) 335,459Share-based compensation— 16,223 — — 16,223Exercise of stock options— 168 — — 168Employee stock purchase plan purchases— 440 — — 440Comprehensive loss: Unrealized gain on investments, net— — 324 — 324Net loss— — — (76,390) (76,390)Total comprehensive loss (76,066)Balance, December 31, 201646 692,422 (440) (415,804) 276,224Share-based compensation1 16,109 — — 16,110Exercise of stock options— 121 — — 121Employee stock purchase plan purchases— 712 — — 712University of Michigan stock issuance— 150 — — 150Comprehensive loss: Unrealized loss on investments, net— — (523) — (523)Net loss— — — (70,984) (70,984)Total comprehensive loss (71,507)Balance, December 31, 2017$47 $709,514 $(963) $(486,788) $221,810The accompanying notes are an integral part of the consolidated financial statements.72CHIMERIX, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Years Ended December 31, 2017 2016 2015Cash flows from operating activities: Net loss$(70,984) $(76,390) $(117,372) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of property and equipment1,091 1,063 657 Amortization of debt costs— — 64 Amortization of premium/discount on investments(5) 1,223 1,622 Share-based compensation16,110 16,223 12,959 Other-than-temporary impairment of investment1,160 — — Amortization of lease-related obligations(319) 132 19 Changes in operating assets and liabilities: Accounts receivable(83) 861 (2,354) Prepaid expenses and other assets(168) 3,215 (3,028) Accounts payable and accrued liabilities3,073 (10,142) 7,725 Net cash used in operating activities(50,125) (63,815) (99,708)Cash flows from investing activities: Purchases of property and equipment(151) (841) (2,393) Purchases of short-term investments— (23,992) (60,297) Purchases of long-term investments(162,613) (79,381) (234,791) Proceeds from sales of short-term investments13,500 — 1,003 Proceeds from maturities of short-term investments165,695 198,279 126,742 Proceeds from maturities of long-term investments— — 240 Net cash provided by (used in) investing activities16,431 94,065 (169,496)Cash flows from financing activities: Proceeds from exercise of stock options121 168 2,107 Proceeds from employee stock purchase plan712 440 1,048 Proceeds from exercise of warrants— — 1,001 Proceeds from public offerings, net of offering costs— — 161,879 Payments of deferred offering costs(54) — — Payments for deferred financing costs— — (338) Repayments of debt— — (4,350) Net cash provided by financing activities779 608 161,347Net (decrease) increase in cash and cash equivalents(32,915) 30,858 (107,857) Cash and cash equivalents: Beginning of period51,463 20,605 128,462 End of period$18,548 $51,463 $20,605Supplemental disclosure of cash flow information Cash paid for interest$— $— $158 Non-cash addition to deferred offering costs$276 $— $—The accompanying notes are an integral part of the consolidated financial statements.73CHIMERIX, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1. The Business and Summary of Significant Accounting PoliciesDescription of BusinessChimerix, Inc. (the Company) is a biopharmaceutical company committed to discovering, developing and commercializing medicines that improveoutcomes for immunocompromised patients. The Company was founded in 2000 based on the promise of our proprietary lipid conjugate technology tounlock the potential of some of the most broad-spectrum antivirals by enhancing their antiviral activity and safety profiles in convenient dosing regimens.The Company's lead compound, brincidofovir, is in development as an oral and intravenous (IV) formulation for the prevention and treatment of DNAviruses, including smallpox, adenoviruses, and the human herpesviruses. The Company is also advancing the development of CMX521 for the treatment andprevention of norovirus. In addition, the Company has an active discovery program focusing on viral targets for which limited or no therapies are currentlyavailable.Basis of PresentationThe consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries. The accompanying consolidated financialstatements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of theCompany’s consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses,and the disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Although these estimates are basedon knowledge of current events and actions the Company may undertake in the future, actual results may ultimately differ from these estimates andassumptions.ReclassificationsCertain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. Thesereclassifications had no effect on previously reported net income or stockholders' equity (deficit).Cash and Cash EquivalentsThe Company considers any highly liquid instrument with an original maturity of three months or less at acquisition to be a cash equivalent. Cashequivalents consist of money market funds and commercial paper.InvestmentsInvestments consist primarily of brokered certificates of deposit, U.S. Treasury securities and stock of a U.S. corporation. The Company invests in high-creditquality investments in accordance with its investment policy which minimizes the probability of loss.Available-for-sale securities are carried at fair value as determined by quoted market prices, with the unrealized gains and losses, net of tax, reported as aseparate component of stockholders equity. Realized gains and losses are determined using the specific identification method and transactions are recordedon a settlement date basis in interest income or expense, net. Investments with original maturities beyond three months at the date of purchase and whichmature on, or less than twelve months from, the balance sheet date are classified as short-term. Investments with a maturity beyond twelve months from thebalance sheet date are classified as long-term. The Company periodically reviews available-for-sale securities for other-than-temporary declines in fair valuebelow the cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Companyevaluates, among other things, the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and anychanges thereto; and the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized costbasis. The Company does not intend to sell, and is not likely to be required to sell, the available-for-sale securities in an unrealized loss position beforerecovery of the amortized cost bases of the securities, which may be maturity. Any such declines in value judged to be other-than-temporary on available-for-sale securities are reported in other-than-temporary impairment of investment. For the year ended December 31, 2017, the Company determined the decline invalue for its investment in ContraVir Pharmaceuticals common stock to be other-than temporary. As such, during the fourth quarter of 2017, the Companyreclassified a loss of $1.2 million from accumulated other comprehensive loss, net in the Consolidated Balance Sheets to other-than-temporary impairment ofinvestment in the Consolidated Statements of Operations and Comprehensive Loss. There were no such declines in value for the years ended December 31,2016 and 2015.74The Company recognizes interest income on an accrual basis in interest income, net in the Consolidated Statements of Operations and Comprehensive Loss.Concentration of Credit RiskFinancial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, short-term investments, long-term investments and accounts receivable. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of default by the financialinstitutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. Accounts receivable represent amounts due froman agency of the federal government.Accounts ReceivableAccounts receivable at December 31, 2017 and December 31, 2016 consisted of amounts billed under the Company’s contract with the BiomedicalAdvanced Research and Development Authority (BARDA). Receivables under the BARDA contract are recorded as qualifying research activities areconducted and invoices from the Company’s vendors are received. The Company carries its accounts receivable at cost less an allowance for doubtfulaccounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance based on its history of collections and write-offsand the current status of all receivables. The Company does not accrue interest on trade receivables. If accounts become uncollectible, they will be written offthrough a charge to the allowance for doubtful accounts. The Company has not recorded a charge to allowance for doubtful accounts as management believesall receivables are fully collectible.Fair Value of Financial InstrumentsThe carrying amounts of certain financial instruments, including accounts receivable, accounts payable and accrued expenses approximate their fair valuesdue to the short-term nature of such instruments.For assets and liabilities recorded at fair value, it is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservableinputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where thereexists limited or no observable market data are based primarily upon estimates and are often calculated based on the economic and competitive environment,the characteristics of the asset or liability and other factors. Therefore, fair value measurements cannot be determined with precision and may not be realizedin an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique and changes inthe underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the calculated current or future fairvalues. The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability ofthe assumptions used to determine fair value. An adjustment to the pricing method used within either Level 1 or Level 2 inputs could generate a fair valuemeasurement that effectively falls in a lower level in the hierarchy. These levels are:•Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the abilityto access.•Level 2 — Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets orliabilities in markets that are not active, and models for which all significant inputs are observable, either directly or indirectly.•Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates hierarchy disclosures and, basedon various factors, it is possible that an asset or liability may be classified differently from period to period. However, the Company expects that changes inclassification between levels will be rare. There were no transfers between Level 1 and Level 2 or transfers to or from Level 3 during the year endedDecember 31, 2017. When the 18 month restriction on selling the Company's investment in ContraVir Pharmaceuticals ended on June 17, 2016, theinvestment was transferred from Level 3 to Level 2 as the fair value was based on quoted prices for similar assets and there were no significant unobservableinputs. The Company's investment in ContraVir Pharmaceuticals transferred from Level 2 to Level 1 when the Company converted its investment in Series BPreferred shares into common stock in September 2016.75At December 31, 2017 and 2016, the Company had cash equivalents, consisting of money market funds, and short-term and long-term investments consistingof U.S. Treasury securities, whose value is based on using quoted market prices. Accordingly, these securities are classified as Level 1.At December 31, 2017, the Company had cash equivalents, consisting of commercial paper, and at December 31, 2016, the Company had cash equivalentsconsisting of commercial paper, and short-term investments comprised of brokered certificates of deposits, for which quoted prices are not available that arevalued using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’scredit rating, prepayment assumptions and other factors such as credit loss assumptions. Accordingly, these securities are classified as Level 2. At December 31, 2015, the Company's preferred stock investment in ContraVir Pharmaceuticals was categorized as Level 3 as there were significantunobservable inputs. The valuation of the investment at December 31, 2015 was calculated on an as if converted to common share basis with a discount forlack of marketability applied due to the 18 month restriction from the date of the investment on selling the converted common shares, which ended on June17, 2016. An option pricing model was used to determine the discount for lack of marketability of 10% at December 31, 2015. The key unobservable inputsused in the option pricing model at December 31, 2015 were (i) exercise price - $1.54, (ii) dividend yield - 0%, (iii) expected holding period - 0.46 years, (iv)risk-free rate - 0.44%, and (v) volatility - 75%. On September 30, 2016, the Company converted its preferred stock investment in ContraVir into 1,071,429shares of ContraVir common stock, which was categorized as a Level 1 asset and valued based on ContraVir's common stock value. The Company evaluates,among other things, the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and any changesthereto; and the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its market value. For theyears ended December 31, 2016 and 2015, the Company did not intend to sell, and was not more likely than not to be required to sell, its investment inContraVir before recovery of its market value, therefore the changes in the fair value of ContraVir common shares was recorded to unrealized (loss) gain oninvestments, net in the Consolidated Statements of Operations and Comprehensive Loss.There was no material re-measurement to fair value of financial assets and liabilities that are not measured at fair value on a recurring basis. For additionalinformation regarding the Company's investments, please refer to Note 2, "Investments."Below is a table that presents information about certain assets measured at fair value on a recurring basis (in thousands): Fair Value Measurements December 31, 2017 Total Quoted Prices inActive Marketsfor Identical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservable Inputs(Level 3)Cash equivalents Money market funds$10,816 $10,816 $— $— Commercial paper3,995 — 3,995 — Total cash equivalents14,811 10,816 3,995 —Short-term investments U.S. Treasury securities132,586 132,586 — — Common stock of U.S. corporation386 386 — — Total short-term investments132,972 132,972 — —Long-term investments U.S. Treasury securities76,731 76,731 — — Total long-term investments76,731 76,731 — — Total assets$224,514 $220,519 $3,995 $—76 Fair Value Measurements December 31, 2016 Total Quoted Prices inActive Marketsfor Identical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservable Inputs(Level 3)Cash equivalents Money market funds$15,733 $15,733 $— $— Commercial paper35,097 — 35,097 — Total cash equivalents50,830 15,733 35,097 —Short-term investments Certificates of deposit7,450 — 7,450 — U.S. Treasury securities171,822 171,822 — — Common stock of U.S. corporation1,286 1,286 — — Total short-term investments180,558 173,108 7,450 —Long-term investments U.S. Treasury securities47,407 47,407 — — Total long-term investments47,407 47,407 — — Total assets$278,795 $236,248 $42,547 $—Below is a table that presents a reconciliation of the beginning and ending balances of assets and liabilities measured at fair value on a recurring basis usingsignificant unobservable inputs (Level 3) (in thousands): Fair ValueMeasurements(Level 3)Preferred stock of U.S. corporation: Fair value at December 31, 20151,485 Fair value decrease recorded in other comprehensive loss(371)Fair value transferred to Level 2(1,114)Fair value at December 31, 2016$—Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets consisted of the following (in thousands): December 31, 2017 2016Prepaid research and development expenses$1,138 $843Interest receivable601 772Prepaid insurance481 389Other prepaid expenses and current assets1,111 841 Total prepaid expenses and other current assets$3,331 $2,845Property and EquipmentProperty and equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives ofthe assets, which generally range from three to five years. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term ofthe related lease. Maintenance and repairs are charged against expense as incurred.77Impairment of Long-Lived AssetsThe Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not berecoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. To date, no such write-downs have occurred.Deferred Lease ObligationsThe Company recognizes rent expense on a straight-line basis over the non-cancelable term of its operating lease and records the difference between cash rentpayments and the recognition of rent expense as a deferred rent liability. The Company also records landlord-funded lease incentives, such as reimbursableleasehold improvements, as a deferred rent liability, which is amortized as a reduction of rent expense over the non-cancelable term of its operating lease.Accrued LiabilitiesAccrued liabilities consisted of the following (in thousands): December 31, 2017 2016Accrued compensation$3,678 $2,906Accrued research and development expenses3,384 2,257Accrued indemnification claim1,000 —Other accrued liabilities1,322 1,052 Total accrued liabilities$9,384 $6,215Revenue RecognitionThe Company’s revenues generally consist of (i) contract and grant revenue – revenue generated under federal contracts and other awarded grants, and (ii)collaboration and licensing revenue – revenue related to non-refundable upfront fees, royalties and milestone payments earned under license agreements.Revenue is recognized in accordance with the criteria outlined in the Securities and Exchange Commission (SEC)’s Topic 13 and Accounting StandardsCodification (ASC) 605-25 and by the Financial Accounting Standards Board. Following these accounting pronouncements, revenue is recognized when allfour of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery of the products and/or services has occurred and risk ofloss has passed; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured.For arrangements that involve the delivery of more than one element, each product, service and/or right to use assets is evaluated to determine whether itqualifies as a separate unit of accounting. This determination is based on whether the deliverable has “stand-alone value” to the customer. The considerationthat is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling prices of each deliverable. The considerationallocated to each unit of accounting is recognized as the related goods and services are delivered, limited to the consideration that is not contingent uponfuture deliverables. If the arrangement constitutes a single unit of accounting, the revenue recognition policy must be determined for the entire arrangementand the consideration received is recognized over the period of inception through the date the last deliverable within the single unit of accounting isexpected to be delivered. Revisions to the estimated period of recognition are reflected in revenue prospectively.Non-refundable upfront fees are recorded as deferred revenue and recognized into revenue as license fees from collaborations on a straight-line basis over theestimated period of the Company’s substantive performance obligations. If the Company does not have substantive performance obligations, the Companyrecognizes non-refundable upfront fees into revenue through the date the deliverable is satisfied. Analyzing the arrangement to identify deliverables requiresthe use of judgment and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation.Milestone payments are recognized when earned, provided that (i) the milestone event is substantive; (ii) there is no ongoing performance obligation relatedto the achievement of the milestone earned; and (iii) it would result in additional payments. Milestone payments are considered substantive if all of thefollowing conditions are met: the milestone payment is non-refundable; achievement of the milestone was not reasonably assured at the inception of thearrangement; substantive effort is involved to achieve the milestone; and the amount of the milestone appears reasonable in relation to the effort expended,the other milestones78in the arrangement; and the related risk associated with the achievement of the milestone. Contingent based event payments the Company may receive undera license or collaboration agreement will be recognized when received.For the years ended December 31, 2017, 2016 and 2015, contract and grant revenue consisted only of revenue from the BARDA contract as there was nogrant revenue. The Company recognizes contract and grant revenue as qualifying research activities are conducted based on invoices received from theCompany’s vendors. Changes in fringe and indirect rates are recognized as a change in estimate in the period such rate changes are approved by BARDA. Forthe year ended December 31, 2015, collaboration and licensing revenue primarily consisted of the upfront license fee payment from ContraVir recognizedwhen the Company completed its performance obligations.Research and Development Prepaids and AccrualsAs part of the process of preparing financial statements, the Company is required to estimate its expenses resulting from its obligation under contracts withvendors and consultants and clinical site agreements in connection with its research and development efforts. The financial terms of these contracts aresubject to negotiations which vary contract to contract and may result in payment flows that do not match the periods over which materials or services areprovided to the Company under such contracts.The Company’s objective is to reflect the appropriate research and development expenses in its financial statements by matching those expenses with theperiod in which services and efforts are expended. The Company accounts for these expenses according to the progress of its research and developmentefforts. The Company determines prepaid and accrual estimates through discussion with applicable personnel and outside service providers as to the progressor state of communication of clinical trials, or other services completed. The Company adjusts its rate of research and development expense recognition ifactual results differ from its estimates. The Company makes estimates of its prepaid and accrued expenses as of each balance sheet date in its financialstatements based on facts and circumstances known at that time. Although the Company does not expect its estimates to be materially different from amountsactually incurred, its understanding of status and timing of services performed relative to the actual status and timing of services performed may vary and mayresult in the Company reporting amounts that are too high or too low for any particular period. Through December 31, 2017, there had been no materialadjustments to the Company’s prior period estimates of prepaid and accruals for research and development expenses. The Company’s research anddevelopment prepaids and accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors.Research and Development ExpensesMajor components of research and development costs include cash compensation, stock based compensation, pre-clinical studies, clinical trial and relatedclinical manufacturing, drug development, materials and supplies, legal, regulatory compliance, and fees paid to consultants and other entities that conductcertain research and development activities on the Company’s behalf. Research and development costs, including upfront fees and milestones paid tocontract research organizations, are expensed as goods as received or services rendered. Costs incurred in connection with clinical trial activities for whichthe underlying nature of the activities themselves do not directly relate to active research and development, such as costs incurred for market research andfocus groups linked to clinical strategy as well as costs to build the Company’s brand, are not included in research and development costs but are reflected asgeneral and administrative costs.Interest Income, NetInterest income, net primarily includes interest earned on short-term and long-term investments, interest incurred on loans payable, the amortization ofdeferred financing costs related to fees paid to attorneys and other non-lender entities in order to acquire debt, and the amortization of debt discount relatedto fees paid to the lender in order to acquire debt.Other-than-temporary Impairment of InvestmentOther-than-temporary impairment of investment includes write-downs in fair value of available-for-sale securities judged to be other-than-temporarilyimpaired.Income TaxesDeferred tax assets and liabilities are determined based on differences between the financial and tax reporting bases of assets and liabilities and are measuredusing enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established when theCompany determines that it is more likely than not that some portion of a79deferred tax asset will not be realized. The Company has incurred operating losses from April 7, 2000 (inception) through December 31, 2017, and thereforehas not recorded any current provision for income taxes.Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustainedon examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particulartax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves foruncertain tax positions.Share-Based CompensationThe Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employeestock options, restricted stock units and the employee stock purchase plan purchase rights, based on estimated fair values. The fair value of employee stockoptions and employee stock purchase plan purchase rights is estimated on the grant date using the Black-Scholes valuation model. The grant-date fair valuefor restricted stock units is based upon the market price of the Company's common stock on the date of the grant. The value of the portion of the award that isultimately expected to vest is recorded as expense over the requisite service periods. For performance-based awards compensation cost is recognized when itis probable that the performance criteria will be met.The Company estimates forfeitures at the time of grant, and revises those estimates in subsequent periods if actual forfeitures differ from its estimates. TheCompany uses historical data to estimate forfeitures and record share-based compensation expense only for those awards that are expected to vest. To theextent that actual forfeitures differ from the Company’s estimates, the difference is recorded as a cumulative adjustment in the period the estimates wererevised. For the years ended December 31, 2017, 2016 and 2015, the Company applied a forfeiture rate based on the Company’s historical forfeitures.401(k) PlanThe Company maintains a defined contribution employee retirement plan (“401(k) plan”). In March 2015, the Company began making matchingcontributions into the 401(k) plan on behalf of participants. For the years ended December 31, 2017, 2016 and 2015, the Company recognized expenses formatching contributions of $0.3 million, $0.4 million and $0.3 million, respectively.Basic and Dilutive Net Loss Per Share of Common StockBasic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding duringthe period, excluding the dilutive effects of warrants to purchase common stock, non-vested restricted stock, stock options, and employee stock purchaseplan purchase rights. Diluted net loss per share of common stock is computed by dividing net loss by the sum of the weighted-average number of shares ofcommon stock outstanding during the period plus the potential dilutive effects of warrants to purchase common stock, non-vested restricted stock, stockoptions, and employee stock purchase plan purchase rights outstanding during the period calculated in accordance with the treasury stock method, but areexcluded if their effect is anti-dilutive. Because the impact of these items is anti-dilutive during the periods of net loss, there was no difference between basicand diluted loss per share of common stock at December 31, 2017, 2016 and 2015.SegmentsThe Company operates in only one segment. The chief operating decision-maker, who is the Company’s Chief Executive Officer, and management use cashflows as the primary measure to manage the business and do not segment the business for internal reporting or decision making.Impact of Recently Issued Accounting StandardsIn May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASUestablishes a principles-based approach for accounting for revenue arising from contracts with customers and supersedes existing revenue recognitionguidance. The ASU provides that an entity should apply a five-step approach for recognizing revenue, including (1) identify the contract with a customer; (2)identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations inthe contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. Also, the entity must provide various disclosures concerningthe nature, amount and timing of revenue and cash flows arising from contracts with customers. The FASB has issued several updates to the standard which(1) defer the original effective date to annual periods and interim periods within those annual periods beginning after December 15, 2017, while allowing forearly adoption as of January 1, 2017 (ASU 2015-14); (2) clarify the application of the principal versus agent guidance (ASU 2016-08); and (3) clarify theguidance on inconsequential and perfunctory80promises and licensing (ASU 2016-10). The Company has evaluated its contract with BARDA and license agreement with ContraVir, and the adoption of theASU will not have a material impact on its consolidated financial statements. The Company plans to use the full retrospective method of adoption effectiveJanuary 1, 2018. The Company is implementing changes to its accounting policies, internal controls and disclosures to support the new standard; however,these changes are not anticipated to be significant.In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall (Subtopic 825-10)-Recognition and Measurement of Financial Assetsand Financial Liabilities.” The new standard enhances reporting for financial instruments. The ASU is effective for financial statements issued for annualperiods and interim periods within those annual periods beginning after December 15, 2017. Earlier adoption is permitted for interim and annual reportingperiods as of the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2016-01 to have a material impact on itsconsolidated financial statements.In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which increases transparency and comparability among companies accountingfor lease transactions. The most significant change of this update will require the recognition of lease assets and liabilities on the balance sheet for lessees foroperating lease arrangements with lease terms greater than 12 months. This update will require a modified retrospective application which includes a numberof optional practical expedients related to the identification and classification of leases commenced before the effective date. This ASU is effective forfinancial statements issued for annual periods and interim periods within those annual periods, beginning after December 18, 2018. The Company iscurrently analyzing the impact of the adoption of ASU No. 2016-02 on its consolidated financial statements.Impact of Recently Adopted Accounting StandardsIn March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting", which simplifies several aspects ofaccounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, andclassification on the statement of cash flows. The ASU was effective for financial statements issued for annual periods and interim periods within those annualperiods, beginning after December 15, 2016, with early adoption permitted. ASU No. 2016-09 became effective for the Company beginning in the firstquarter of 2017. The Company elected to continue estimating the number of awards expected to be forfeited and adjusting the estimate when it is no longerprobable that the employee will fulfill the service condition. The Company's adoption of ASU No. 2016-09 did not have a material impact on itsconsolidated financial statements.Note 2. Investments The following tables summarize the Company's short-term and long-term investments (in thousands): December 31, 2017 Amortized Cost Gross UnrealizedGains GrossUnrealizedLosses EstimatedFair ValueU.S. Treasury securities$210,280 $— $(963) $209,317Common stock of U.S. corporation386 — — 386 Total investments$210,666 $— $(963) $209,703 December 31, 2016 Amortized Cost Gross UnrealizedGains GrossUnrealizedLosses EstimatedFair ValueCertificates of deposit$7,445 $5 $— $7,450U.S. Treasury securities219,415 15 (201) 219,229Common stock of U.S. corporation1,545 — (259) 1,286 Total investments$228,405 $20 $(460) $227,96581The following tables summarize the Company's investments with unrealized losses, aggregated by investment type and the length of time that individualinvestments have been in a continuous unrealized loss position (in thousands, except number of securities): December 31, 2017 Less than 12 Months Greater than 12 Months Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized LossU.S. Treasury securities $170,390 $(871) $38,927 $(92) $209,317 $(963)Total $170,390 $(871) $38,927 $(92) $209,317 $(963)Number of securities with unrealizedlosses 39 7 46 December 31, 2016 Less than 12 Months Greater than 12 Months Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized LossU.S. Treasury securities $128,204 $(201) $— $— $128,204 $(201)Preferred stock of U.S. corporation 1,286 (259) — — 1,286 $(259)Total $129,490 $(460) $— $— $129,490 $(460)Number of securities with unrealizedlosses 24 — 24The following table summarizes the scheduled maturity for the Company's investments at December 31, 2017 (in thousands): December 31, 2017Maturing in one year or less$132,586Maturing after one year through two years76,731Total debt investments$209,317Common stock of U.S. corporation386Total investments$209,703Note 3. Property and EquipmentProperty and equipment, net of accumulated depreciation consisted of the following (in thousands): December 31, 2017 2016Lab equipment$2,496 $2,419Leasehold improvements1,552 1,570Computer equipment1,170 1,262Office furniture and equipment520 586 Property and equipment5,738 5,837 Less accumulated depreciation(3,844) (2,994) Property and equipment, net of accumulated depreciation$1,894 $2,843Note 4. Loan PayableOn January 27, 2012, the Company entered into a Loan and Security Agreement (LSA) with Silicon Valley Bank (SVB) and MidCap Financial SBIC, LP(MidCap) allowing for borrowings up to $15.0 million, split between a first tranche of $3.0 million borrowed at the time of the agreement, and a secondtranche of up to $12.0 million that was available to be drawn by December 31, 2012 upon meeting one of three stated financial and/or operational goals. Theborrowings under the LSA were collateralized by a security interest in all of the Company's assets, excluding its intellectual property.82The first tranche, which was paid in full as of June 30, 2015, had an interest-only period of twelve months followed by a principal and interest amortizationperiod of 30 months with interest being charged at 8.25% per year. The second tranche, which was paid in full as of December 31, 2015, had an interest-onlyperiod of six months followed by a principal and interest amortization period of 32 months with interest being charged at 8.25%. There were certain fees inaccordance with the LSA which were recorded as discounts or short-term liabilities depending on the nature of the fees and accreted through interest expenseover the life of the loans. As of December 31, 2015, the LSA was paid in full and no amounts remain outstanding.Note 5. Commitments and ContingenciesLeasesThe Company leases its facilities and certain office equipment under long-term non-cancelable operating leases that expire at various dates through 2021.The Company has the following minimum rental payments under non-cancelable operating lease obligations that existed at December 31, 2017 (inthousands):Years Ending December 31,MinimumRental Payment2018$735201971120207202021182 Total future minimum rental payments$2,348Rent expense under non-cancelable operating leases and other month-to-month equipment rental agreements, including common area maintenance fees,totaled approximately $0.5 million, $0.7 million, and $0.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.SubleaseThe Company subleases 3,537 square feet of its office space under a non-cancelable operating lease that expires February 2021. Total future minimum rentalsunder the non-cancelable operating sublease as of December 31, 2017 are presented below (in thousands):Years Ending December 31,MinimumSublease Rentals2018$75201978202081202114 Total future minimum sublease rentals$248Significance of Revenue SourceThe Company is the recipient of federal research contract funds from BARDA. Periodic audits are required under the grant and contract agreements andcertain costs may be questioned as appropriate under the agreements. Management believes that such amounts in the current year, if any, are not significant.Accordingly, no provision for refundable amounts under the agreements has been made as of December 31, 2017 and 2016.Claims and ContingenciesFrom time to time, the Company is subject to claims arising in the ordinary course of business. As of December 31, 2017, the Company has accrued apotential liability of $1 million to a former director related to an indemnification claim.83Note 6. Stockholders’ Equity (Deficit)Common StockThe Company’s common stock consists of 200 million authorized shares at December 31, 2017 and 2016, and 47.5 million and 46.5 million shares issuedand outstanding at December 31, 2017 and December 31, 2016, respectively.On June 16, 2015, the Company completed an underwritten public offering of 4,341,250 shares of common stock, including 566,250 shares sold pursuant tothe full exercise of an option granted to the underwriters to purchase additional shares of common stock. All of the shares were offered by the Company at aprice to the public of $39.75 per share. The net proceeds from this offering, after deducting underwriting discounts and commissions and other offeringexpenses payable by the Company, were approximately $161.9 million.Shares Reserved for Future IssuanceThe Company has reserved shares of common stock for future issuances as follows: December 31, 2017 2016For exercise of common stock warrants227,794 227,794For exercise of outstanding common stock options4,996,661 4,342,466For delivery upon vesting of outstanding restricted stock units956,299 946,200For future equity awards under the 2013 Equity Incentive Plan1,082,608 662,180For future purchases under the 2013 Employee Stock Purchase Plan1,861,472 1,612,759 Total shares of common stock reserved for future issuances9,124,834 7,791,399Stock OptionsIn connection with the Company’s IPO, the Company adopted the 2013 Equity Incentive Plan (the 2013 Plan). The 2013 Plan provides for the grant ofincentive stock options (ISOs), nonstatutory stock options (NSOs), stock appreciation rights, restricted stock awards, restricted stock unit (RSU) awards,performance-based stock awards, and other forms of equity compensation (collectively, stock awards), all of which may be granted to employees, includingofficers, non-employee directors and consultants of the Company and its affiliates. Additionally, the 2013 Plan provides for the grant of performance cashawards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors andconsultants. Initially, the aggregate number of shares of common stock that may be issued pursuant to stock awards under the 2013 Plan was the sum of (i)1,408,450 shares, plus (ii) 244,717 shares, which was the number of shares reserved for issuance under the Company’s 2012 Equity Incentive Plan (the 2012Plan) at the time the 2013 Plan became effective, plus (iii) any shares subject to outstanding stock options or other stock awards that would have otherwisereturned to the 2012 Plan (such as upon the expiration or termination of a stock award prior to vesting). Additionally, the number of shares of common stockreserved for issuance under the 2013 Plan will automatically increase on January 1 of each year, beginning on January 1, 2014 and continuing through andincluding January 1, 2023, by 2.5% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, or a lessernumber of shares determined by the Company’s board of directors. The maximum number of shares that may be issued upon the exercise of ISOs under the2013 Plan is 2,816,901 shares. Following the effectiveness of the 2013 Plan in April 2013, no further grants were made under the 2012 Plan. At theCompany's annual meeting held on June 20, 2014, shareholders approved a change to the annual automatic increase in the number of common shares to bereserved for issuance under the 2013 Plan by changing the percentage increase to 4.0%, or a lesser number of shares determined by the Company's board ofdirectors.The Company estimates the fair value of its share-based awards to employees, directors and consultants using the Black-Scholes option-pricing model. TheBlack-Scholes model requires the input of highly complex and subjective assumptions, including (a) the expected stock price volatility, (b) the calculationof expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the Company’s limited operating history and historical andimplied volatility data, the Company has based its estimates of expected volatility on a blend of Company specific historical data and a group of similarpublic traded companies. When selecting these public companies on which it has based its expected stock price volatility, the Company selected companieswith comparable characteristics to it, including enterprise value, risk profiles, positions within the industry, and with historical share price informationsufficient to meet the expected life of its stock options. For employee stock options, the Company uses historical exercise data to estimate the expected life.The risk-free interest rates for the periods within the expected life of the84option are based on the U.S. Treasury instrument with a life that is similar to the expected life of the option grant. The Company has never paid, and does notexpect to pay, dividends in the foreseeable future.The following table illustrates the assumptions for the Black-Scholes model used in determining the fair value of the stock options granted: Years Ended December 31, 2017 2016 2015Expected volatility85.51% 85.16% 66.89%Expected term (in years)5.9 6.0 6.0Weighted-average risk-free interest rate2.02% 1.70% 1.53%Expected dividend yield—% —% —%Weighted-average fair value per option$3.71 $5.62 $25.18A summary of activity related to the Company’s stock options is as follows: Number ofOptionsOutstanding Weighted-AverageExercise Price Weighted-AverageRemainingContractualLife (in Years) Total IntrinsicValueBalance, December 31, 20152,746,395 $28.19 8.41 Granted2,418,551 7.76 — Exercised(48,441) 3.48 — Forfeited(774,039) 24.13 — Balance, December 31, 20164,342,466 $17.81 8.09 Granted928,816 5.17 — Exercised(38,885) 3.98 — Forfeited(235,736) 19.10 — Balance, December 31, 20174,996,661 $15.51 7.59 $529,145Exercisable at December 31, 20173,021,179 $18.05 7.14 $516,430Vested or expected to vest at December 31, 20174,934,708 $15.56 7.58 $527,433As of December 31, 2017, there was approximately $14.1 million of total unrecognized compensation cost related to non-vested share-based compensationarrangements granted under the 2013 Plan. That compensation cost is expected to be recognized over a weighted-average period of approximately 1.64 years.Other information regarding the Company’s stock options is as follows (in thousands, except per share data): Years Ended December 31, 2017 2016 2015Weighted-average grant-date fair value per share of options granted $3.71 $5.62 $25.18Total intrinsic value of options exercised $48 $119 $10,139Total fair value of shares vested $11,786 $13,330 $11,49885The following table summarizes, at December 31, 2017, by price range: (1) for stock option awards outstanding under the 2013 Plan, the number of stockoption awards outstanding, their weighted-average remaining life and their weighted-average exercise price; and (2) for stock option awards exercisableunder the 2013 Plan, the number of stock option awards exercisable and their weighted-average exercise price: Outstanding ExercisableRange Number Weighted-AverageRemainingContractualLife (in years) Weighted-AverageExercise Price Number Weighted-AverageExercise Price$1.53 to 7.57 1,324,631 8.10 $4.65 631,032 $4.117.58 to 8.06 1,885,674 8.02 8.06 907,919 8.068.07 to 18.75 381,805 6.05 17.73 373,743 17.7218.76 to 39.17 564,854 6.56 25.39 492,529 25.0939.18 to 53.74 839,697 7.21 41.70 615,956 41.61$1.53 to 53.74 4,996,661 7.59 $15.51 3,021,179 $18.05Employee Stock Purchase PlanIn February 2013, the Company’s board of directors adopted the 2013 Employee Stock Purchase Plan (ESPP), which was subsequently ratified bystockholders and became effective in April 2013. The purpose of the ESPP is to retain the services of new employees and secure the services of new andexisting employees while providing incentives for such individuals to exert maximum efforts toward the Company’s success and that of its affiliates. TheESPP initially authorized the issuance of 704,225 shares of common stock pursuant to purchase rights granted to the Company’s employees or to employeesof any of its designated affiliates. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each calendar year,from January 1, 2014 through January 1, 2023 by the least of (a) 1% of the total number of shares of common stock outstanding on December 31 of thepreceding calendar year, (b) 422,535 shares, or (c) a number determined by the Company’s board of directors that is less than (a) and (b). The ESPP isintended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986. The common stockreserved for future issuance under the ESPP was automatically increased by an additional 422,535 shares on January 1, 2016 and 2017, bringing the totalnumber of shares of common stock that may be purchased under the ESPP to 1,803,726 and 2,226,261, respectively.The Company has reserved a total of 2,226,261 shares of common stock to be purchased under the ESPP, of which 1,861,472 and 1,612,759 shares remainedavailable for purchase at December 31, 2017 and 2016, respectively. Eligible employees may authorize an amount up to 15% of their salary to purchasecommon stock at the lower of a 15% discount to the beginning price of their offering period or a 15% discount to the ending price of each six-monthpurchase interval. The ESPP also provides for an automatic reset feature to start participants on a new twenty-four month participation period in the event thatthe common stock market value on a purchase date is less than the common stock value on the first day of the twenty-four month offering period. TheCompany issued 173,822 and 108,109 shares of common stock pursuant to the ESPP for the year ended December 31, 2017 and 2016, respectively.Compensation expense for purchase rights under the ESPP related to the purchase discount and the “look-back” option were determined using a Black-Scholes option pricing model.The following table illustrates the assumptions for the Black-Scholes model used in determining the fair value of the ESPP purchase rights: Years Ended December 31, 2017 2016 2015Expected volatility77.18% 111.57% 57.77%Expected term (in years)0.97 1.37 1.1Weighted-average risk-free interest rate0.99% 0.75% 0.43%Expected dividend yield—% —% —%Weighted-average option value per share$2.65 $3.20 $22.10As of December 31, 2017, the Company had a liability of $0.2 million representing employees' contributions to the ESPP.86Restricted Stock UnitsFor the years ended December 31, 2017 and 2016, the Company issued RSUs to certain employees which vest based on service criteria. When vested, theRSU represents the right to be issued the number of shares of the Company's common stock that is equal to the number of RSUs granted. The grant date fairvalue for RSUs is based upon the market price of the Company's common stock on the date of the grant. The fair value is then amortized to compensationexpense over the requisite service period or vesting term. For the years ended December 31, 2017 and 2016, the Company issued 744,450 and 203,400 sharesof common stock pursuant to the vesting of RSUs, respectively.In January 2017, the Company also granted performance-based RSUs which, when vested, represent the right to be issued the number of shares of theCompany's common stock that is equal to the number of RSUs granted. The grant date fair value for performance-based RSUs is based upon the market priceof the Company's common stock on the date of the grant. For the portion of the performance-based RSUs of which the achievement of the performancecondition is considered probable, the Company recognizes stock-based compensation expense on the related estimated fair value of such RSUs ratably foreach vesting tranche from the service inception date to the end of the requisite service period. For the performance conditions that are not consideredprobable of achievement at the grant date or upon quarterly re-evaluation, prior to the event actually occurring, the Company begins recognizing the relatedstock-based compensation expense ratably when the event occurs or when the Company can determine that achievement of the performance condition isprobable. In those cases, the Company recognizes the change in estimate at the time it determines the performance condition is probable of achievement (byrecognizing stock-based compensation expense as cumulative catch-up adjustment as if the Company had estimated at the grant date that the performancecondition would have been achieved) and recognize the remaining compensation cost through the end of the requisite service period. The Company issuedno shares of common stock pursuant to the vesting of performance-based RSUs for the year ended December 31, 2017.A summary of activity related to the Company’s RSUs is as follows: Number ofRestrictedStock UnitsOutstandingWeighted-AverageGrant-Date FairValueBalance, December 31, 2016946,200$4.91Granted879,3005.12Share issuance(744,450)4.91Forfeited(124,751)5.09Balance, December 31, 2017956,299$5.08The total unrecognized compensation cost related to the non-vested RSUs as of December 31, 2017 was $3.5 million and will be recognized over a weightedaverage period of approximately 2.54 years.WarrantsIn February 2011, the Company issued warrants to purchase an aggregate of 5,501,215 shares of Series F redeemable convertible preferred stock at an exerciseprice of $2.045 per share. Upon the completion of the Company’s IPO in April 2013, these warrants were converted into warrants to purchase 1,549,628shares of common stock at an exercise price of $7.26 per share. The warrants were exercisable at any time and expired on February 7, 2018. At December 31,2017 and 2016, warrants for the purchase of 227,794 shares of common stock were issued, outstanding and exercisable.87Stock-based CompensationFor awards with only service conditions and graded-vesting features, the Company recognizes compensation expense on a straight-line basis over therequisite service period. Total stock-based compensation expense was as follows (in thousands): Years Ended December 31, 2017 2016 2015Income Statement Classification: Research and development expense$7,047 $7,137 $5,578General and administrative expense9,063 9,086 7,381 Total stock-based compensation expense$16,110 $16,223 $12,959Cash received from exercises under all share-based payment arrangements for 2017, 2016 and 2015 was $0.8 million, $0.6 million and $3.2 million,respectively. There was no actual tax benefit realized for the tax deductions from exercises of the share-based payment arrangements during 2017, 2016 or2015.Note 7. Income TaxesNo income tax expense or benefit has been recorded for the years ended December 31, 2017, 2016 or 2015. This is due to the establishment of a valuationallowance against the deferred tax assets generated during those periods. At December 31, 2017, the Company has concluded that it is more likely than notthat the Company may not realize the benefit of its deferred tax assets due to its history of losses. Accordingly, the net deferred tax assets have been fullyreserved.88A reconciliation of the difference between the benefit for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows for the yearsended December 31, 2017, 2016, and 2015 (in thousands, except percentages): 2017 2016 2015 Amount % of PretaxEarnings Amount % of PretaxEarnings Amount % of PretaxEarningsIncome tax benefit at statutory rate$(24,134) 34.0 % $(25,973) 34.0 % $(39,907) 34.0 %State income taxes(1,090) 1.5 % (1,544) 2.0 % (2,176) 1.9 %Research and development credits(2,039) 2.9 % (2,691) 3.5 % (5,698) 4.9 %Foreign rate differential60 (0.1)% (2) — % 2 — %Permanent items1,646 (2.3)% 2,537 (3.3)% 3,687 (3.1)%Provision to return adjustments1,212 (1.7)% 259 (0.3)% (426) 0.2 %Effect of change in federal tax rate57,950 (81.6)% — — % — — %Effect of change in state tax rate193 (0.3)% 1,585 (2.1)% 932 (0.8)%Removal of excess tax benefit(12,930) 18.2 % — — % — — %Increase in unrecognized tax benefits403 (0.6)% 444 (0.6)% 950 (0.8)%Change in valuation allowance(21,271) 30.0 % 25,385 (33.2)% 42,636 (36.3)%Net benefit$— — % $— — % $— — %The components of deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in thousands): December 31, 2017 2016Deferred tax assets: Domestic net operating loss carryforwards$92,020 $114,111 Foreign net operating loss carryforwards61 — Research and development expenses763 813 Capitalized Section 174 expenses28 48 Research and development credits12,437 10,907 Accrued bonuses777 1,006 Share-based compensation6,156 7,214 Other983 460 Total gross deferred tax assets113,225 134,559 Valuation allowance(113,225) (134,496) Total deferred tax assets— 63Deferred tax liabilities: Other— (63) Total deferred tax liabilities— (63) Total deferred tax assets and liabilities, net$— $—At December 31, 2017, the Company had net operating loss carryforwards for federal, state, and foreign tax purposes of approximately $408.1 million, $319.9million and $0.4 million, respectively. At December 31, 2016, the Company had net operating loss carryforwards for federal and state tax purposes ofapproximately $356.1 million and $287.2 million, respectively. The federal losses begin to expire in 2020 and the state losses begin to expire in 2018. Theforeign losses do not expire. In addition, the Company has tax credit carryforwards for federal tax purposes of approximately $16.6 million as ofDecember 31, 2017, which begin to expire in 2022. The future utilization of net operating loss and tax credit carryforwards may be limited due to changes inownership. Management has recorded a valuation allowance for all of the deferred tax assets due to the uncertainty of future taxable income.The Company incorporated a subsidiary in the United Kingdom in 2014. However, the subsidiary has had minimal activity since inception. The subsidiaryrecorded a net loss as of December 31, 2017 and a small amount of net income as of December 31, 2016 and as such, has no undistributed earnings.89In general, if the Company experiences a greater than 50% aggregate change in ownership of certain significant stockholders over a three-year period (aSection 382 ownership change), utilization of its pre-change net operating loss carryforwards is subject to an annual limitation under Section 382 of theInternal Revenue Code (and similar state laws). The annual limitation generally is determined by multiplying the value of the Company’s stock at the time ofsuch ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion ofthe net operating loss carryforwards before utilization and may be substantial. The ability of the Company to use its net operating loss carryforwards may belimited or lost if the Company experiences a Section 382 ownership change in connection with offerings or as a result of future changes in its stockownership. Losses from a specific period may be subject to multiple limitations, and would generally be limited by the lowest of those limitations.The Company has determined that a Section 382 ownership change occurred in 2002, and as such, losses incurred prior to that date are subject to an annuallimitation of at least $64,000. Additionally, the Company has determined that a Section 382 ownership change occurred in 2007, and as such, losses incurredprior to that date are subject to an annual limitation of at least $762,000. The Company evaluated Section 382 ownership changes subsequent to 2007through September 30, 2015 and concluded that a Section 382 ownership change occurred in 2013 as a result of the initial public offering. As such, lossesincurred prior to that date are subject to an annual limitation of at least $6.7 million.As of December 31, 2017, the Company has adopted ASU 2016-09 which is effective for public companies for annual periods beginning after December 15,2016. The ASU requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement in the year inwhich they occur. As such, the Company has grossed up its net operation loss deferred tax asset to include all excess tax benefits as of December 31, 2017.The Company has determined that there may be a future limitation on the Company’s ability to utilize its entire federal R&D credit carryover. Therefore, theCompany recognized an uncertain tax benefit associated with the federal R&D credit carryover during the years ended December 31, 2017 and 2016, asfollows (in thousands):Balance at December 31, 2015$1,956 Increases related to 2016444 Increases related to prior periods—Balance at December 31, 20162,400 Increases related to 2017403 Increases related to prior periods473Balance at December 31, 2017$3,276The change in the amount of the unrecognized tax benefits accrued for prior years is due to the change in the federal tax rate and is reflected as a componentof such in the statutory rate reconciliation.The Company has determined that it had no other material uncertain tax benefits for the year ended December 31, 2017. As of January 1, 2018, due to thecarry forward of unutilized net operating losses and research and development credits, the Company is subject to U.S. Federal and state income taxexaminations for the tax years 2000 through 2017. The Company recognizes accrued interest related to unrecognized tax benefits in interest expense andpenalties in operating expense. No amounts were accrued for the payment of interest and penalties at December 31, 2017.On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law, which reduced the federal corporate income tax rate to 21% for tax years beginningafter December 31, 2017. As a result of the new enacted tax rate, the Company adjusted its deferred tax assets as of December 31, 2017 by applying the new21% rate, which resulted in a decrease to the deferred tax assets and a corresponding decrease to the valuation allowance of approximately $58 million.The Tax Legislation also implements a territorial tax system. Under the territorial tax system, in general, the Company's foreign earnings will no longer besubject to tax in the U.S. As part of transition to the territorial tax system the Tax Legislation includes a mandatory deemed repatriation of all undistributedforeign earnings that are subject to a U.S. income tax. The Company estimates that the deemed repatriation will not result in an additional U.S. income taxliability as it has no undistributed foreign earnings.The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118) which will allow theCompany to record provisional amounts during a measurement period which is similar to the measurement period used when accounting for businesscombinations. Provisional amounts have been recorded related to deferred taxes for90stock compensation and the deferred rate change. The Company will continue to assess the impact of the recently enacted tax law on its business andconsolidated financial statements.Note 8. Significant AgreementsThe Regents of the University of CaliforniaIn May 2002, the Company entered into a license agreement with The Regents of the University of California (UC) under which the Company obtained anexclusive, worldwide license to UC’s patent rights in certain inventions (the UC Patent Rights) related to lipid-conjugated antiviral compounds and their use,including certain patents relating to brincidofovir. The license agreement was amended in September 2002 in order to expand the scope of the license andagain in December 2010 in order to modify certain financial terms. The agreement was amended a third time in September 2011 to add additional patentsrelated to certain metabolically stable lipid-conjugate compounds. A fourth amendment was executed in July 2012 to alter the rights and obligations of theparties in light of the Company’s current business plans.Under the license agreement, the Company is permitted to research, develop, manufacture and commercialize products utilizing the UC Patent Rights for allhuman and veterinary uses, and to sublicense such rights. UC retained the right, on behalf of itself and other non-profit institutions, to use the UC PatentRights for educational and research purposes and to publish information about the UC Patent Rights.In consideration for the rights granted under the license agreement, the Company has issued UC an aggregate of 64,788 shares of common stock. Asadditional consideration, the Company is required to pay certain cash milestone payments in connection with the development and commercialization ofcompounds that are covered by the UC Patent Rights, plus certain annual fees to maintain such patents until the Company commercializes a product utilizingUC Patent Rights. In connection with the development and commercialization of brincidofovir and CMX157, the Company could be required to pay UC upto an aggregate of $3.4 million in milestone payments, assuming the achievement of all applicable milestone events under the license agreement. In addition,upon commercialization of any product utilizing the UC Patent Rights (which would include the commercialization of brincidofovir), the Company will berequired to pay low single digit royalties on net sales of such product.The license agreement requires that we diligently develop, manufacture and commercialize compounds that are covered by the UC Patent Rights, and wehave agreed to meet certain development and commercialization milestones. UC may, at its option, either terminate the license agreement or change thelicense granted from an exclusive license to a non-exclusive license if we fail to meet such development and commercialization milestones. We are currentlyin compliance with these milestone requirements.In the event the Company sublicenses a UC Patent Right (including UC Patent Rights relating to brincidofovir or CMX157) the Company is obligated to payto UC a fee, which amount will vary depending upon the amount of any payments the Company receives and the clinical development stage of thecompound being sublicensed, but which could be up to approximately 50% of the sublicense fee in certain circumstances. With respect to brincidofovir, thefee payable to UC will not exceed 5% of the sublicense fee. In addition, the Company will also be required to pay to UC a low single digit sublicense royaltyon net sales of products that use the sublicensed UC Patent Rights, but in no event will the Company be required to pay more than 50% of the royalties itreceives in connection with the relevant sublicense. Any such royalty payment will be reduced by other payments the Company is required to make to thirdparties until a minimum royalty has been reached.Biomedical Advanced Research and Development Authority (BARDA)In February 2011, the Company entered into a contract with BARDA for the advanced development of brincidofovir as a medical countermeasure in theevent of a smallpox release. Under the contract, BARDA will reimburse the Company, plus pay a fixed fee, for the research and development of brincidofoviras a broad-spectrum therapeutic antiviral for the treatment of smallpox infections. The contract consists of an initial performance period, referred to as thebase performance segment, plus up to four extension periods, referred to as option segments, each of which may be exercised at BARDA’s sole discretion. TheCompany must complete the agreed upon milestones and deliverables in each discrete work segment before the next option segment is eligible to beexercised. Under the contract as currently in effect, the Company may receive up to $75.8 million in expense reimbursement and $5.3 million in fees.The Company is currently performing under the second and third option segments of the contract during which the Company may receive up to a total of$21.6 million and $11.6 million in expense reimbursement and fees, respectively. The second and third option segments are scheduled to end on September30, 2018. As of December 31, 2017, the Company has recognized revenue in aggregate of $56.1 million with respect to the base performance segment and thefirst three extension periods.91ContraVir PharmaceuticalsOn December 17, 2014, the Company entered into a license agreement with ContraVir Pharmaceuticals (NASDAQ: CTRV) for the development andcommercialization of CMX157 for certain antiviral indications. Under the terms of the agreement, ContraVir has sole responsibility with respect to thecontrol of the development and commercialization of CMX157.In exchange for the license to CMX157 rights, the Company received an upfront payment consisting of 120,000 shares of ContraVir Series B ConvertiblePreferred Stock with a stated value of $1.2 million. In addition, the Company is eligible to receive up to approximately $20 million in clinical, regulatoryand initial commercial milestones in the United States and Europe, as well as royalties and additional milestones based on commercial sales in thoseterritories. Either party may terminate the license agreement upon the occurrence of a material breach by the other party (subject to standard cure periods), orupon certain events involving the bankruptcy or insolvency of the other party. ContraVir may also terminate the license agreement without cause on acountry-by-country basis upon sixty days’ prior written notice.The upfront payment of 120,000 shares of ContraVir Series B Convertible Preferred Stock was valued at $1.5 million at the time of the agreement. TheCompany recorded this amount as a long-term investment and deferred revenue, which is included in accrued liabilities in the Consolidated Balance Sheets.Upon completion of the transfer of the IND and technical know-how related to CMX157 in April 2015, the Company recognized the $1.5 million upfrontpayment as revenue. In September 2016, the Company converted its shares of ContraVir Series B convertible preferred stock into 1,071,429 shares ofContraVir common stock. As of December 31, 2017 and 2016, the fair value of the investment was recorded as a short-term investment of $0.4 million and$1.3 million, respectively.University of MichiganIn 2006, the Company entered into a license agreement with The Regents of the University of Michigan (UM) under which the Company obtained anexclusive, worldwide license to UM’s patent rights in certain inventions (UM Patent Rights) related to certain compounds originally synthesized at UM.Under the license agreement, the Company is permitted to research, develop, manufacture and commercialize products utilizing the UM Patent Rights, and tosublicense such rights subject to certain sublicensing fees and royalty payments.In consideration for the rights granted to the Company, under the license agreement as amended in December 2016, the Company paid UM $50,000 in fees in2016 and in January 2017 issued UM an aggregate of 33,058 shares of its common stock. In connection with the Company's commercialization orsublicensing of certain products covered by the license agreement, including CMX521, the Company could be required to pay royalties on net sales of suchproducts ranging from 0.25% to 2%. Beginning in 2024, the Company is also subject to certain minimum annual royalty payments.The UM license agreement requires that the Company uses commercially reasonable efforts to develop and make commercially available licensed products assoon as practicable. Specifically, the Company has agreed to make the first commercial sale of a licensed product by June of 2026. UM may terminate thelicense agreement if the Company materially breaches the license agreement. The Company is currently in compliance with its milestone requirements.Note 9. Selected Quarterly Financial Data (Unaudited)The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of theresults of the interim periods. Summarized quarterly data for 2017 and 2016 are as follows (in thousands, except share and per share data): 2017 Quarters Fourth Third Second FirstTotal revenues$1,844 $897 $675 $1,078Operating loss(18,687) (17,910) (17,245) (18,260)Net loss(19,238) (17,312) (16,680) (17,754)Net loss per share, basic and diluted$(0.41) $(0.37) $(0.36) $(0.38)Weighted-average shares outstanding, basic and diluted47,341,271 47,065,756 46,863,753 46,573,39492 2016 Quarters Fourth Third Second FirstTotal revenues$1,980 $653 $1,841 $1,228Operating loss(15,373) (17,422) (18,525) (26,632)Net loss(14,957) (17,025) (18,148) (26,260)Net loss per share, basic and diluted$(0.32) $(0.37) $(0.39) $(0.57)Weighted-average shares outstanding, basic and diluted46,431,809 46,236,749 46,214,086 46,184,134Net loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly per share calculations will not necessarilyequal the annual per share calculation. Diluted weighted-average shares outstanding are identical to basic weighted-average shares outstanding and dilutednet loss per share is identical to basic net loss per share for all quarters of 2017 and 2016.Note 10. Subsequent EventsThe Company has evaluated subsequent events through the issuance date of these financial statements to ensure that this filing includes appropriatedisclosure of events both recognized in the financial statements as of December 31, 2017, and events which occurred subsequently but were not recognizedin the financial statements.ITEM. 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or Exchange Act) as of December 31, 2017, have concluded that, based on suchevaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submitunder the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and isaccumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similarfunctions, as appropriate to allow timely decisions regarding required disclosure.Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRules 13a-15(f) and 15d-15(f). Our internal control system was designed to provide reasonable assurance to our management and Board of Directorsregarding the preparation and fair presentation of published financial statements.Our internal control over financial reporting includes those policies and procedures that:i.pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;ii.provide reasonable assurance that transactions are recorded as necessary to permit preparations of financial statements in accordance with generallyaccepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our managementand directors; andiii.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on the financial statements.All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provideonly reasonable assurance with respect to financial statement preparation and presentation. In making the assessment of internal controls over financialreporting, our management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on that93assessment and those criteria, management has concluded that our internal control over financial reporting was effective as of December 31, 2017.Ernst & Young LLP, the independent registered public accounting firm that audited our financial statements included in this Annual Report, has issued anattestation report on the Company's internal control over financial reporting, a copy of which appears in Item 8 of this Annual Report.Changes in Internal Control Over Financial ReportingNo change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) occurred during the lastfiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B. OTHER INFORMATIONNot applicable.94PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this item and not set forth below will be set forth in the section headed “Election of Directors” and “Executive Officers” in ourProxy Statement for our 2018 Annual Meeting of Stockholders (Proxy Statement), to be filed with the SEC within 120 days after the end of the fiscal yearended December 31, 2017, and is incorporated herein by reference.We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer)and employees, known as the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available on our website athttp://www.chimerix.com under the Corporate Governance section of our Investor Relations page. We will promptly disclose on our website (i) the nature ofany amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or personsperforming similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of thesespecified individuals that is required to be disclosed pursuant to SEC rules and regulations, the name of such person who is granted the waiver and the date ofthe waiver.ITEM 11. EXECUTIVE COMPENSATIONThe information required by this item will be set forth in the section headed “Executive Compensation” in our Proxy Statement and is incorporated herein byreference.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe information required by this item will be set forth in the section headed “Security Ownership of Certain Beneficial Owners and Management” in ourProxy Statement and is incorporated herein by reference.The information required by Item 201(d) of Regulation S-K will be set forth in the section headed “Executive Compensation” in our Proxy Statement and isincorporated herein by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by this item will be set forth in the section headed “Transactions With Related Persons” in our Proxy Statement and is incorporatedherein by reference.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this item will be set forth in the section headed “Ratification of Selection of Independent Registered Public Accounting Firm” inour Proxy Statement and is incorporated herein by reference.95PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES1. Financial Statements. The financial statements and reports of independent registered public accounting firm are filed as part of this Annual Report (see"Index to Consolidated Financial Statements" at Item 8).2. Financial Statement Schedules. No financial statement schedules are included because the information is either provided in the consolidated financialstatements, is not required under the instructions or is immaterial, and such schedules, therefore have been omitted.3. Exhibits. The following exhibits have been or are being filed herewith and are numbered in accordance with Item 601 of Regulation S-K:EXHIBIT INDEXExhibitNumber Description of Document 3.1 (1) Amended and Restated Certificate of Incorporation of the Registrant. 3.2 (1) Amended and Restated Bylaws of the Registrant. 4.1 (1) Form of Common Stock Certificate of the Registrant.10.1+ (1) Form of Indemnity Agreement by and between the Registrant and its directors and officers.10.2+ (1) Chimerix, Inc. 2002 Equity Incentive Plan and Form of Stock Option Agreement, Notice of Exercise and Form of Stock Option GrantNotice thereunder.10.3+ (1) Chimerix, Inc. 2012 Equity Incentive Plan and Form of Stock Option Agreement, Notice of Exercise and Form of Stock Option GrantNotice and Form of Restricted Stock Unit Award Agreement and Form of Restricted Stock Unit Award Grant Notice thereunder.10.4+(17) Form of Stock Option Agreement, Notice of Exercise and Form of Stock Option Grant Notice and Form of Restricted Stock Unit AwardAgreement and Form of Restricted Stock Unit Award Grant Notice under Chimerix, Inc. 2013 Equity Incentive Plan.10.5+ (2) Chimerix, Inc. 2013 Equity Incentive Plan, as amended.10.6+ (1) Chimerix, Inc. 2013 Employee Stock Purchase Plan.10.7+(20) Chimerix, Inc. Non-Employee Director Compensation Policy.10.8+ (9) Chimerix, Inc. Officer Change in Control Severance Benefit Plan, as amended.10.9+ (1) Employment Offer Letter to Timothy W. Trost dated March 16, 2011.10.10+ (1) Employment Offer Letter to M. Michelle Berrey, M.D., M.P.H. dated November 7, 2012.10.11+ (7) Employment Offer Letter to Linda M. Richardson dated December 13, 2013.10.12 (3) Employment Offer Letter to William Garrett Nichols, M.D., M.S., dated August 19, 2014.10.13+ (1) Directorship Offer Letter to Ernest Mario, Ph.D. dated January 31, 2013.10.14+ (13) Directorship Offer Letter to James M. Daly dated June 6, 2014.10.15+ (13) Directorship Offer Letter to Catherine L. Gilliss dated June 13, 2014.10.16+ (13) Directorship Offer Letter to Patrick Machado dated May 30, 2014.10.17+ (13) Directorship Offer Letter to Ronald C. Renaud, Jr. dated December 12, 2014.10.18 (1) Office Lease by and between the Registrant and ACP 2505 Meridian LLC dated September 1, 2007, as amended.10.19 (6) Lease Agreement by and between the Registrant and Northwood RTC LLC dated March 10, 2014.10.20 (5) Fifth Amendment to Office Lease dated July 2, 2014 by and between the Registrant and AREP Meridian I LLC.10.21 (10) Sixth Amendment to Office Lease dated April 28, 2015 by and between the Registrant and IVC Meridian TT O, LLC.10.22 (18) Seventh Amendment to Office Lease dated March 10, 2017 by and between the Registrant and IVC Meridian TT O, LLC.10.23 (19) Eighth Amendment to Office Lease dated July 13, 2017 by and between the Registrant and IVC Meridian TT O, LLC.9610.24* (1) Contract by and between the Registrant and the Biomedical Advanced Research and Development Authority of the United StatesDepartment of Health and Human Services dated February 16, 2011, as amended.10.25* (8) Contract modification No. 14, dated May 30, 2013, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.26* (9) Contract modification No. 15, dated August 28, 2013, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.27* (9) Contract modification No. 16, dated December 10, 2013, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.28 (4) Contract modification No. 17, dated April 14, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.29 (13) Contract modification No. 18, dated May 6, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.30* (5) Contract modification No. 19, dated August 27, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.31 (5) Contract modification No. 20, dated October 27, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.32* (13) Contract modification No. 21, dated November 7, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.33 (13) Contract modification No. 22, dated December 11, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.34 (13) Contract modification No. 23, dated December 22, 2014, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.35 (13) Contract modification No. 24, dated February 19, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.36 (10) Contract modification No. 25, dated March 26, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.37 (11) Contract modification No. 26, dated June 18, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.38 (11) Contract modification No. 27, dated July 14, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.39* (12) Contract modification No. 28, dated September 1, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.40* (12) Contract modification No. 29, dated September 11, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.41* (14) Contract modification No. 30, dated November 12, 2015, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.42* (15) Contract modification No. 31, dated April 8, 2016, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.43* (15) Contract modification No. 32, dated May 5, 2016, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.9710.44* (16) Contract modification No. 33, dated June 17, 2016, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.45* (17) Contract modification No. 34, dated August 3, 2016, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.46 (18) Contract modification No. 35, dated October 21, 2016, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.47 (18) Contract modification No. 36, dated January 23, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.48 (19) Contract modification No. 37, dated March 27, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.49 (20) Contract modification No. 38, dated April 3, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.50 (20) Contract modification No. 39, dated May 11, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.51 (20) Contract modification No. 40, dated June 16, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.52 (21) Contract modification No. 41, dated July 24, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.53 (21) Contract modification No. 42, dated August 25, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.54 (21) Contract modification No. 43, dated September 22, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.55 (21) Contract modification No. 44, dated September 28, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.56 Contract modification No. 45, dated October 20, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.57 Contract modification No. 46, dated November 27, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.58** Contract modification No. 47, dated December 21, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.59 Contract modification No. 48, dated December 21, 2017, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.10.60** Contract modification No. 49, dated February 27, 2018, to the contract by and between the Registrant and the Biomedical AdvancedResearch and Development Authority of the United States Department of Health and Human Services dated February 16, 2011, asamended.9810.61*(18) Patent Option and License Agreement by and between the Registrant and The Regents of the University of Michigan dated May 24,2006, as amended.10.62*(1) License Agreement by and between the Registrant and The Regents of the University of California dated May 13, 2002, as amended.10.63(22) Sales Agreement, dated November 8, 2017, by and between Chimerix, Inc and Cowen and Company, LLC.10.64 First Amendment to Lab Lease dated December 14, 2017 by and between Registrant and CLPF - Research Center, LLC.23.1 Consent of Ernst & Young LLP, an Independent Registered Public Accounting Firm.24.1 Power of Attorney. Reference is made to the signature page hereto.31.1 Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2 Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.101.DEF XBRL Taxonomy Extension Definition Linkbase Document.101.LAB XBRL Taxonomy Extension Label Linkbase Document.101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.99+ Indicates management contract or compensatory plan. * Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately withthe SEC.** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separatelywith the SEC.(1) Incorporated by reference to Chimerix, Inc.’s Registration Statement on Form S-1 (No. 333-187145), as amended.(2) Incorporated by reference to Chimerix, Inc.’s Current Report on Form 8-K (No. 001-35867) filed with the SEC on June 23, 2014.(3) Incorporated by reference to Chimerix, Inc.’s Current Report on Form 8-K (No. 001-35867) filed with the SEC on September 4, 2014.(4) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on May 9, 2014.(5) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on November 7, 2014.(6) Incorporated by reference to Chimerix, Inc.’s Current Report on Form 8-K (No. 001-35867) filed with the SEC on March 14, 2014.(7) Incorporated by reference to Chimerix, Inc.’s Current Report on Form 8-K (No. 001-35867) filed with the SEC on December 18, 2013.(8) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on August 14, 2013.(9) Incorporated by reference to Chimerix, Inc.’s Annual Report on Form 10-K (No. 001-35867) filed with the SEC on March 7, 2014.(10) Incorporated by reference to Chimerix, Inc.'s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on May 11, 2015.(11) Incorporated by reference to Chimerix, Inc.'s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on August 6, 2015.(12) Incorporated by reference to Chimerix, Inc.'s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on November 5, 2015.(13) Incorporated by reference to Chimerix, Inc.’s Annual Report on Form 10-K (No. 001-35867) filed with the SEC on March 6, 2015.(14) Incorporated by reference to Chimerix, Inc.’s Annual Report on Form 10-K (No. 001-35867) filed with the SEC on February 29, 2016(15) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on May 9, 2016.(16) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on August 8, 2016.(17) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on November 7, 2016.(18) Incorporated by reference to Chimerix, Inc.’s Annual Report on Form 10-K (No. 001-35867) filed with the SEC on March 2, 2017.(19) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on May 9, 2017.(20) Incorporated by reference to Chimerix, Inc.’s Quarterly Report on Form 10-Q (No. 001-35867) filed with the SEC on August 7, 2017.(21) Incorporated by reference to Chimerix, Inc.’s Current Report on Form 8-K (No. 001-35867) filed with the SEC on October 11, 2017.100SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-Kto be signed on its behalf by the undersigned, thereunto duly authorized. Chimerix, Inc. Date:March 1, 2018 By: /s/ M. Michelle Berrey M. Michelle Berrey, MD, MPH President & Chief Executive OfficerPOWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints M. Michelle Berrey and Timothy W.Trost, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him in any and all capacities, to sign any amendmentsto this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities andExchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done byvirtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.Signature Title Date /s/ M. Michelle Berrey President, Chief Executive Officer and Director March 1, 2018M. Michelle Berrey, MD, MPH (Principal Executive Officer) /s/ Timothy W. Trost Senior Vice President, Chief Financial Officer March 1, 2018Timothy W. Trost and Corporate Secretary (Principal Financial and Accounting Officer) /s/ Ernest Mario Ernest Mario, PhD Chairman of the Board of Directors March 1, 2018 /s/ James M. Daly James M. Daly Member of the Board of Directors March 1, 2018 /s/ Catherine L. Gilliss Catherine L. Gilliss, PhD, RN, FAAN Member of the Board of Directors March 1, 2018 /s/ Patrick Machado Patrick Machado Member of the Board of Directors March 1, 2018 /s/ James Niedel James Niedel, MD, PhD Member of the Board of Directors March 1, 2018101AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT1. CONTRACT ID CODEPAGE OF PAGES122. AMENDMENT/MODIFICATION NO00453. EFFECTIVE DATESee Block 16C4. REQUISITION/PURCHASE REQ NON/A.5. PROJECT NO (if applicable)6. ISSUED BY CODEASPR-BARDA7. ADMINISTERED BY (if other than line item 6) CODEASPR-BARDA02ASPR-BARDA200 Independence Ave., S.W.Room 640-GWashington DC 20201ASPR-BARDA330 Independence Ave., SW, Rm G640Washington DC 202018. NAME AND ADDRESS OF CONTRACTOR (No, street, county, State and ZIP Code)(x)9A AMENDMENT OF SOLICITATION NO.CHIMERIX, INC. 1377270CHIMERIX, INC. 2505 MERIDIAN P2505 MERIDIAN PKWY STE 340DURHAM NC 277135246 9B DATED (SEE ITEM 11)x10A MODIFICATION OF CONTRACT/ORDER NOHHSO100201100013C10B DATED (SEE ITEM 13)02/16/2011CODE 1377270FACILITY CODE11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS¨ The above numbered solicitation is amended as set forth in Item 14. The hour and date specified of receipt of Offers ¨ is extended. ¨ is not extended Offers must acknowledge receipt of this amendment prior to the hour end dale specified in the solicitation or as amended, by one or the following methods: (a) By completing Items 8 and 15, and returning __________ copies of the amendment; (b) Byacknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BERECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted,such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.12. ACCOUNTING AND APPROPRIATION DATA (if required)N/A. 13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.CHECK ONEA. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO IN ITEM 10A B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14,PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OFXD. OTHER (Specify type of modification and authority)Bilateral: Mutual Agreement of the Parties.E. IMPORTANT: Contractor ¨ is not. ý is required to sign this document and return 0 copies to the issuing office.14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible)Tax ID Number: 33-0903395DUNS Number: 121785997A. The purpose of this modification is to incorporate the following changes into the contract:1. The period of performance for Option 2/CLIN 0003 of Contract Number HHS0100201100013C ONLY is hereby changed from 1 September 2014 through 31 October 2017 to 1 September 2014 through 8 December 2017, at no additional cost to the Government. The total amount and scope of Option 2/CLIN 0003 of Contract Number HHSO100201100013C remains unchanged.2. The period of performance for CLIN 0004 of Contract Number HHSO100201100013C ONLY isContinued ...Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.15A. NAME AND TITLE OF SIGNER (Type or print) Timothy W. Trost, SVP & CFO16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)ETHAN J. MUELLER15B. CONTRACTOR/OFFEROR /s/ Timothy W. Trost (Signature of person authorized to sign)15C. DATE SIGNED18 Oct 201716B. UNITED STATES OF AMERICA /s/ Ethan J. Mueller (Signature of person authorized to sign)16C. DATE SIGNED10/20/17NSN 7540-152-8070 STANDARD FORM 30 (REV 10-83)Previous edition unusable Prescribed by GSAFAR (48 CFR) 53.2431CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0045PAGE OF22NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) hereby changed from 11 September 2015 through 31 October 2017 to September 2015 through 8 December 2017, at no additional cost to the Government. The total amount and scope of CLIN 0004 of Contract Number HHSO100201100013C remains unchanged.3. The total amount, scope and period of performance of all other CLINs that are currently being performed under the contract remain unchanged. This modification does not exercise any unexercised Option CLINs under the contract and does not authorize any performance of efforts under any unexercised Option CLINs under the contract. In addition, the total amount, scope and period of performance of all unexercised option CLINs under the contract remain unchanged. This modification also confirms that all activities under the base period of performance CLIN 0001 were completed as of 31 May 2013 and confirms that all activities under the Option 1/CLIN 0002 period of performance were completed as of 30 April 2015.B. This is a no cost bilateral modification. All other terms and conditions of Contract Number HHSO100201100013C remain unchanged.Period of Performance: 02/16/2011 to 12/08/2017NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.1102AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT1. CONTRACT ID CODEPAGE OF PAGES122. AMENDMENT/MODIFICATION NO00463. EFFECTIVE DATESee Block 16C4. REQUISITION/PURCHASE REQ NON/A.5. PROJECT NO (if applicable)6. ISSUED BY CODEASPR-BARDA7. ADMINISTERED BY (if other than line item 6) CODEASPR-BARDA02ASPR-BARDA200 Independence Ave., S.W.Room 640-GWashington DC 20201 ASPR-BARDA330 Independence Ave., SW, Rm G640Washington DC 20201 8. NAME AND ADDRESS OF CONTRACTOR (No, street, county, State and ZIP Code)(x)9A AMENDMENT OF SOLICITATION NO.CHIMERIX, INC. 1377270CHIMERIX, INC. 2505 MERIDIAN P2505 MERIDIAN PKWY STE 340DURHAM NC 277135246 9B DATED (SEE ITEM 11)X10A MODIFICATION OF CONTRACT/ORDER NOHHSO100201100013C10B DATED (SEE ITEM 13) 02/16/2011CODE 1377270FACILITY CODE11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS¨ The above numbered solicitation is amended as set forth in Item 14. The hour and date specified of receipt of Offers ¨ is extended. ¨ is not extended Offers must acknowledge receipt of this amendment prior to the hour end dale specified in the solicitation or as amended, by one or the following methods: (a) By completing Items 8 and 15, and returning __________ copies of the amendment; (b) Byacknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BERECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offeralready submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.12. ACCOUNTING AND APPROPRIATION DATA (if required)N/A.13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.CHECK ONEA. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO IN ITEM 10A B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14,PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OFXD. OTHER (Specify type of modification and authority)Bilateral: Mutual Agreement of the Parties.E. IMPORTANT: Contractor ¨ is not. ý is required to sign this document and return 0 copies to the issuing office.14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible)Tax ID Number: 33-0903395DUNS Number: 121785997A. The purpose of this modification is to incorporate the following changes into the contract:1. The period of performance for Option 2/CLIN 0003 of Contract Number HHSO100201100013C ONLY I hereby changed from 1 September 2014 through 8 December 2017 to 1September 2014 through 31 December 2017, at no additional cost to the Government. The total amount and scope of Option 2/CLIN 0003 of Contract NumberHHSO100201100013C remains unchanged.2. The period of performance for CLIN 0004 of Contract Number HHSO100201100013C ONLY isContinued ...Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.15A. NAME AND TITLE OF SIGNER (Type or print) Timothy W. Trost, SVP & CFO16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)ETHAN J. MUELLER15B. CONTRACTOR/OFFEROR /s/ Timothy W. Trost (Signature of person authorized to sign)15C. DATE SIGNED11/21/1716B. UNITED STATES OF AMERICA /s/ Ethan J. Mueller (Signature of person authorized to sign)16C. DATE SIGNED11/27/17NSN 7540-152-8070 STANDARD FORM 30 (REV 10-83)Previous edition unusable Prescribed by GSAFAR (48 CFR) 53.2431CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0046PAGE OF22NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) Hereby changed from 11 September 2015 through 8 December 2017 to 11 September 2015 through 31 December 2017, at no additional cost to the Government. Thetotal amount and scope of CLIN 0004 of Contract Number HHSO100201100013C remains unchanged.3. The total amount, scope and period of performance of all other CLINs that are currently being performed under the contract remain unchanged. This modificationdoes not exercise any unexercised Option CLINs under the contract and does not authorize any performance of efforts under any unexercised Option CLINs under thecontract. In addition, the total amount, scope and period of performance of all unexercised Option CLINs under the contract remain unchanged. This modification alsoconfirms that all activities under the base period of performance CLIN 0001 were completed as of 31 May 2013 and confirms that all activities under the Option1/CLIN 0002 period of performance were completed as of 30 April 2015.B. This is no cost bilaterla modification. All other terms and conditions of Contract Number HHSO100201100013C remain unchanged.Period of Performance: 02/16/2011 to 12/31/2017NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.1102***Text Omitted and Filed SeparatelyWith Securities and Exchange CommissionConfidential Treatment RequestedUnder 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2 of theSecurities Exchange Act of 1934, as amended.AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT1. CONTRACT ID CODEPAGE OF PAGES1182. AMENDMENT/MODIFICATION NO00473. EFFECTIVE DATESee Block 16C4. REQUISITION/PURCHASE REQ NOOS2123845. PROJECT NO (if applicable)6. ISSUED BY CODEASPR-BARDA7. ADMINISTERED BY (if other than line item 6) CODEASPR-BARDA02ASPR-BARDA200 Independence Ave., S.W.Room 640-GWashington DC 20201 ASPR-BARDA330 Independence Ave., SW, Rm G640Washington DC 20201 8. NAME AND ADDRESS OF CONTRACTOR (No, street, county, State and ZIP Code)(x)9A AMENDMENT OF SOLICITATION NO.CHIMERIX, INC. 1377270CHIMERIX, INC. 2505 MERIDIAN P2505 MERIDIAN PKWY STE 340DURHAM NC 277135246 9B DATED (SEE ITEM 11)x10A MODIFICATION OF CONTRACT/ORDER NOHHSO100201100013C10B DATED (SEE ITEM 13) 02/16/2011CODE 1377270FACILITY CODE11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS¨ The above numbered solicitation is amended as set forth in Item 14. The hour and date specified of receipt of Offers ¨ is extended. ¨ is not extended Offers must acknowledge receipt of this amendment prior to the hour end dale specified in the solicitation or as amended, by one or the following methods: (a) By completing Items 8 and 15, and returning __________ copies of the amendment; (b) Byacknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BERECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offeralready submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.12. ACCOUNTING AND APPROPRIATION DATA (if required)See ScheduleNet Increase:$2,812,858.0013. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.CHECK ONEA. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO IN ITEM 10A B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14,PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OFXD. OTHER (Specify type of modification and authority)Bilateral: Mutual Agreement of the Parties.E. IMPORTANT: Contractor ¨ is not. ý is required to sign this document and return 0 copies to the issuing office.14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible)Tax ID Number: 33-0903395DUNS Number: 121785997A. The purpose of this modification is to incorporate the following changes into the contract:1. The purpose of this modification is for the Government and the Contractor to bilaterally modify the Statement of Work Requirements for Option 2 CLIN 0003 and CLIN 0004 forthe purposes of 1. Adding within scope changes to the Statement of Work for Option 2 [...***...] This within scope change to Option 2 CLIN 0003 is necessary for the full completionof Option 2 CLIN 0003 2.Continued ...Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.15A. NAME AND TITLE OF SIGNER (Type or print) Timothy W. Trost, SVP & CFO16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)ETHAN J. MUELLER15B. CONTRACTOR/OFFEROR /s/ Timothy W. Trost (Signature of person authorized to sign)15C. DATE SIGNED12/21/1716B. UNITED STATES OF AMERICA /s/ Ethan J. Mueller (Signature of person authorized to sign)16C. DATE SIGNED12/21/17NSN 7540-152-8070 STANDARD FORM 30 (REV 10-83)Previous edition unusable Prescribed by GSAFAR (48 CFR) 53.243***Confidential Treatment Requested CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0047PAGE OF218NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) [...***...]2. In addition, the purpose of this bilateral modification is to also add additional cost growth to Option 2 CLIN 0003 Only in order to complete existing within scopeactivities under Option 2 CLIN 0003 Only.3. As a result, the addition of these within scope tasks and the cost growth to Option 2/OLIN 0003 under Contract Number HHSO100201100013C results in ContractLine Item Number (CLIN) 0003 being changed as follows:Total Estimated Cost: From [...***...] By $3,912,544.00 To [...***...].Total Fixed Fee: From [...***...] By $178,633.00 To [...***...].Total Estimated Cost Plus Fixed Fee: From [...***...] By $4,091,177.00 To [...***...].4. As a result, the descope to CLIN 0004 under Contract Number HHSO100201100013C results in Contract Line Item Number (CLIN) 0004 being changed asfollows:Total Estimated Cost: From [...***...] By $1,194,731.00 To [...***...].Total Fixed Fee: From [...***...] By $83,588.00 To [...***...]Total Estimated Cost Plus Fixed Fee: From [...***...] By $1,278,319.00 To [...***...].5. This modification also results a change in the total amount of the contract from [...***...] by $2,812,858.00 to [...***...] as well as the following:Total Estimated Cost of the Contract: From [...***...] By $2,717,813.30 To [...***...].Total Fixed Fee: From [...***...] By $95,045.00 To [...***...].Total Estimated Cost Plus Fixed Fee of the Contract: From [...***...] By $2,812,858.00 To [...***...].6. This modification hereby results in a increase in the total amount of the contract from [...***...] by $2,812,858.00 to [...***...].7. Block 15G of the SF 26, the amount of $66,637,061.23 shall be changed to $69,449,919.23.8. Also in Block 14 of the SF 26, the following CAN Number is added as follows:Appropriation Year: 2018; Object Class: 25106; CAN# 1992018 $4,091,177.009. The Government and the Contractor bilaterally modify Attachment 1, Statement ofContinued ...NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.110***Confidential Treatment Requested CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0047PAGE OF318NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) Work dated 11 September 2015, under PART III, LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS, SECTION J - LIST OF ATTACHMENTSfor the purposes of incorporating within scope changes to Option 2 CLIN 0003 and the descope deletions under CLIN 0004 and per recent FDA guidance. As such,Attachment 1, Statement of Work dated 11 September 2015, under PART III, LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS, SECTION J -LIST OF ATTACHMENTS is hereby deleted and replaced with the attached Statement of Work dated 20 October 2017 (14 Pages attached herein). The additionefforts that are added to Option 2 CLIN 0003 that involve clinical human trials/studies and non-clinical animal studies cannot be performed until the receipt andapproval of all required Protocols by BARDA inclusive of all IRB, OHRP approvals and any required Ethics Approvals for any clinical trials/studies and any requiredapproved OLAW Assurances and IIA approvals from OLAW for any non clinical animal studies.10. Under WBS Milestones/Deliverables and Technical Deliverables and Technical Deliverables and Contract Milestones and Go/No Go Decision Gates dated 11September 2015 under Article F.2. Deliverables, under Milestone 19, 4.3.3/5.3.2 for the ECTV Pivotal Study under CLIN 0004 is hereby deleted.11. The period of performance for Option 2/CLIN 0003 of Contract Number HHSO100201100013C ONLY is hereby changed from 1 September 2014 through 31December 2017 to 1 September 2014 through 30 September 2018, at no additional cost to the Government. The total amount and scope of Option 2/CLIN 0003 ofContract Number HHSO100201100013C remains unchanged.12. The period of performance for CLIN 0004 of Contract Number HHSO100201100013C ONLY is hereby changed from 11 September 2015 through 31December 2017 to 11 September 2015 through 30 September 2018, at no additional cost to the Government. The total amount and scope of CLIN 0004 of ContractNumber HHSO100201100013C remains unchanged.13. The total amount, scope and period of performance of all other CLINs that are currently being performed under the contract remain unchanged. Thismodification does not exercise any unexercised Option CLINs under the contract and does not authorize any performance of efforts under any unexercised OptionCLINs under the contract. In addition, the total amount, scope and period of performance of all unexercised Option CLINs under the contract remain unchanged.This modification also confirms that all activities under the base period of performance CLIN 0001 were completed as of 31 May 2013 and confirms that all activitiesunder the Option 1/CLIN 0002 period of performance were completed as of 30 April 2015.B. This is a bilateral modification. All other terms and conditions of Contract Number HHSO100201100013C remain unchanged.Delivery Location Code: HHSHHSContinued ...NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.110CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0047PAGE OF418NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F)34200 Independence Avenue, SW Washington DC 20201 USFOB: Destination Period of Performance: 02/16/2011 to 09/30/2018Change – Item 3 to read as follows (amount shown is the obligated amount) :[...***...]Reports and Other Data Deliverables.Delivery: 11/30/2015 Amount: $16,951,226.00 Accounting Info: 2014.1992003.25106 Appr. Yr.: 2014 CAN: 1992003 Object Class: 25106 Funded: $0.00Delivery: 06/30/2017 Amount: $535,016.00 Accounting Info: 2016.1992016.25103 Appr. Yr.: 2016 CAN: 1992016 Object Class: 25103 Funded: $0.00Delivery: 09/30/2018 Amount: $4,091,177.00 Accounting Info: 2018.1992018.25106 Appr. Yr.: 2018 CAN: 1992018 Object Class: 25106 Funded: $4,091,177.00Change Item 4 to read as follows (amount shown is the obligated amount) :[...***...]. -1,278,319.00Reports and Other Data Deliverables.Delivery: 09/30/2018 Accounting Info: 2015.1992015.25103 Appr. Yr.: 2015 CAN: 1992015 Object Class: 25103 Funded: -$1,278,319.00NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.110***Confidential Treatment Requested BARDA Broad Agency Announcement (BAA) (CBRN-BAA-10-100-SOL-00012)Advanced Research and Development of Chemical, Biological, Radiological, and Nuclear Medical Countermeasures DEVELOPMENT OF CMX-001 FOR THE TREATMENT OF SMALLPOX Topical Area of Interest No. 3, Antimicrobial DrugsContractual Statement of Work1.PREAMBLEIndependently and not as an agency of the Government, the Contractor shall be required to furnish all the necessary services, qualifiedpersonnel, material, equipment, and facilities, not otherwise provided by the Government, as needed to perform the Statement of Worksubmitted in response to the BARDA Broad Agency Announcement (BAA) CBRN-BAA-10-100-SOL-00012.In accordance with FAR 52.243-2, Changes-Cost Reimbursement (Alt. V), the Government reserves the right to modify themilestones, progress, schedule, budget, or to add or delete deliverables, process, or schedules if the need arises. Because of the natureof this research and development (R&D) contract and the complexities inherent in this and prior programs, at designated milestones theGovernment will evaluate whether work should be redirected, removed, or whether schedule or budget adjustments should be made.1.1 Overall Objectives and ScopeThe overall objective of this contract is to advance the development of CMX-001 as a broad-spectrum therapeutic antiviral for thetreatment of smallpox infections and dsDNA viruses. The scope of work for this contract includes preclinical, clinical andmanufacturing development activities that fall into the following areas: non-clinical efficacy studies; clinical activities; manufacturingactivities; and all associated regulatory, quality assurance, management, and administrative activities. The Research and Development(R&D) effort for the antiviral will progress in specific stages that cover the base performance segment and four (4) option segments asspecified in this contract. The Contractor must complete specific tasks required in each of the five discrete work segments. The scopeof work has been broken into the following five phases which are discrete work segments:I.[...***...]II.[...***...]III.[...***...]IV.[...***...]V.[...***...]1***Confidential Treatment Requested2.PHASE I: [...***...]Research and development of CMX-001 for the treatment of smallpox and dsDNA viruses to include the following activities:[...***...]. The contractor shall carry out the following tasks and subtasks and in accordance with an agreed upon IntegratedMaster Schedule and Integrated Master Plan (defined in 2.1.8 and 2.1.9 below) which shall further detail the conduct of thespecific tasks and subtasks.2.1 Program ManagementThe Contractor shall provide for the following as outlined below and in the contract deliverables list (Article F.2):2.1.1The overall management, integration and coordination of all contract activities, including a technical and administrativeinfrastructure to ensure the efficient planning, initiation, implementation, and direction of all contract activities;2.1.2A Principal Investigator (PI) responsible for project management, communication, tracking, monitoring and reporting onstatus and progress, and modification to the project requirements and timelines, including projects undertaken bysubcontractors; The contract deliverables list (reference), identifies all contract deliverables and reporting requirements forthis contract.2.1.3Project Manager(s) with responsibility for monitoring and tracking day-to-day progress and timelines, coordinatingcommunication and project activities; costs incurred; and program management; The contract deliverables list (reference),identifies all contract deliverables and reporting requirements for this contract.2.1.4A BARDA Liaison with responsibility for effective communication with the Project Officer and Contracting Officer.2.1.5Administrative and legal staff to provide development of compliant subcontracts, consulting, and other legal agreements, andensure timely acquisition of all proprietary rights, including IP rights, and reporting all inventions made in the performanceof the project.2.1.6Administrative staff with responsibility for financial management and reporting on all activities conducted by the Contractorand any subcontractors. 2***Confidential Treatment Requested2.1.7Contract Review Meetings.2.1.7.1The Contractor shall participate in regular meetings to coordinate and oversee the contract effort as directed by theContracting and Project Officers. Such meetings may include, but are not limited to, meeting of the Contractors andsubcontractors to discuss clinical manufacturing progress, product development, product assay development, scale upmanufacturing development, clinical sample assays development, preclinical/clinical study designs and regulatoryissues; meetings with individual contractors and other HHS officials to discuss the technical, regulatory, and ethicalaspects of the program; and meeting with technical consultants to discuss technical data provided by the Contractor.2.1.7.2The Contractor shall participate in teleconferences every two weeks between the Contractor and subcontractors andBARDA to review technical progress. Teleconferences or additional face-to-face meetings shall be more frequent at therequest of BARDA.2.1.8Integrated Master Schedule2.1.8.1Within 30 calendar days of the effective date of the contract, the Contractor shall submit a first draft of an updatedIntegrated Master Schedule in a format agreed upon by BARDA to the Project Officer and the Contracting Officer forreview and comment. The Integrated Master Schedule shall be incorporated into the contract, and will be used tomonitor performance of the contract. Contractor shall include the key milestones and Go/No Go decision gates. TheIMS for the period of performance will be mutually agreed upon at the PMBR2.1.9Integrated Master Plan2.1.9.1Work Breakdown Structure: The Contractor shall utilize a WBS template agreed upon by BARDA for reporting on thecontact. The Contractor shall expand and delineate the Contract Work Breakdown Structure (CWBS) to a level agreedupon by BARDA as part of their Integrated Master Plan for contract reporting. The CWBS shall be discernable andconsistent. BARDA may require Contractor to furnish WBS data at the work package level or at a lower level if thereis significant complexity and risk associated with the task.2.1.9.2GO/ NO-GO Decision Gates: The Integrated Master Plan outlines key milestones with "Go/No Go" decision criteria(entrance and exit criteria for each phase of the project). The project plan should include, but not be limited to,milestones in manufacturing, non-clinical and clinical studies, and regulatory submissions.2.1.9.3Earned Value Management System Plan: Subject to the requirements under HHSAR Clause 352.234-4, the Contractorshall use principles of Earned Value Management System (EVMS) in the management of this contract. The SevenPrinciples are:I. Plan all work scope for the program to completion.3II.Break down the program work scope into finite pieces that can be assigned to a responsible person ororganization for control of technical, schedule, and cost objectives.III.Integrate program work scope, schedule, and cost objectives into a performance measurement baselineplan against which accomplishments may be measured. Control Changes to the baseline.IV.Use actual cost incurred and recorded in accomplishing the work performed.V.Objectively assess accomplishments at the work performance level.VI.Analyze significant variances from the plan, forecast impacts, and prepare an estimate at completionbased on performance to date and work to be performed.VII.Use earned value information in the company's management processes.Elements of EVMS shall be applied to all Cost Plus Fixed Fee CLINs as part of the Integrated Master Project Plan, theContractor shall submit a written summary of the management procedures that it will establish, maintain and use tocomply with EVMS requirements.2.1.10Decision Gate Reporting: On completion of a stage of the product development, as defined in the agreed upon IntegratedMaster Schedule and Integrated Master Plan, the Contractor shall prepare and submit to the Project Officer and theContracting Officer a Decision Gate Report that contains (i) sufficient detail, documentation and analysis to supportsuccessful completion of the stage according to the predetermined qualitative and quantitative criteria that were establishedfor Go/No Go decision making; and (ii) a description of the next stage of product development to be initiated and a requestfor approval to proceed to the next stage of product development.2.1.11Risk Management Plan: The Contractor shall develop a risk management plan within 90 days of contract award highlightingpotential problems and/or issues that may arise during the life of the contract, their impact on cost, schedule andperformance, and appropriate remediation plans. This plan should reference relevant WBS elements where appropriate.Updates to this plan shall be included every three months (quarterly) in the monthly Project Status Report.42.1.12Performance Measurement Baseline Review (PMBR): The Contractor shall submit a plan for a PMBR to occur within 90days of contract award. At the PMBR, the Contractor and BARDA shall mutually agree upon the budget, schedule andtechnical plan baselines (Performance Measurement Baseline). These baselines shall be the basis for monitoring andreporting progress throughout the life of the contract. The PMBR is conducted to achieve confidence that the baselinesaccurately capture the entire technical scope of work, are consistent with contract schedule requirements, are reasonably andlogically planned, and have adequate resources assigned. The goals of the PMBR are as FOLLOWS:I.Jointly assess areas such as the Contractor's planning for complete coverage of the SOW, logical schedulingof the work activities, adequate resources, and identification of inherent risksII.Confirm the integrity of the Performance Measurement Baseline (PMB)III.Foster the use of EVM as a means of communicationIV.Provide confidence in the validity of Contractor reportingV.Identify risks associated with the PMBVI.Present any revised PMBs for mutual agreementVII.Present an Integrated Master Schedule: The Contractor shall deliver an initial program level Integrated MasterSchedule (IMS) that rolls up all time-phased WBS elements down to the activity level. This IMS shallinclude the dependencies that exist between tasks. This IMS will be agreed to and finalized at the PMBR.DI-MGMT-81650 may be referenced as guidance in creation of the IMS (see http://www.acq.osd.mil/pm/).VIII.Present the Risk Management Plan2.1.13Deviation Request: During the course of contract performance, in response to a need to change IMS activities as baselined atthe PMBR, the Contractor shall submit a Deviation Report. This report shall request a change in the agreed-upon IMS andtimelines. This report shall include: (i) discussion of the justification/rationale for the proposed change; (ii) options foraddressing the needed changes from the agreed upon timelines, including a cost-benefit analysis of each option; and (iii)recommendations for the preferred option that includes a full analysis and discussion of the effect of the change on the entireproduct development program, timelines, and budget.2.1.14Monthly and Annual Reports: The Contractor shall deliver Project Status Reports on a monthly basis. The reports shalladdress the items below cross referenced to the WBS, SOW, IMS, and EVM:I.Executive summary highlighting the progress, issues, and relevant activities in manufacturing, non-clinical,clinical, and regulatory;II.Progress in meeting contract milestones, detailing the planned progress and actual progress during thereporting period, explaining any differences between the two and corrective steps;5III.Updated IMS;IV.Updated EVM;V.Updated Risk Management Plan (Every 3 months);VI.Three month rolling forecast of planned activities;VII.Progress of regulatory submissions;VIII.Estimated and actual expenses;2.1.15Data Management: The Contractor shall develop and implement data management and quality control systems/procedures,including transmission, storage, confidentiality, and retrieval of all contract data;2.1.15.1Provide for the statistical design and analysis of data resulting from the research;2.1.15.2Provide raw data or specific analyses of data generated with contract funding to the Project Officer, upon request.2.2 Non-Clinical Toxicology2.2.1N/A (no scope)2.3 Non-Clinical2.3.1Develop and validate [...***...] to lower [...***...].2.3.2[...***...]: Conduct [...***...] studies including [...***...] studies, [...***...] studies in [...***...].2.3.3[...***...]2.3.3.1Conduct [...***...study in [...***...].2.3.3.2Conduct [...***...] studies including [...***...studies, [...***...] studies including [...***...] CMX-001 and [...***...] in[...***...].2.3.4Use of [...***...] as a CMX-001 Surrogate in [...***...] Studies.2.3.4.1Dose [...***...] with [...***...] to identify the concentration of the [...***...] in [...***...] associated with [...***...] of[...***...].2.3.5Scaling of [...***...] to [...***...] by conducting studies with [...***...] to determine [...***...] in [...***...].2.3.6[...***...] of CMX001, [...***...] and [...***...] in the [...***...].2.3.7Conduct [...***...] experiments to demonstrate [...***...] following effective [...***...] prior to [...***...].2.3.8Conduct studies to [...***...] in [...***...].2.3.9Conduct CMX001 [...***...] study in [...***...] at a dose of CMX001 equivalent or less than [...***...] with treatmentbeginning at the [...***...] 6***Confidential Treatment Requested2.4 Clinical2.4.1Measurement of [...***...] levels in [...***...] and correlate the [...***...] levels to studies conducted in [...***...].2.4.2Conduct expanded access protocol ([...***...]).2.4.3Analyze data and provide a Final Report for [...***...] evaluation of CMX001 in patients ([...***...])2.5 Regulatory2.5.1Engaging the FDA on a path to support the treatment of smallpox indication with CMX-0012.5.2Preparing materials for and requesting, scheduling and participating in all meetings with the FDA, including meetings toreview EUA and/or all other data packages;2.5.3Providing BARDA with (i) the initial draft minutes and final draft minutes of any formal meeting with the FDA; (ii) finalminutes of any informal meeting with the FDA;2.5.4Obtain FDA concurrence on the feasibility of the proposed [...***...]CMX001/CDV/[...***...] in the [...***...], includingFDA feedback on [...***...] and review of data for the first [...***...] enrolled in the [...***...] sub-study2.5.5Develop and submit a revised [...***...] for CMX001 for Treatment of Smallpox, [...***...] for FDA review and comment,and revise the [...***...] as requested by FDA2.6 CMC2.6.1Validation of the [...***...] process: Validation of the process to demonstrate the [...***...] of a [...***...] of acceptablequality will be performed.2.6.2Validation of the [...***...] process to produce [...***...]: Validation of the process to demonstrate the [...***...] of a[...***...] of acceptable quality will be performed.3.PHASE II: [...***...]Research and development of CMX001 for the treatment of smallpox to include the following activities: [...***...]. Thecontractor shall carry out the following tasks and subtasks and in accordance with the agreed upon Integrated Master Scheduleand Integrated Master Plan (defined in 2.1.8 and 2.1.9) which shall further detail the conduct of the specific tasks and subtasks.7***Confidential Treatment Requested3.1 Program Management (consistent with section 2.1)3.1.1Program management scope in BASE year is consistent with program management scope in each option year.3.2 Non-Clinical toxicology3.2.1N/A (no scope)3.3 Non-Clinical3.3.1Quantify [...***...] concentrations in [...***...] from [...***...].3.3.2Determine [...***...] for CMX001 [...***...] in [...***...].3.3.3Scaling of [...***...] to [...***...] - Review with BARDA and FDA the [...***...] generated to support scaling between[...***...] and [...***...] using [...***...] as well as comparisons of [...***...] in the [...***...].3.3.4Determine [...***...] for CMX001 in [...***...] in [...***...].3.3.5Conduct [...***...].3.3.6Conduct [...***...] and [...***...] of [...***...]3.3.7Chimerix will provide [...***...] for the [...***...] and [...***...] conducted under the [...***...]3.4 Clinical3.4.1N/A (No scope)8***Confidential Treatment Requested3.5 Regulatory3.5.1Engaging the FDA on a path to support the treatment of smallpox indication with CMX0013.5.2Generating all necessary documentation for [...***...]. [[...***...]]3.5.3Preparing materials for and requesting, scheduling and participating in all meetings with the FDA, including meetings toreview EUA (if needed) and/or all other data packages;3.5.4Providing BARDA with (1) the initial draft minutes and final draft minutes of any formal meeting with the FDA relating tothe smallpox program; (ii) final draft minutes of any informal meeting with the FDA relating to the smallpox program.3.6 CMC3.6.1N/A (No scope)4.PHASE III: [...***...]Research and development of CMX001 for the treatment of smallpox and dsDNA viruses to include the following activities: [...***...]Study, [...***...] Study, [...***...]. The contractor shall carry out the following tasks and subtasks and in accordance with agreed uponIntegrated Master Schedule and Integrated Master Plan (defined in 2.1.8 and 2.1.9) which shall further detail the conduct of the specifictasks and subtasks.4.1 Program Management (Consistent with section 2.1)4.1.1Program management scope in BASE year is consistent with program management scope in each option year.4.2 Non-Clinical toxicology4.2.1N/A (no scope)9***Confidential Treatment Requested4.3 Non-Clinical4.3.1[...***...] studies: A [...***...] study will be conducted with the [...***...] of CMX001 selected based on the results of the[...***...] and [...***...] studies, [...***...] will be [...***...] to [...***...] beginning at the [...***...] or the FDA agreed upontrigger for treatment. The first [...***...] study will be a [...***...] study of CMX001 in the [...***...] model. A study will beconducted with an [...***...] of CMX001 to determine the [...***...] after observation of the FDA agreed upon trigger fortreatment. These studies will include [...***...] and [...***...]. The primary endpoint will be [...***...].4.3.2[...***...] study of CMX001 in the [...***...]: The [...***...] study will evaluate the [...***...] of CMX001 at [...***...]. Thestudy will include [...***...] and [...***...] agreed upon with the FDA. The primary endpoint will be [...***...]. A [...***...]study to measure [...***...] in the selected [...***...] will be conducted to confirm the [...***...]. A [...***...] study will beconducted prior to [...***...] in the [...***...] to determine [...***...] and [...***...]..4.3.3Conduct additional studies, including [...***...], in [...***...] to determine [...***...] and [...***...] for CMX001 at [...***...]4.3.4Conduct [...***...] of [...***...]4.3.5Conduct additional studies for [...***...] of [...***...] to be used in [...***...]4.3.6Conduct additional [...***...] studies using [...***...].4.4 Clinical4.4.1Clinical [...***...] studies to evaluate [...***...] used in previous clinical studies and [...***...] used in previous clinicalstudies and [...***...]. This study will [...***...] to [...***...] to determine if [...***...] are comparable.10***Confidential Treatment Requested4.5 Regulatory4.5.1Generating all necessary data and preparing documentation for an [...***...] meeting submission to regulatory agencies;4.5.2Preparing materials for and requesting, scheduling and participating in all meetings with the FDA, including the [...***...]Meeting, meetings to review [...***...], EUA (if needed) and/or all other data packages;4.5.3Providing BARDA with (i) the initial draft minutes and final draft minutes of any formal meeting with the FDA relating tothis Contract; (ii) final draft minutes of any informal meeting with the FDA;4.5.4Preparing an [...***...] submission for a [...***...]4.6 CMC4.6.1[...***...] in order to [...***...] for registration and clinical trial supplies4.6.2[...***...]. Validation of the process to demonstrate the [...***...] of a [...***...] of acceptable quality will be performed.5.PHASE IV: [...***...]Research and development of CMX001 for the treatment of smallpox to include the following activities: [...***...]. Thecontractor shall carry out the following tasks and subtasks and in accordance with agreed upon Integrated Master Schedule andIntegrated Master Plan (defined in 2.1.8 and 2.1.9) which shall further detail the conduct of the specific tasks and subtasks.5.1 Program Management (Consistent with section 2.1)5.1.1Program management scope in BASE year is consistent with program management scope in each option year.5.2 Non-Clinical toxicology5.2.1N/A (no scope)5.3 Non-Clinical5.3.1[...***...]. A [...***...] study will be conducted with [...***...] and [...***...] subject to FDA feedback. [...***...] will berandomized to [...***...] beginning at the [...***...or the FDA agreed upon trigger for treatment. These studies will include[...***...] and [...***...]. The primary endpoint will be [...***...].11***Confidential Treatment Requested5.4 Clinical5.4.1N/A (No scope)5.5 Regulatory5.5.1Generating all necessary data and preparing documentation for NDA submissions to regulatory agencies;5.5.2Preparing materials for and requesting, scheduling and participating in all meetings with the FDA, including meetings toreview IND, NDA and/or all other data packages relating to this Contract;5.5.3Providing BARDA with (i) the initial draft minutes and final draft minutes of any formal meeting with the FDA; (ii) finaldraft minutes of any informal meeting with the FDA relating to this Contract5.6 CMC5.6.1[...***...]. [...***...] of the process to demonstrate the [...***...] of the [...***...] of acceptable quality will be performed atnew manufacturing site either at [...***...] or [...***...]. May include a [...***...] and [...***...], the [...***...] to support the[...***...], and [...***...] of required necessary [...***...] to support [...***...].6.PHASE V: [...***...]Research and development of CMX-001 for the treatment of smallpox to include the following activities: [...***...]. The contractorshall carry out the following tasks and subtasks and in accordance with an agreed upon Integrated Master Schedule and IntegratedMaster Plan (defined in 2.1.8 and 2.1.9) which shall further detail the conduct of the specific tasks and subtasks.6.1 Program Management (Consistent with section 2.1)6.1.1Program management scope in BASE year is consistent with program management scope in each option year.6.2 Non-Clinical toxicology6.2.1N/A (no scope)6.3 Non-Clinical6.3.1[...***...] Studies. This study replicates [...***...] if a larger sample size is necessary to achieve a [...***...] result.12***Confidential Treatment Requested6.4 Clinical6.4.1Compile [...***...]. A database of [...***...] collected from all CMX001 clinical studies, irrespective of [...***...], will bepopulated and analyzed in order to support an NDA for smallpox.6.5 Regulatory6.5.1Generating all necessary data and preparing documentation for NDA submissions to regulatory agencies;6.5.2Submitting NDA documentation to the FDA in a timely manner, consistent with timelines set out in the contract and by theFDA.6.5.3Preparing materials for and requesting, scheduling and participating in all meetings with the FDA, including meetings toreview IND, EUA and/or all other data packages;6.5.4Providing BARDA with (i) the initial draft minutes and final draft minutes of any formal meeting with the FDA; (ii) finaldraft minutes of any informal meeting with the FDA;6.6 CMC6.6.1[...***...]. [...***...] of the process to demonstrate the [...***...] of a [...***...] will be performed.7.Other Items7.1 Facilities, Equipment and Other Resources. (Contract: Section J)The Contractor shall provide equipment; facilities and other resources required for implementation of the SOW dated 27-OCT-14to comply with all Federal and HHS regulations in:7.1.1The [...***...] and use of [...***...];7.1.2The acquisition, handling, storage and shipment of [...***...], including [...***...] required for working with the [...***...];7.1.3The [...***...] of [...***...] under cGMP;7.1.3.1The design and conduct of [...***...]; and7.1.3.2The conduct of [...***...] studies to determine [...***...] of [...***...] 7.1.4Design and conduct of [...***...] under GCP.13***Confidential Treatment RequestedAMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT1. CONTRACT ID CODEPAGE OF PAGES132. AMENDMENT/MODIFICATION NO00483. EFFECTIVE DATESee Block 16C4. REQUISITION/PURCHASE REQ NON/A5. PROJECT NO (if applicable)6. ISSUED BY CODEASPR-BARDA7. ADMINISTERED BY (if other than line item 6) CODEASPR-BARDA02ASPR-BARDA200 Independence Ave., S.W.Room 640-GWashington DC 20201 ASPR-BARDA330 Independence Ave., SW, Rm G640Washington DC 20201 8. NAME AND ADDRESS OF CONTRACTOR (No, street, county, State and ZIP Code)(x)9A AMENDMENT OF SOLICITATION NO.CHIMERIX, INC. 1377270CHIMERIX, INC. 2505 MERIDIAN P2505 MERIDIAN PKWY STE 340DURHAM NC 277135246 9B DATED (SEE ITEM 11)X10A MODIFICATION OF CONTRACT/ORDER NOHHSO100201100013C10B DATED (SEE ITEM 13) 02/16/2011CODE 1377270FACILITY CODE11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS¨ The above numbered solicitation is amended as set forth in Item 14. The hour and date specified of receipt of Offers ¨ is extended. ¨ is not extended Offers must acknowledge receipt of this amendment prior to the hour end dale specified in the solicitation or as amended, by one or the following methods: (a) By completing Items 8 and 15, and returning __________ copies of the amendment; (b) Byacknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BERECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offeralready submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.12. ACCOUNTING AND APPROPRIATION DATA (if required)N/A13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.CHECK ONEA. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO IN ITEM 10A B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14,PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OFXD. OTHER (Specify type of modification and authority)Bilateral: Mutual Agreement of the Parties.E. IMPORTANT: Contractor ¨ is not. ý is required to sign this document and return 0 copies to the issuing office.14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible)Tax ID Number: 33-0903395DUNS Number: 121785997A. The purpose of this modification is to incorporate the following changes into the contract:1. Under Contract Number HHS0100201100013D in SECTION 6 – CONTRACT ADMINISTRATION DATA, under Article G.10. Government Property, the following is hereby added as Paragraph 6. and titled “Disposition Instructions” as follows:6. Disposition InstructionsContinued ...Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.15A. NAME AND TITLE OF SIGNER (Type or print) Timothy W. Trost, SVP & CFO16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)ETHAN J. MUELLER15B. CONTRACTOR/OFFEROR /s/ Timothy W. Trost (Signature of person authorized to sign)15C. DATE SIGNED12/21/1716B. UNITED STATES OF AMERICA /s/ Ethan J. Mueller (Signature of person authorized to sign)16C. DATE SIGNED12/21/17NSN 7540-152-8070 STANDARD FORM 30 (REV 10-83)Previous edition unusable Prescribed by GSAFAR (48 CFR) 53.2431CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0048PAGE OF23NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) Title for retain samples for batches CMX001 Tab 100mg nor-film (FC) coated, R&D Formulation (CNX-CTM-029 (200 Tablets, i.e. 20 bottles 10 count) (CMX-CTM-032 (200 Tablets, i.e. 20 bottles 10 count) and stability samples for batches of CMX001 Tab 100mg non-film coated, R&D Formulation (CMX-CTM-029 (2,500Tablets, i.e. 250 bottles 10 count) (CMX-CTM-032 (3,240 Tablets, i.e. 324 bottles 10 count) Only under Contract Number HHSO100201100013C that are no longerneeded by the Government and have no commercial market value will hereby vest with the Contractor and will be destroyed by Chimerix following proper Cgmpdestruction procedures Only.2. In signing this no cost bilateral modification, the Contractor hereby certifies for both Chimerix and any of its subcontractors at any tier that the retain samples forbatches of CMX001 Tab 100mg non-film (FC) coated, R&D Formulation (CMX-CTM-029 (200 Tablets, i.e. 20 bottles 10 count) (CMX-CTM-032 (200 Tablets, i.e.20 bottles 10 count) and stability samples for batches of CMX001 Tab 100mg non-film coated, R&D Formulation (CMX-CTM-029 (2,500 Tablets, i.e. 250 bottles 10count) (CMX-CTM-032 (3,240 Tablets, i.e. 324 bottles 10 count) Only under Contract Number HHSO100201100013C that are no longer needed by the Governmentand have no commercial market value that the Government will be turning title over to the Contractor will be destroyed Only and will not be repurposed for use underany efforts nor disposed of, nor destroyed in any methods that are prohibited by any federal, state and local laws and regulations and will not result in any costs beingincurred under both Contract Number HHSO100201100013C and under any other U.S. Government contracts and in signing this no cost bilateral modification, theContractor also hereby certifies for both Chimerix and any of its subcontractors at any tier that the retain samples for batches of CMX001 Tab 100mg non-film (FC)coated, R&D Formulation (CMX-CTM-029 (200 Tablets, i.e. 20 bottles 10 count) (CMX-CTM-032 (200 Tablets, i.e. 20 bottles 10 count) and stability, samples forbatches of CMX001 Tab 100mg non-film coated, R&D Formulation (CMX-CTM-029 (2,500 Tablets, i.e. 250 bottles 10 count) (CMX-CTM-032 (3,240 Tablets, i.e.324 bottles 10 count) Only under Contract Number HHSO100201100013C that are no longer needed by the Government and have no commercial market value thatthe Government will be turning title over to the Contractor will not be repurposed for the performance of any other efforts that are under the scope of ContractNumber HHSO100201100013C nor under any other Government contracts by either Chimerix or any of its subcontractors at any tier and will not result in any costsbeing incurred under both Contract Number HHSO100201100013C and under any other U.S. Government contracts.3. In signing this no cost bilateral modification, the Contractor hereby certifies for both Chimerix and any of its subcontractors at any tier that the retain samples forbatches of CMX001 Tab 100mg non-film (FC) coated, R&D Formulation (CMX-CTM-029 (200 Tablets, i.e. 20 bottles 10 count) (CMX-CTM-032 (200 Tablets, i.e.20 bottles 10 count) and stability samples for batches of CMX001 Tab 100mg non-film coated, R&D Formulation (CMX-CTM-029 (2,500 Tablets, i.e. 250 bottles 10count) (CMX-CTM-032 (3,240 Tablets, i.e. 324 bottles 10 count) Only under Contract Number HHSO100201100013C that are no longer needed by the Governmentand have no commercial market value that the Government will be turning title over to the Contractor once they are destroyed, Chimerix will send certifieddocumentation to the Contracting Officer that certifies the official destruction of the property.4. The total amount, scope and period of performance of all other CLINs that areContinued ...NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.1102CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0048PAGE OF33NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) Currently being performed under the contract remain unchanged. This modification does not exercise any unexercised Option CLINs under the contract and does notauthorize any performance of efforts under any unexercised Option CLINs under the contract. In addition, the total amount, scope and period of performance of allunexercised Option CLINs under the contract remain unchanged. This modification also confirms that all activities under the base period of performance CLIN 0001were completed as of 31 May 2013 and confirms that all activities under the Option 1/CLIN 0002 period of performance were completed as of 30 April 2015.B. This is a no cost bilateral modification. All other terms and conditions of Contract Number HHSO100201100013C remain unchanged.Period of Performance: 02/16/2011 to 09/30/2018NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.1103***Text Omitted and Filed SeparatelyWith Securities and Exchange CommissionConfidential Treatment RequestedUnder 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2 of theSecurities Exchange Act of 1934, as amended.AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT1. CONTRACT ID CODEPAGE OF PAGES142. AMENDMENT/MODIFICATION NO00493. EFFECTIVE DATESee Block 16C4. REQUISITION/PURCHASE REQ NON/A.5. PROJECT NO (if applicable)6. ISSUED BY CODEASPR-BARDA7. ADMINISTERED BY (if other than line item 6) CODEASPR-BARDA02ASPR-BARDA200 Independence Ave., S.W.Room 640-GWashington DC 20201 ASPR-BARDA330 Independence Ave., SW, Rm G640Washington DC 20201 8. NAME AND ADDRESS OF CONTRACTOR (No, street, county, State and ZIP Code)(x)9A AMENDMENT OF SOLICITATION NO.CHIMERIX, INC. 1377270CHIMERIX, INC. 2505 MERIDIAN P2505 MERIDIAN PKWY STE 340DURHAM NC 277135246 9B DATED (SEE ITEM 11)x10A MODIFICATION OF CONTRACT/ORDER NOHHSO100201100013C10B DATED (SEE ITEM 13) 02/16/2011CODE 1377270FACILITY CODE11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS¨ The above numbered solicitation is amended as set forth in Item 14. The hour and date specified of receipt of Offers ¨ is extended. ¨ is not extended Offers must acknowledge receipt of this amendment prior to the hour end dale specified in the solicitation or as amended, by one or the following methods: (a) By completing Items 8 and 15, and returning __________ copies of the amendment; (b) Byacknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BERECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer alreadysubmitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.12. ACCOUNTING AND APPROPRIATION DATA (if required)N/A.Net Increase:$2,812,858.0013. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.CHECK ONEA. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO IN ITEM 10A B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14,PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OFXD. OTHER (Specify type of modification and authority)Bilateral: Mutual Agreement of the Parties.E. IMPORTANT: Contractor ¨ is not. ý is required to sign this document and return 0 copies to the issuing office.14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible)Tax ID Number: 33-0903395DUNS Number: 121785997A. The purpose of this modification is to incorporate the following changes into the contract:1. Under Contract Number HHSO100201100013C in SECTION G – CONTRACT ADMINISTRATION DATA, under Article G.10. Government Property, the following is herebyadded as Paragraph 7. and titled “disposition Instructions” as follows:7. Disposition InstructionsContinued ...Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.15A. NAME AND TITLE OF SIGNER (Type or print) Timothy W. Trost, SVP & CFO16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)ETHAN J. MUELLER15B. CONTRACTOR/OFFEROR /s/ Timothy W. Trost (Signature of person authorized to sign)15C. DATE SIGNED2/26/1816B. UNITED STATES OF AMERICA /s/ Ethan J. Mueller (Signature of person authorized to sign)16C. DATE SIGNED2/27/18NSN 7540-01-152-8070 STANDARD FORM 30 (REV 10-83)Previous edition unusable Prescribed by GSAFAR (48 CFR) 53.243CONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0049PAGE OF24NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) Title for [...***...] under Contract Number HHSO100201100013Cthat are no longer needed by the Government and have no commercial market value will hereby vest with the Contractor.2. In signing this no cost bilateral modification, the Contractor hereby certifies for both Chimerix and any of its subcontractors at any tier that the [...***...] underContract Number HHS0100201100013C that are no longer needed by the Government and have no commercial market value that the Government will be turning titleover to the Contractor will not be repurposed for use under any efforts in any methods that are prohibited by any federal, state and local laws and regulations and willnot result in any costs being incurred under both Contract Number HHS0100201100013C and under any other U.S. Government contracts in effect as of the effectivedate of this modification and in signing this no cost bilateral modification, the Contractor also hereby certifies for both Chimerix and any of its subcontractors at anytier that the [...***...] under Contract Number HHS0100201100013C that are no longer needed by the Government and have no commercial market value that theGovernment will be turning title over to the Contractor will not be repurposed for the performance of any other efforts that are under the scope of Contract NumberHHS0100201100013C nor under any other U.S. Government contracts in effect as of the effective date of this modification by either Chimerix or any of itssubcontractors at any tier any will not result in any costs being incurred under both Contract Number HHSO100201100013C and under any other U.S. Governmentcontracts.3. As consideration for the transfer of Title for [...***...] from the Government under Contract Number HHSO100201100013C to Chimerix, the Government andChimerix hereby bilaterally and mutually agree to the following:a. For Option 1 CLIN 0002, for Modification 14, Total Estimated Cost – [...***...], Total Fixed Fee – [...***...] and Total Estimated cost Plus Fixed Fee – [...***...]Only, the following Indirect Cost Ceiling is established for which Chimerix cannot seek reimbursement in excess of the following Indirect Cost Ceiling:[...***...]b. For Option 1 CLIN 0002 Cost Growth, for Modification 16, Total Estimated Cost – [...***...] Only, the following Indirect Cost Ceiling is established for whichChimerix cannot seek reimbursement in excess of the following Indirect Cost Ceiling:[...***...]c. For Option 2 CLIN 0003, for Modification 19, Total Estimated Cost – [...***...], Total Fixed Fee – [...***...] and Total Estimated Cost Plus Fixed Fee – [...***...]Only, the following Indirect Cost Ceiling is established for which Chimerix cannot seek reimbursement in excess of the following Indirect Cost Ceiling and within theTotal Estimated Cost of [...***...] Only:[...***...]d. For Option 2 CLIN 0003 Cost Growth, for Modification 34, Total Estimated Cost – Continued ...NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.110***Confidential Treatment RequestedCONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0049PAGE OF34NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) [...***...] Only, the following Indirect Cost Ceiling is established for which Chimerix cannot seek reimbursement in excess of the following Indirect Cost Ceiling andwithin the Total Estimated Cost of [...***...] Only:[...***...]e. For Option 2 CLIN 0003, supplement for Modification 47, Total Estimated Cost – [...***...], Total Fixed Fee – [...***...] and Total Estimated Cost Plus Fixed Fee –[...***...] Only, the following Indirect Cost Ceiling Rates are established for which Chimerix cannot seek reimbursement in excess of the following indirect CostCeiling Rates:[...***...]% Fringe, [...***...]% G&Af. For CLIN 0004, for Modification 47, Total Estimated Cost – [...***...], Total Fixed Fee – [...***...] and Total Estimated Cost Plus Fixed Fee – [...***...] Only, thefollowing Indirect Cost Ceiling is established for which Chimerix cannot seek reimbursement in excess of the following Indirect Cost Ceiling and within the TotalEstimated Cost of [...***...] Only:[...***...]g. For any Indirect Rates for Calendar Years 2018 and beyond under this contract, the following Indirect Rates are established as Indirect Cost Ceiling Rates for whichChimerix cannot seek reimbursement in excess of the following Indirect Cost Ceiling Rates;[...***...]% Fringe, [...***...]% G&Ah. In signing this no cost bilateral modification, Chimerix hereby certifies that they have received as of the executed date of this modification full payment under bothCLIN 0001 and CLIN 0002 (Including any supplemental amounts) for all indirect expenses (both forward billing indirect expenses and retroactive billing indirectexpenses) and will seek no further payment/reimbursement from the Government for indirect expenses under both CLIN 0001 and CLIN 0002 (Including anysupplemental amounts).4. The total amount, scope and period of performance of all other CLINs that are currently being performed under the contract remain unchanged. This modificationdoes not exercise any unexercised Option CLINs under the contract and does not authorize any performance of efforts under any unexercised Option CLINs under thecontract. In addition, the total amount, scope an period of performance of all unexercised Option CLINs under the contract remain unchanged. This modification alsoconfirms that all activities under the base period of performance CLIN 0001 were completed as of 31 May 2013 and confirms that all activities under the Option1/CLIN 0002 period of performance were completed as of 30 April 2015.B. This is a no cost bilateral modification. All other terms and conditions of Contract Number HHS0100201100013C remain unchanged.Continued . . .NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.110***Confidential Treatment RequestedCONTINUATION SHEETREFERENCE NO. OF DOCUMENT BEING CONTINUEDHHSO100201100013C/0049PAGE OF44NAME OF OFFEROR OR CONTRACTORCHIMERIX, INC. 1377270ITEM NO.(A)SUPPLIES/SERVICES(B)QUANTITY(C)UNIT(D)UNIT PRICE(E)AMOUNT(F) Period of Performance: 02/16/2011 to 09/30/2018NSN 7540-152-8067 STANDARD FORM 336 (4-86)Sponsored by GSAFAR (48 CFR) 53.110FIRST AMENDMENT TO INDUSTRIAL BUILDING LEASEThis First Amendment to Industrial Building Lease (this “Amendment”) is dated to be effective as of December 14, 2017 (the“Effective Date”), by and between CLPF-RESEARCH CENTER, LLC, a Delaware limited liability company, successor-in-interestto NORTHWOOD RTC LLC, a Delaware limited liability company (“Landlord”), and CHIMERIX, INC., a Delaware corporation(“Tenant”).R E C I T A L SWHEREAS, Landlord and Tenant entered into that certain Industrial Building Lease dated March 10, 2014 (the “OriginalLease”, with the Original Lease and this Amendment being collectively hereinafter referred to as the “Lease”), for the leasing ofapproximately 7,925 square feet of space known as Suite E (the “Premises”) in the building commonly known as Research Tri-CenterNorth I, located at 3501 Tri-Center Boulevard, Durham, North Carolina 27713 (the “Building”), which Building is part of that certainindustrial project commonly known as Research Tri-Center (the “Project”), as more particularly described in the Lease.WHEREAS, Tenant and Landlord desire to modify the Original Lease pursuant to the terms herein.NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties and other good and valuableconsideration, the receipt and adequacy of which is hereby acknowledged, it is the sole intent of Landlord and Tenant to hereby amendthe Lease as follows:1.Extension of Lease Term and Base Rent.(a) Landlord and Tenant acknowledge and agree that, pursuant to the Original Lease, the Lease Term expires on July 31, 2018,however, Landlord and Tenant hereby agree to extend the Lease Term commencing on August 1, 2018 (the “ExtensionCommencement Date”) and expiring on July 31, 2021, and the Base Rent during such extension shall be as follows:MonthsAnnual Base Rent RatePer Sq. Ft.Annual Base RentMonthly Installment of BaseRentAugust 1, 2018 – July 31, 2019$17.50$138,687.50$11,557.29August 1, 2019 – July 31, 2020$18.03$142,887.75$11,907.32August 1, 2020 – July 31, 2021$18.57147.167.25$12,263.94Except as expressly amended or modified in this Amendment, Tenant will continue to pay all rent, including monthly Base Rent,Additional Rent and all other charges and expenses pursuant to the applicable terms and conditions of the Lease.Fourth Amendment to Industrial Building Lease PAGE 1(b) Tenant and Landlord acknowledge and agree that except as expressly set forth in Section 2 below, Tenant shall have noright or option to extend the Lease Term beyond July 31, 2021.2.Renewal Option.(a) Provided that no Event of Default has occurred, and Tenant is occupying the entire Premises at the time of such election,Tenant may renew the Lease Term for one (1) additional period of five (5) years (the “Renewal Term”), by delivering written noticeof the exercise thereof to Landlord not later than twelve (12) months before the expiration of the Lease Term (as such Lease Term isextended pursuant to Section 1 of this Amendment). The monthly Base Rent payable for each month during the Renewal Term shallbe the Fair Market Value (hereinafter defined), as determined by Landlord at the commencement of the Renewal Term, provided,however, in no event shall the Fair Market Value be less than the Base Rent rate at the expiration of the Lease Term. As used herein,the term “Fair Market Value” shall: (1) mean the prevailing market rate at the commencement of the Renewal Term for leases in theRTP / I-40 corridor submarket of Raleigh/Durham, North Carolina of equivalent quality, size, utility and for similarly constructedbuildings, (2) take into consideration the finish out and improvements within the Premises, and (3) take the length of the Renewal Termand the credit standing of Tenant into account. Within 30 days after receipt of Tenant’s written notice to renew, Landlord shall deliverto Tenant written notice of the Fair Market Value and shall advise Tenant of the required adjustment to monthly Base Rent, if any, andthe other terms and conditions offered, if any. Tenant shall, within ten (10) business days after receipt of Landlord’s notice, notifyLandlord in writing whether Tenant accepts or rejects Landlord’s determination of the Fair Market Value and the other terms offered, ifany. If Tenant timely notifies Landlord that Tenant accepts Landlord’s determination of the Fair Market Value and the other termsoffered, if any, in the time set forth herein (time being of the essence), then, on or before the commencement date of the RenewalTerm, Landlord and Tenant shall execute an amendment to this Lease extending the Lease Term on the same terms provided in thisLease, except as follows: (i) monthly Base Rent shall be adjusted to the Fair Market Value; (ii) Tenant shall have no further renewaloption unless expressly granted by Landlord in writing pursuant to a subsequent written agreement between Landlord and Tenant; (iii)any other terms and conditions agreed upon by Landlord and Tenant shall be included in such amendment; and (iv) Landlord shalllease to Tenant the Premises in their then-current condition, and, unless otherwise expressly agreed to between Landlord and Tenant ina written amendment to the Lease, Landlord shall not provide to Tenant any allowances (e.g., moving allowance, constructionallowance, and the like) or other tenant inducements.(b) If Tenant rejects Landlord’s determination of the Fair Market Value, or fails to timely notify Landlord in writing thatTenant accepts or rejects Landlord’s determination of the Fair Market Value, or fails to execute an amendment to this Lease inconnection with the exercise of its renewal option within twenty (20) days after receipt from Landlord, time being of the essence withrespect thereto, Tenant’s rights under this Section 3 to extend the Lease Term for the Renewal Term shall terminate and Tenant shallhave no right to renew this lease.First Amendment to Industrial Building Lease PAGE 2(c) Tenant’s renewal rights under this Section 2 shall terminate if (1) this Lease or Tenant’s right to possession of thePremises is terminated, (2) Tenant assigns any of its interest in this Lease or sublets the Premises, (3) Tenant fails to timely exercise itsoption under this paragraph or fails to timely execute and return an acceptable form of the lease amendment reference above, timebeing of the essence with respect thereto, or (4) Landlord determines, in its sole but reasonable discretion, that at the expiration of theLease Term, Tenant’s tangible net worth has materially deteriorated compared with its tangible net worth as of the Effective Date.3. AS IS Condition of Premises. Tenant accepts the Premises (including, without limitation, all equipment, fixtures, systemsand racking therein), the Building, the Common Areas and the Project in their AS IS, WHERE IS, WITH ALL FAULTS conditionand state of repair existing as of the Effective Date, and Tenant agrees that Landlord shall not be required to perform any work, supplyany materials, or incur any expense to prepare the Premises for Tenant’s occupancy, provided, however, nothing herein shall relieveLandlord of its obligations under Section 8 of the Lease.. Tenant shall, at its sole cost and expense, be solely responsible to obtain anyand all licenses, permits and/or consents, if any, related to its use and occupancy of the Premises.4. Release of Landlord. Tenant, for itself and on behalf of its owners, employees, officers, subsidiaries and divisions, herebywaives and releases any and all known claims and causes of action, if any, which it has or may have against Landlord or any of itsagents arising out of or in any way related to, directly or indirectly, the Original Lease and this Amendment, and/or the operation orcondition of the Project, the Building and/or the Premises.5. Brokers. Landlord and Tenant represent and warrant that they have dealt with no broker, agent or other person inconnection with this transaction except for Davis Moore Capital, who represents Tenant (the “Tenant’s Broker”), and FoundryCommercial, who represents Landlord (the “Landlord’s Broker”), and except for the Tenant’s Broker and Landlord’s Broker, noother broker, agent or other person brought about this transaction. Landlord agrees to pay a commission to the Tenant’s Broker and theLandlord’s Broker pursuant to a separate written agreement(s) between Landlord, Tenant’s Broker, and Landlord’s Broker. Landlordand Tenant hereby indemnify and hold each other harmless against any loss, claim, expense or liability with respect to anycommissions or brokerage fees claimed by any broker or finder other than the Tenant’s Broker and Landlord’s Broker on account ofthe execution of this Amendment and the transactions contemplated herein due to any action of the indemnifying party.5. Miscellaneous. Landlord and Tenant represent each to the other that it has full right and authority to enter into thisAmendment. All other terms and conditions of the Lease, except as specifically amended or modified by this Amendment, shall remainin effect and unchanged. All terms used herein having initial capital letters and not otherwise herein defined shall have the meaningascribed to such terms in the Lease, and effective as of the Effective Date, any defined terms in the Lease that are also defined herein,shall be replaced with the defined terms in this Amendment. If any conflict exists between the provisions in this Amendment and theOriginal Lease, then this Amendment controls. The Lease, including this Amendment, constitutes the entire agreement of the Landlordand Tenant with respect to the subject matter of the Lease and this Amendment, and contains all of the covenants and agreements ofLandlord and Tenant with respectFirst Amendment to Industrial Building Lease PAGE 3thereto. The recitals set forth above are true and correct and are hereby incorporated herein by this reference. Landlord and Tenanteach acknowledge that no representations, inducements, promises or agreements, oral or written, have been made by Landlord orTenant, or anyone acting on behalf of Landlord or Tenant, which are not contained herein, and any prior agreements, promises,negotiations, or representations not expressly set forth in this Amendment are of no effect. This Amendment may not be altered,changed or amended except by an instrument in writing signed by both parties hereto. Except as modified in this Amendment,Landlord and Tenant hereby ratify and confirm all provisions of the Lease. Accordingly, the parties agree that the Lease remains in fullforce and effect with the exception of the lease terms and obligations that are amended herein.[Signatures To Follow On Next Page][Remainder Of This Page Left Intentionally Blank]First Amendment to Industrial Building Lease PAGE 4THIS FIRST AMENDMENT TO INDUSTRIAL BUILDING LEASE is dated to be effective as of the date first written above.TENANT:CHIMERIX, INC.,a Delaware corporationBy: /s/ Timothy W. Trost Name: Timothy W. Trost Title: SVP and CFOLANDLORD: CLPF-RESEARCH CENTER, LLC,a Delaware limited liability companyBy: Clarion Lion Properties Fund Holdings, L.P.,its sole memberBy: CLPF-Holdings, LLC, its general partnerBy: Clarion Lion Properties Fund Holdings REIT, LLC,its sole memberBy: Clarion Lion Properties Fund, LP,its managing memberBy: Clarion Partners LPF GP, LLC, its general partner By: Clarion Partners, LLC, its sole memberBy: /s/ Jesse Harty Name: Jesse Harty Title: Vice President First Amendment to Industrial Building Lease PAGE 5Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the following Registration Statements:1.Registration Statement (Form S-8 No. 333-187860) pertaining to the 2002 Equity Incentive Plan, 2012 Equity Incentive Plan, 2013 EquityIncentive Plan and 2013 Employee Stock Purchase Plan of Chimerix, Inc.,2.Registration Statement (Form S-8 Nos. 333-194408, 333-202582, 333-209802 and 333-216396) pertaining to the 2013 Equity Incentive Plan and2013 Employee Stock Purchase Plan of Chimerix, Inc., and3.Registration Statement (Form S-3 No. 333-221412) of Chimerix, Inc.;of our reports dated March 1, 2018 with respect to the consolidated financial statements of Chimerix, Inc. and the effectiveness of internal control overfinancial reporting of Chimerix, Inc. included in this Annual Report (Form 10-K) of Chimerix, Inc. for the year ended December 31, 2017. /s/ Ernst & Young LLP Raleigh, North Carolina March 1, 2018 Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, M. Michelle Berrey, certify that: 1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2017 of Chimerix, 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 this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date:March 1, 2018 /s/ M. Michelle Berrey M. Michelle Berrey, MD, MPH President & Chief Executive Officer Exhibit 31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Timothy W. Trost, certify that: 1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2017 of Chimerix, 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 this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date:March 1, 2018 /s/ Timothy W. Trost Timothy W. TrostSenior Vice President, Chief Financial Officer and CorporateSecretary Exhibit 32.1 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 on Form 10-K of Chimerix, Inc. (the “Company”) for the period ended December 31, 2017, as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, M. Michelle Berrey, as Principal Executive Officer of the Company, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: 1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date:March 1, 2018 /s/ M. Michelle Berrey M. Michelle Berrey, MD, MPH President & Chief Executive Officer The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or afterthe date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has beenprovided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Exhibit 32.2 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 on Form 10-K of Chimerix, Inc. (the “Company”) for the period ended December 31, 2017, as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, Timothy W. Trost, as Principal Financial Officer of the Company, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: 1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date:March 1, 2018 /s/ Timothy W. Trost Timothy W. TrostSenior Vice President, Chief Financial Officer and CorporateSecretary The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or afterthe date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has beenprovided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

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