Fortress Biotech, Inc. Annual Report 2012

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2012 Annual Report

Included in the 2012 Annual Report:
Form 10-K filed with the U.S. Securities and Exchange Commission on
March 18, 2013

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

FORM 10-K

EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 2012
or

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the Transition Period from

to
Commission File No. 001-35366

CORONADO BIOSCIENCES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

24 New England Executive Park, Suite 105
Burlington, MA
(Address of Principal Executive Offices)

20-5157386
(I.R.S. Employer
Identification No.)

01803
(Zip Code)

Registrant’s telephone number, including area code: (781) 652-4500

Securities registered pursuant to Section 12(b) of the Act:

(Title of Class)

Common Stock, par value $0.001 per share

(Name of exchange on which registered)

NASDAQ Capital Market

Securities registered pursuant to section 12(g) of the Act:
None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes ‘ No È

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer ‘
Non-accelerated filer ‘ (Do not check if a smaller reporting company)

È
Accelerated filer
Smaller reporting company ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the

registrant’s most recently completed second fiscal quarter: Not applicable.

As of March 11, 2013, there were 26,023,484 shares of the registrant’s common stock outstanding.

CORONADO BIOSCIENCES, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

PART I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6. Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . .
Item 7A Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
Item 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Statements in this Annual Report on Form 10-K that are not descriptions of historical facts are forward-looking
statements that are based on management’s current expectations and are subject to risks and uncertainties that
could negatively affect our business, operating results, financial condition and stock price. We have attempted to
identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,”
“could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the
negative of these terms or other comparable terminology. Factors that could cause actual results to differ
materially from those currently anticipated include those set forth under “Item 1A. Risk Factors” including, in
particular, risks relating to:

•

the results of research and development activities;

uncertainties relating to preclinical and clinical testing;

financing and strategic agreements and relationships;

the early stage of products under development;

our need for substantial additional funds and uncertainties relating to financings;

our ability to attract, integrate and retain key personnel;

our ability to manufacture our product;

government regulation;

patent and intellectual property matters;

dependence on third party manufacturers; and

competition.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-
looking statements contained herein to reflect any change in our expectations or any changes in events,
conditions or circumstances on which any such statement is based, except as required by law.

PART I

Item 1.

Business.

Overview

We are a clinical stage biopharmaceutical company focused on the development of novel immunotherapy
biologic agents for the treatment of autoimmune diseases and cancer. Our two principal product candidates in
clinical development are described below.

TSO

TSO, or CNDO-201, is a biologic comprising Trichuris suis ova, the microscopic eggs of the porcine whipworm,
which we believe could be used for the treatment of a range of autoimmune diseases, such as Crohn’s disease, or
Crohn’s, ulcerative colitis, or UC, multiple sclerosis, or MS, autism, psoriasis, Type 1 diabetes, or T1D, psoriatic
arthritis and rheumatoid arthritis. In February 2012, we announced positive results from our Phase 1 clinical trial
of TSO in 36 patients with Crohn’s. The trial was a sequential dose-escalation, double-blind, placebo-controlled
study to examine safety and tolerability. TSO was shown to be safe and well tolerated, with no serious treatment-
related adverse events reported. To date, a number of investigator-sponsored clinical trials have been conducted
using TSO in patients suffering from Crohn’s, UC or MS. These studies also demonstrated that TSO is safe and
well tolerated.

In April 2012, our development partner, Dr. Falk Pharma GmbH, or Falk, reported that an independent data
monitoring committee had found no safety concerns and a positive efficacy trend in an interim analysis (blinded
to Falk) of clinical data from the initial 120 patients in Falk’s ongoing Phase 2 clinical trial in Europe evaluating
TSO in Crohn’s patients, known as TRUST-II. Based on the committee’s recommendations, Falk has advised us
that it is increasing the size of its trial and will conduct a subsequent interim analysis at the time the trial reaches
approximately 240 patients, which we expect to occur in the second half of 2013.

In August 2012, we initiated in the U.S. a Phase 2 clinical trial of TSO, known as TRUST-I, designed to evaluate
the safety and efficacy of TSO in approximately 220 patients with Crohn’s and expect to have initial study results
in the second half of 2013.

We have the exclusive rights to TSO in North America, South America and Japan (the “Coronado Territories”)
under a sublicense agreement with Ovamed GmbH, or Ovamed, as well as a manufacturing and supply
agreement with Ovamed to provide us with our clinical and commercial requirements of TSO. In December
2012, we signed the Second Amendment and Agreement to our sublicense agreement with Ovamed, which
provides to us the exclusive right to manufacture TSO for the Coronado Territories in exchange for certain
consideration to Ovamed. We anticipate that we will continue to purchase our Phase 2 TSO supplies and we may
purchase at least a portion of our Phase 3 TSO supplies from Ovamed under the current agreement. Thereafter,
we plan to manufacture our remaining Phase 3 supplies from our US facility which we plan to establish in
Woburn, MA under a lease acquired from Ovamed as part of the agreement.

In March 2012, we entered into a Collaboration Agreement with Ovamed and Falk, Ovamed’s sublicensee in
Europe for gastroenterology indications, under which we agreed to collaborate in the development of TSO for
Crohn’s. Under the Collaboration Agreement, Falk granted us exclusive rights and licenses under certain Falk
patent rights, pre-clinical data and clinical data from Falk’s clinical trials of TSO in Crohn’s, including Falk’s
ongoing Phase 2 clinical trial, for use in North America, South America and Japan. We granted Falk exclusive
rights and licenses to data from our clinical trials of TSO in Crohn’s for use in Europe. A steering committee
comprised of our representatives and representatives of Falk and Ovamed is overseeing the clinical development
program for Crohn’s, under which we and Falk will each be responsible for clinical testing on approximately
50% of the total number of patients required for regulatory approval of TSO for Crohn’s in the United States and
Europe and will share in certain pre-clinical development costs.

CNDO-109

CNDO-109 is a biologic that activates the immune system’s natural killer, or NK, cells to seek and destroy
cancer cells. We intend to study CNDO-109 initially in patients that have been diagnosed with acute myeloid
leukemia, or AML. Preclinical studies have demonstrated that CNDO-109 activated NK cells directly kill cells
that cause hematologic malignancies including myeloid leukemia and multiple myeloma, as well as breast,
prostate and ovarian cancers. Eight patients with high-risk AML received CNDO-109 activated NK cells in a
recent Phase 1 investigator-sponsored trial. Although the primary endpoint of the Phase 1 clinical trial was
safety, based on the data obtained from this Phase 1 study, we believe early efficacy was observed. The clinical
investigators observed that the majority of patients experienced a longer complete remission than their previous
complete remission. In February 2012, we filed an Investigational New Drug application, or IND, for a multi-
center Phase 1/2 clinical trial in patients with relapsed AML. In November 2012, we initiated this trial. In June
2012, the U.S. Food and Drug Administration, or FDA, granted orphan drug designation to CNDO-109 activated
NK cells for the treatment of AML and, in September 2012, the U.S. Patent and Trademark Office granted the
first U.S. patent covering CNDO-109. We have exclusive worldwide rights to develop and market CNDO-109
under a license agreement with the University College London Business PLC, or UCLB.

Industry

Immunology Therapeutics Markets

Autoimmune diseases represent a diverse collection of diseases in terms of their demographic profile and
primary clinical manifestations. The phenotypic commonality between them, however, is the damage, driven by a
dysfunctional immune system, to tissues and organs that arises from the loss of tolerance or recognition of “self”
Autoimmune disorders include inflammatory bowel disease, or IBD, such as Crohn’s and UC, MS, autism,
psoriasis, T1D and psoriatic and rheumatoid arthritis.

According to a 2012 Decision Resources report, in the United States and Japan, the estimated prevalence of
Crohn’s was 534,000 patients, UC was 669,000 patients and MS was 485,000 patients (Tim to update market
data). Autism statistics from the U.S. Centers for Disease Control and Prevention, or CDC, identify around 1 in
88 American children as on the autism spectrum–a ten-fold increase in prevalence in 40 years. According to the
National Psoriasis Foundation, psoriasis is the most prevalent autoimmune disease in the United States affecting
as many as 7.5 million Americans. According to the 2011 National Diabetes Foundation Fact Sheet (released
January 26, 2011 by the American Diabetes Association), nearly 26 million Americans have diabetes and
between 5-10% or up to 2.5 million have T1D. Per the National Psoriasis Foundation, approximately 1 million
Americans have psoriatic arthritis. Rheumatoid arthritis, or RA, affects more than 2 million people in the United
States. Prevalence rates for all autoimmune disorders are expected to continue to rise in the next several years.
Each of these diseases is believed to be associated with an excessive inflammatory response and dysfunctional
immune system, including abnormal activity of T regulatory (Treg) cells.

Crohn’s is characterized by inflammation of the gastrointestinal tract that causes painful and debilitating
symptoms. Most patients with Crohn’s experience relapses, and no current therapy is completely effective in
preventing acute flares. Although immunosuppressants and TNF-inhibitors are effective maintenance therapies,
according to an article published in Alimentary Pharmacology & Therapeutics in 2011, fewer than 50% of
patients maintain long-term remission with these drugs. According to a 2007 article in Surgical Clinics of North
America, a significant percentage of Crohn’s patients require surgery during their lifetime despite available
therapies. Therefore, we believe the greatest unmet need is for more effective maintenance therapies that are also
safe for long-term use.

The etiology and pathophysiology of UC are not fully understood, but research appearing in several industry
publications, including Inflammatory Bowel Disease (2006) and the World Journal of Gastroenterology (2006),
strongly suggests that genetic susceptibility and environmental factors, coupled with an abnormal immune
response, contribute to the development of the disease. Despite significant advances in the understanding of
genetic susceptibility and its role in IBD, novel, targeted therapies for the treatment of UC have yet to be
identified. We believe the need for safe and more effective maintenance therapies with sustained long-term
efficacy are the greatest unmet need in the management of UC.

MS is an autoimmune inflammatory disease of the central nervous system that is characterized by progressive
neuronal loss that manifests clinically as worsening physical disability. The key pathophysiological hallmark of
MS is the loss of myelin, a layer of lipids and proteins produced by cells called oligodendrocytes that wrap
around the neuron and act like an insulating sheath to facilitate electrical conduction along the nerve. Destruction
of myelin by an inflammatory cascade leads to neuronal degeneration. As a result, we believe that there is a
substantial unmet need for effective treatments for chronic progressive MS as well as a need for therapies that are
more conveniently delivered (e.g., oral agents and less-frequently administered injectable drugs).

Autism is a disorder of neural development characterized by impaired social interaction, impaired social
communication, and restricted and repetitive behavior. The diagnostic criteria require that symptoms become
apparent before a child is three years old. Autism affects information processing in the brain by altering how
nerve cells and their synapses connect and organize; how this occurs is not well understood. It is one of three

recognized disorders in the autism spectrum, the other two being Aspberger syndrome, which lacks delays in
cognitive development and language, and pervasive development disorder, not otherwise specified, which is
diagnosed when the full set of criteria for autism or Asperger syndrome are not met. Increasingly, researchers are
looking at the role of the immune system in autism. Intervention can involve behavioral treatments, medicines or
both. There are no FDA-approved medicines for treating all three core symptoms of autism, but there are two
drugs for treating the irritability associated with autism (risperidone – Risperdal; and aripiprazole—Abilify).

Psoriasis (psoriasis vulgaris) is a chronic inflammatory skin disease characterized by red, scaly, raised plaques.
The disease process is driven by T-cell infiltration and associated elevation in cytokine levels leading to
increased cell division and aberrant differentiation, resulting in the psoriatic phenotype. While many patients
with mild disease are able to control psoriasis symptoms with topical medications alone, patients with moderate
to severe disease usually require treatment with systemic agents to achieve good clearance. These systemic
agents are usually well tolerated, but can have potentially significant side effects including organ toxicity,
infection, malignancy, and teratogenicity that limit their usefulness in the long-term management of psoriasis.

Diabetes mellitus is the condition defined by the body’s inability to regulate blood glucose (sugar) levels. There
are two major types of diabetes, T1D and type 2 diabetes, or T2D. T1D, also called juvenile diabetes or insulin-
dependent diabetes, is a disorder of the body’s immune system. T1D occurs when the body’s immune system
attacks and destroys the beta cells in the pancreas. These cells are located within small islands of endocrine cells
called the pancreatic islets. Beta cells normally produce insulin, a hormone that helps the body move the glucose
contained in food into cells throughout the body, which use it for energy. But when the beta cells are destroyed,
no insulin can be produced, and the glucose stays in the blood instead, where it can cause serious damage to all
the organ systems of the body. Insulin is currently the major treatment for people with T1D, and exists as short,
medium and long-acting version. A relatively small number of people also use Symlin (pramlintide acetate)
injections to help normalize their blood sugar.

Psoriatic arthritis (also arthritis psoriatica, arthropathic psoriasis or psoriatic arthropathy) is a type of
inflammatory arthritis that may develop in up to 30 percent of people who have psoriasis. Psoriatic arthritis is
said to be a seronegative spondyloarthropathy and therefore occurs more commonly in patients with tissue type
HLA-B27. Symptoms involve pain and inflammation, as well as extreme exhaustion that does not go away with
adequate rest. The exhaustion may last for days or weeks without abatement. Psoriatic arthritis may remain mild,
or may progress to more destructive joint disease. Periods of active disease, or flares, will typically alternate with
periods of remission. Treatments are directed at reducing and controlling inflammation. Milder cases of psoriatic
arthitis may be treated with Non-Steroidal Anti-Inflammatory Drugs, or NSAIDs alone; however, there is a trend
toward earlier use of disease modifying antirheumatic drugs or biological response modifiers to prevent
irreversible joint destruction.

RA is a long-term autoimmune disease that leads to inflammation of the joints and surrounding tissues. It can
also affect other organs. RA usually affects joints on both sides of the body equally. Wrists, fingers, knees, feet,
and ankles are the most commonly affected. The disease often begins slowly, usually with only minor joint pain,
stiffness, and fatigue. RA usually requires lifelong treatment, including medications (biologics and
immunosuppressants), physical therapy, exercise, education, and possibly surgery. Early, aggressive treatment
for RA can delay joint destruction.

Since many autoimmune diseases are being diagnosed in younger patients, the impact of long-term medical
treatment, including dosing convenience and safety, is becoming increasingly important.

Oncology Therapeutics Markets

The American Cancer Society estimates that over 1.6 million people in the United States are expected to be
diagnosed with cancer in 2012, excluding basal and squamous cell skin cancers and in situ carcinomas (other

than urinary bladder carcinomas). This is an increase of approximately 33% from the estimated number of new
cancer diagnoses in 2000. We believe this rate is unlikely to decrease in the foreseeable future as the causes of
cancer are multiple and poorly understood.

Despite continuous advances every year in the field of cancer research, we believe there remains a significant
unmet medical need in the treatment of cancer, as the overall five-year survival rate for a cancer patient
diagnosed between 2001 and 2007 still averages only 67% according to the American Cancer Society. According
to that same source, cancer is the second leading cause of mortality in the United States after heart disease. The
American Cancer Society estimates that approximately one in four deaths in the United States is due to cancer.

AML is one of the most deadly and most common types of acute leukemia in adults. According to a 2011/2012
Decision Resources report, there are over 43,000 cases worldwide, primarily afflicting elderly and relapsed and
refractory populations. Once diagnosed with AML, patients typically receive induction and consolidation
chemotherapy, with the majority achieving complete remission. However, about 70–80% of patients who achieve
first complete remission will relapse, and the overall five-year survival rate is less than 25%.

One of the main treatments for cancer is chemotherapy. While chemotherapy is the most widely used class of
anti-cancer agents, individual chemotherapeutic agents often show limited efficacy because tumors maintain
complex machinery to repair the DNA damage to tumor cells caused by chemotherapy. Solutions to this problem
include combination chemotherapy, but while combination chemotherapy has been intensively studied, it offers
only limited hope for improvement as a result of additive toxicities. The limitations inherent in chemotherapy are
mirrored by limitations in other therapeutic modalities for cancer, including radiation therapy, targeted therapies
and surgical intervention. Each of these therapies either has high levels of toxicity and/or potentially severe
adverse events, which in turn frequently limit the amount of treatment that can be administered to a patient.

As a result, we believe that there is a significant unmet medical need for alternatives to existing chemotherapy
drugs that do not have the associated toxicities of traditional chemotherapy drugs.

Our Product Candidates

TSO

TSO is a biologic product candidate for the treatment of autoimmune diseases. We initially plan to investigate
TSO for the treatment of Crohn’s, UC, MS, autism, psoriasis, T1D, psoriatic arthritis and RA. TSO originates
from the work of Dr. Joel V. Weinstock, currently the Chief of the Division of Gastroenterology/Hepatology at
Tufts New England Medical Center in Boston. Dr. Weinstock’s research has centered on the evolutionary role of
the parasitic helminth, or worm, infections in the prevention of inflammatory diseases such as IBD, specifically
Crohn’s and UC. Dr. Weinstock has discovered that when the microscopic eggs of a certain helminth, preferably
T. suis, the porcine whipworm, are administered to patients with IBD a beneficial immune response is induced,
which provides clinical benefit to the underlying disease with minimal side-effects. Dr. Weinstock is a consultant
to us and a member of our scientific advisory board and certain of his colleagues, namely David Elliott, M.D.,
Ph.D., and William Sanborn, M.D. are also consultants to us.

Background

The use of helminths in the treatment of autoimmune disease is based on the belief that the immune systems of
populations living in the relatively sterile environments found in developed countries with little or no exposure to
parasites may develop in abnormal ways. This “hygiene hypothesis” is based on epidemiologic findings of an
inverse relationship between autoimmune diseases and helminthic colonization. According to articles published
in the New England Journal of Medicine in 2002 and Inflammatory Bowel Disease in 2009, the incidence of IBD
is highest in the developed world and in temperate climates, with positive correlations noted among persons of

higher socioeconomic status and high levels of domestic hygiene experienced in childhood. Conversely, the
incidence of IBD is rare in less developed countries and in persons with blue-collar jobs involving exposure to
dirt and physical exercise.

In contrast to the epidemiologic findings of IBD, according to articles by Dr. Weinstock and others published in
the New England Journal of Medicine in 2002 and the International Journal for Parasitology in 2007, the
prevalence of helminths is highest in warm climates and in populations characterized by crowding, poor
sanitation, and impure food supply. Furthermore, the incidence of IBD has increased over the past several
decades, while the prevalence of helminths in the United States and Europe has steadily declined during the same
time period. These findings have led to the hypothesis that eliminating intestinal helminths in the industrialized
world has eliminated a natural T regulatory cell mechanism that prevents excessive T-cell activation such as
occurs in IBD as well as in other immune-mediated diseases such as MS and allergies.

The immunologic basis for helminth therapy for IBD is derived from experimental animal and human data
demonstrating that these organisms alter immune responses beyond those directed against the worms. In animal
models, helminths blunt Th1 responses and promote Th2 responses associated with increased production of IL-4
and IL-3. Helminthic colonization in humans can result in diminished Th1 immune responses to challenges with
unrelated antigens, as well as increased production of immunomodulatory molecules such as IL-10, transforming
growth factor (TGF)-ß, and regulatory T-cells. Thus, as noted in the National Review of Immunology in 2007,
genetically susceptible persons who are never exposed to helminths may lack a strong Th2 immune response and
develop a poorly regulated and destructive intestinal Th1 response, leading to chronic colitis or ileitis.

TSO was chosen as an appropriate helminth for therapeutic application due to its ability to colonize in humans
briefly without invading or infecting the host. Although not a human parasite, T. suis resembles the human
whipworm T. Trichuris and is able to colonize in a human host for several weeks before being eliminated from
the body without the need for antihelminthic therapy. As reported in the American Journal of Gastroenterology
in 2005, TSO has potential for being a natural immune system modulator without significant risk of causing
disease in humans. Mature T. suis produce ova that exit the porcine host with the stool, however, we believe ova
are not infective until incubating in the soil for several weeks, thereby preventing direct host-to-host
transmission. We believe that no human diseases have been associated with exposure to T. suis or TSO.

Third Party Clinical Trials

The initial safety and efficacy of TSO in Crohn’s has been evaluated in two open-label investigator-sponsored
clinical trials. The first, a pilot clinical trial conducted by Dr. Weinstock and his colleagues and reported in the
American Journal of Gastroenterology in 2003, administered a single dose of 2500 embryonated TSO orally to
four patients with refractory Crohn’s. Patients were followed every two weeks for at least 12 weeks, with the
efficacy of therapy determined by the Crohn’s Disease Activity Index, or CDAI and the Inflammatory Bowel
Disease Quality of Life questionnaire, or IBDQ. Using an IBDQ score > 170 to indicate remission, three of four
(75%) patients achieved remission by week 8. Similarly, three of four (75%) patients achieved remission during
the observation period as assessed by a CDAI < 150. However, two of the three patients who achieved remission
relapsed at the end of the 12-week observation period. No significant clinical complications or adverse events
occurred in any of the patients in this study.

In a subsequent open-label clinical trial reported in GUT in 2005, Dr. Weinstock and his colleagues examined the
safety and efficacy of TSO in 29 patients with active Crohn’s, defined by a CDAI > 220. Patients received TSO
in individual aliquots of 2500 ova suspended in a solution every three weeks for 24 weeks. Patients maintained
diaries of clinical symptoms, and disease activity was measured by CDAI. Therapy with TSO was associated
with substantial and sustained improvement, with 79.3% patients experiencing a response (decrease in CDAI >
100 points or CDAI < 150) and 72.4% achieving remission (CDAI < 150) at week 24. TSO was well tolerated.
No significant clinical complications or adverse events occurred in any of the patients in this study.

Falk is currently conducting a Phase 2 double-blind, randomized, placebo-controlled, multi-center trial in Europe
evaluating the efficacy and safety of TSO in Crohn’s. The second interim analysis is expected by the end of
2013. In March 2012, we signed a Collaboration Agreement with Falk and Ovamed for the development of TSO
in Crohn’s.

Two investigator-sponsored studies of TSO have been conducted in patients with UC. The first study was a pilot
study conducted by Dr. Weinstock and his colleagues and published in the American Journal of
Gastroenterology, in 2003 in which three patients with refractory UC were treated with a single dose of 2500
embryonated T. suis eggs orally and observed every two weeks for 12 weeks. The IBDQ and Simple Clinical
Colitis Activity Index, or SCCAI, were used to determine the efficacy of therapy. Using an IBDQ score > 170 to
define remission, all three patients achieved remission by week eight. Using an SCCAI < 4 to indicate remission,
each of the UC patients achieved remission during the treatment and observation period, and one patient
experienced a relapse. No significant clinical complications or adverse events occurred in any of the patients in
this study.

As reported in the American Journal of Gastroenterology in 2005, Dr. Weinstock and his colleagues
subsequently conducted a randomized, double-blind, placebo-controlled clinical trial to determine the safety and
efficacy of TSO in 54 patients with active UC (defined by an Ulcerative Colitis Disease Activity Index, or
UCDAI, > 4) who were treated with placebo or 2500 TSO every two weeks for 12 weeks. After the first 12
weeks of treatment, placebo-treated patients were switched to TSO for a second 12-week interval and TSO
patients were switched to placebo. The blind was maintained during the crossover phase. In order to calculate
UCDAI and SCCAI scores, patients kept diaries detailing their clinical symptoms. The primary measure of
efficacy was clinical improvement at 12 weeks, defined as a decrease in UCDAI > 4. Clinical remission, defined
as UCDAI < 2, was a secondary endpoint. Of the 54 patients enrolled in the study, 24 received placebo and 30
received TSO during the first 12 weeks of the study. The proportion of patients achieving a favorable response
was significantly higher with TSO compared with placebo in both the intention-to-treat, or ITT, (43.3% vs.
16.7%, p = 0.04) and per protocol, or PP, (44.8% vs. 17.4%, p = 0.04) populations. Only patients with active
disease (UCDAI > 4) were included in the analysis of the crossover phase of the study. Among 31 patients (n=15
for placebo, n=16 for TSO) analyzed, the percentage of TSO-treated patients achieving response was higher than
that for placebo-treated patients (56.3% vs. 13.3%, p = 0.02). When the two study periods were combined, TSO
administration was associated with significantly higher responses in both the ITT and PP populations. No
significant clinical complications or adverse events occurred in any of the treated patients in this study.

In a study reported in the Multiple Sclerosis Journal in 2011, Dr. John Fleming and his colleagues at the
University of Wisconsin studied five subjects with newly diagnosed, treatment-naïve, relapsing–remitting
multiple sclerosis, or RRMS. The patients were given 2500 TSO orally every two weeks for three months in a
baseline versus treatment controlled trial. The study showed that the mean number of new gadolinium- enhancing
magnetic resonance imaging, or MRI, lesions (n-Gdþ) fell from 6.6 at baseline to 2.0 at the end of TSO
administration, and two months after TSO was discontinued, the mean number of n-Gdþ rose to 5.8 new lesions.
No significant adverse effects were observed. In preliminary immunological investigations, increases in the
serum level of the cytokines IL-4 and IL-10 were noted in four of the five subjects. These first five patients
represented the first part of a 2-part study (known as HINT-1 and HINT-2). Additional patients are currently
being studied for up to 10 months. Results from this second cohort are expected in the first half of 2014.

In studies presented by Dr. John Fleming and by Professor Per Soelberg Soerensen at the American Academy of
Neurology in New Orleans on April 25, 2012, TSO was observed to be safe and well tolerated in MS patients,
suggesting that TSO would be safe to use in indications other than IBD. Abstracts for these studies, entitled
“Temporal Changes in MRI Activity, Inflammation, Immunomodulation, and Gene Expression in Relapsing-
Remitting Multiple Sclerosis Subjects Treated with Helminth Probiotic Trichuris Suis” (Fleming) and “Trichuris
Suis Ova Therapy for Relapsing Multiple Sclerosis—A Safety Study” (Soerenson) are available on the American
Academy of Neurology 2012 Annual Meeting website.

There are also additional ongoing or proposed investigator-initiated clinical trials evaluating TSO in various
indications, including UC, MS, autism, psoriasis, T1D, psoriatic arthritis, and RA. We publicly announced the
start of two new trials in 2012, one at the New York University School of Medicine (NYU), with Drs. Michael
Poles, P’ng Loke and Martin Wolff in UC and one at Montefiore in New York City, with Dr. Eric Hollander in
autism. We also issued a statement about the agreement with the National Institute of Health’s Allergy and
Immunology Department, NIAID in UC, with the principal investigator being Dr Steven Hanauer, Chicago. All
three trials are investigator initiated, but we will provide TSO and have worked closely with the investigators to
develop protocols and data management tools. We will continue to work with these sites throughout the trials as
part of our overall clinical strategy for TSO. In the first quarter of 2013, we announced the start of an open-label
trial in psoriasis, and named the first site of three sites, Mt. Sinai School of Medicine. We also plan to initiate
additional trials in other indications, including additional sites for the psoriasis trial, autism, psoriatic arthritis,
and T1D over the next 12 months. We intend to support certain of these investigator-initiated trials by providing
product supply and, in some cases, grants.

Our Clinical Trial Program

In February 2012, we announced positive results from our Phase 1 clinical trial of TSO in patients with Crohn’s
and the full study results were presented in May 2012 by Dr. David Elliott, Professor and Director of the
Gastroenterology and Hepatology Division at the University of Iowa, as a poster at the 8th International Congress
on Autoimmunity in Granada, Spain. The Phase 1 clinical trial was a multi-center, sequential dose-escalation,
double-blind, placebo-controlled study. The primary objective of the study was to evaluate the safety and
tolerability of TSO. The trial enrolled 36 patients with Crohn’s ranging in age from 20 to 54 with an equal
distribution of male and female patients in three single dose cohorts of orally administered 500, 2500 and 7500
ova. Each cohort had twelve patients, with nine patients receiving TSO and three receiving placebo. Primary
safety assessments were determined at day 14 post-dose. Dr. Elliot is a consultant to us.

Overall, TSO was found to be safe and well tolerated across all three dose levels tested. There were only two
adverse events (metallic taste and sour taste) that were considered to be study drug related as assessed by the
investigators, one reported in the 7,500 ova dose group and the other in a patient receiving placebo, respectively.
All other reported events were assessed as unrelated to study drug and were self-limiting. Mild gastrointestinal
side effects such as nausea (in one placebo-treated patient and two TSO-treated patients) and diarrhea and/or
abdominal pain (in two TSO-treated patients) were reported. Safety laboratory values were assessed throughout
the study and no clinically significant adverse trends were observed and no laboratory- related adverse events
were reported. There were no serious adverse events reported and no patient discontinued the study prematurely.

In March 2012, we signed a Collaboration Agreement with Falk and Ovamed for the development of TSO for
Crohn’s. Under the Collaboration Agreement, Falk granted us exclusive rights and licenses under certain Falk
patent rights, pre-clinical data and clinical data from Falk’s clinical trials of TSO in Crohn’s, including Falk’s
ongoing Phase 2 clinical trial, for use in North America, South America and Japan. We granted Falk exclusive
rights and licenses to data from our clinical trials of TSO in Crohn’s for use in Europe. Under the agreement, we
agreed to pay Falk (i) a total of €5 million (approximately $6.5 million) after receipt of certain pre-clinical and
clinical data, of which €2.5 million (approximately $3.4 million) was paid in 2012 and the remaining €2.5 million is
expected to be paid in the first half of 2014, and (ii) a royalty of 1% of net sales of TSO in North America, South
America and Japan. A steering committee comprised of our representatives and representatives of Falk and Ovamed
is overseeing the clinical development program for Crohn’s, under which we and Falk will each be responsible for
clinical testing on approximately 50% of the total number of patients required for regulatory approval of TSO for
Crohn’s in the United States and Europe and will share in certain pre-clinical development costs.

In April 2012, we received from Falk a recommendation from the independent data monitoring committee that
conducted an interim analysis (blinded to Falk) of clinical data from the initial 120 patients in Falk’s Phase 2
clinical trial in Europe evaluating TSO in Crohn’s. The committee noted no safety concerns and a positive
efficacy trend in its recommendation that the study continue. Falk advised us that they are adopting the

committee’s recommendations to increase the sample size and to conduct a subsequent interim analysis at the
time the trial reaches approximately 240 patients. The Falk Phase 2 clinical trial, known as TRUST-II, was
initially expected to enroll approximately 212 patients and to evaluate three different dosages of TSO versus
placebo. The interim analysis aimed to verify the assumptions of the sample size calculation or to recalculate
sample size based on the effect size estimations of the interim analysis, as well as evaluating whether to
discontinue one or two of the active treatment arms. Based on currently projected enrollment rates, we expect the
additional analysis to occur in the second half of 2013.

In August 2012, we initiated our TRUST-I trial, a phase 2 clinical trial of TSO designed to evaluate the safety
and efficacy of TSO (7500 ova) given once every two weeks for 12 weeks, in approximately 220 patients with
Crohn’s, and expect to have initial study results in the second half of 2013.

In addition, we plan to conduct pilot studies and support certain investigator initiated clinical trials in various
other autoimmune diseases. In close collaboration with investigators at NYU and Montefiore, two trials were
initiated, one in UC and one in autism, respectively. The UC trial at NYU, led by Drs. Poles, Wolff and Loke, is
a primarily mechanism of action trial, including 18 patients, treated with TSO at 2500 ova every second week,
for 3 months, followed by a wash-out period and then the patients on TSO will receive placebo and vice versa.
Colonoscopies are performed at baseline to characterize the microbe, then again at the end of 12 weeks of
treatment of either placebo or TSO (2500 ova). The primary endpoint is the amount of mucus production, but
there will also be measurements of clinical efficacy. The adult autism trial at Montefiore, led by Dr. Hollander, is
an initial attempt to study the effect of TSO (2500 ova every 2 weeks) on some of the symptoms of autism
addressing the immune basis of the disease. It is a small study, in 10 patients, over a period of 12 weeks,
followed by a period of 12 weeks when patients cross-over to drug or placebo respectively. The primary outcome
includes three different autism scales, Autism Behavior Checklist, Clinical Global Impression, and Yale-Brown
Obsessive Compulsive scale.

The NIH UC trial is a 120 patient randomized, double-blind, study comparing the change in clinical symptoms of
ulcerative colitis (using the ulcerative colitis disease activity index) following 12 weeks of treatment of either
placebo or TSO (7500 ova).

Manufacturing

To date, we have contracted with Ovamed to produce and supply us with all of our requirements of TSO.
Ovamed’s contractor inoculates young pathogen-free pigs with T. suis from a master ova bank and harvests the
ova which are incubated to maturity and are processed to remove any viruses and other pathogens. Ova then are
processed and extensively tested to assure uniformity. They are then used to repopulate the master ova bank and
are processed further by Ovamed into a final formulation of the drug product that is a clear, tasteless and odorless
liquid. Ovamed manufacturing is conducted at one facility in Germany, which has received Good Manufacturing
Practice, or GMP, certification by the European Medicines Agency, or EMA. Ovamed’s manufacturing
operations will be subject to an FDA inspection to assess compliance with FDA standards and is subject to EMA
inspections to assess compliance with EMA standards. See “Government Regulation and Product Approval”.

In December 2012, we and Ovamed entered into the Second Amendment amending certain provisions of our
exclusive sublicense agreement and our manufacturing and supply agreement, between us and Ovamed, and
providing for certain additional agreements between the parties. Pursuant to the Second Amendment, our
exclusive license from Ovamed in the Coronado Territory was amended to include an exclusive license to make
and have made product containing TSO for the Coronado Territory and Ovamed’s exclusive supply rights in the
Coronado Territory will terminate once we establish an operational manufacturing facility in the United States.
The Ovamed License now terminates 15 years from first commercial sale in the United States, subject to earlier
termination under certain circumstances.

In exchange, we agreed to pay Ovamed a total of $1,500,000 in three equal installments of $500,000 in each of
December 2014, 2015, and 2016. Additionally, in lieu of product supply payments that would have been payable
to Ovamed as the exclusive supplier, we will pay Ovamed a manufacturing fee for product manufactured and
sold by us. The manufacturing fee will consist of the greater of (i) a royalty on net sales of product manufactured
by us or (ii) a specified amount per unit, known as the Transfer Fee Component. The Manufacturing Fee is
subject to certain adjustments and credits and we have a right to reduce the Transfer Fee Component by paying
Ovamed an agreed amount within ten business days following FDA approval of a Biologics License Application
approving the manufacturing, marketing and commercial sale of Product in the United States and an additional
amount within ninety days after the end of the first calendar year in which net sales in the Territory exceed an
agreed amount.

Simultaneously with the execution of the Second Amendment, Ovamed assigned to us a five-year property lease
in Woburn, MA for space in which we intend to establish a TSO manufacturing facility. Build out and site
preparation of the manufacturing facility are planned to commence in the first half of 2013 and continue
throughout the year to enable production of Phase 3 supplies of TSO. Ovamed agreed to assist us in establishing
this facility and the Second Amendment contemplates that we and Ovamed would act as second source suppliers
to each other at agreed transfer prices pursuant to a Second Source Agreement to be negotiated between the
parties. This facility will be required to meet GMP standards and will be subject to FDA and other regulatory
authorities’ inspections.

CNDO-109

CNDO-109 is a lysate (disrupted CTV-1 cells, cell membrane fragments, cell proteins and other cellular
components) that activates donor NK cells. CTV-1 is a leukemic cell line recently re-classified as a T-cell acute
lymphocytic leukemia, or ALL. We acquired exclusive worldwide rights to develop and commercialize CNDO-
109 activated NK cells for the treatment of cancer from UCLB.

Background

Standard therapy for patients with advanced cancer include chemotherapy therapies, or therapies that are toxic to
the cells, that suppress the immune system and carry significant risks of life-threatening infections and other
toxicities in the absence of hope for cure. Despite effective cancer therapies that induce clinical responses,
including complete remissions, minimal residual disease, or MRD, a term referring to disease that is undetectable
by conventional morphologic methods, often remains and serves as a source of cancer recurrence. For years,
scientists have studied ways to enhance the patient’s immune system to target cancer cells, maintain remission
and possibly even eradicate all cancer cells in the body, including MRD. Researchers believe that a cure for
cancer might be possible if immunotherapy is successfully applied to the treatment of cancer.

The most common immunotherapy studied to date involves the use of targeted humanized monoclonal antibodies
such as rituximab (anti-CD20) or trastuzumab (anti-HER2/neu). These antibodies bind targets that are over-
expressed on cancer cells and promote cell death by a number of immune mechanisms, including antibody
dependent cell-mediated cytotoxicity, or ADCC. In ADCC, the most common mechanism of tumor killing, the
antibody tags the cancer cell and recruits the cells from the patient’s immune system to attack the tumor. Immune
cells recruited by the antibody to kill the cancer include granulocytes, macrophages and NK cells.

Another common therapy that activates the innate immune system involves the administration of high dose
Interleukin-2, or IL-2. Through binding to the IL-2 receptor, IL-2 activates NK cells to attack cancer cells. After
high-dose IL-2 therapy, NK cells are activated to search out and kill cancer cells. Unfortunately, the use of IL-2
therapy is limited because of its severe side effects, which include severe life-threatening infusion reactions and
induction of autoimmune disease.

The importance of NK cells in the host system’s defense against cancer was recognized by Dr. Mark Lowdell at
the Royal Free Hospital in London and others when they noted that patients who could mount an immune

response to their AML became long-term survivors after chemotherapy. Researchers identified that a key to the
successful immune response of the patient’s immune systems was the NK cell. Dr. Lowdell determined that
activated NK cells were the key to eliminating AML cells and that NK cells require two signals to kill a tumor
cell—a priming signal followed by a trigger signal. NK cells that can be activated by certain cancer cells
provide both signals resulting in killing the cancer cell. Cancer cells that cannot be killed only trigger one signal
and therefore are considered resistant to NK cells. NK cells which have not been primed cannot respond to the
trigger. The “priming signal” can be provided by either cytokines, such as high dose IL-2 or IL-15 or by CNDO-
109. In contrast to IL-2 or IL-15, NK cells activated by CNDO-109 retain their activated state after freezing and
thawing. This allows commercialization of the process since the NK cells can be activated with CNDO-109 and
prepared at a manufacturing facility under GMP conditions and shipped to the clinical center as a frozen patient-
specific dose, ready for infusion. The results of the research conducted by Dr. Lowdell and his colleagues were
published in the British Journal of Haematology in 2002 and The Journal of Immunology in 2007 and all
inventions and related intellectual property that arose from such research are covered by our license agreement
with UCL Business PLC, or UCLB. Dr. Lowdell is a consultant to us.

Although AML is the prototype tumor lysed by CNDO-109 activated NK cells, CNDO-109 activated NK cells
are expected to be active against most cancer types. Based on in vitro preclinical efficacy studies of CNDO-109
conducted by Dr. Lowdell at the Royal Free Hospital in London using human specimens of breast cancer,
prostate and ovarian cancer, we expect CNDO-109 to be active against tumors that have been successfully treated
by high dose IL-2 therapy such as renal cell carcinoma and melanoma.

The treatment of patients with CNDO-109 activated NK cells involves several steps. The activated NK cells are
infused into the patient after resting NK cells are incubated with CNDO-109 for at least eight hours. Preparation
of CNDO-109 activated NK cells takes about 24 hours from start to finish. If the source of the NK cells being
used is someone other than the patient, “an allogeneic donor,” the patient will need some form of
immunosuppression to allow the CNDO-109 activated NK cells to persist long enough to eradicate MRD.
Preliminary data on a small number of patients from the UK Phase 1 clinical trial demonstrated that CNDO-109
activated NK cells can remain active for weeks.

Completed Clinical Trial

An investigator-initiated Phase 1 clinical trial of CNDO-109 activated haploidentical NK cells was conducted at
the Royal Free Hospital in London in eight patients with high risk (i.e. chemo-sensitive relapsed/refractory)
AML who were not eligible for a stem cell transplant. The results of this trial were presented at the ASH Annual
Meeting in December 2011. Although the primary endpoint of the Phase 1 clinical trial was safety, the results
demonstrated that the majority of AML patients experienced a longer complete remission after receiving CNDO-
109 activated NK cells than their previous complete remission.

Our Clinical Program

We submitted an IND for the CNDO-109 activated NK cell product in the United States in February 2012 using
data from UCLB’s Phase 1 clinical trial in the United Kingdom. We initiated a Phase 1/2 clinical trial in the
United States in November 2012 using CNDO-109 to activate NK cells to treat MRD in AML patients with
relapsed/refractory disease. In Phase 1/2 oncology clinical trials, dose limiting toxicity stopping rules are
commonly applied. The CNDO-109 Phase 1/2 trial is subject to a set of Dose-Limiting Toxicities, or DLTs, that
could suspend or stop dose escalation by predetermined criteria, including allergic reactions, prolonged aplasia or
other organ toxicities of a serious nature. We are also considering participation in a Phase 1/2 multiple myeloma
trial which we believe may initiate in 2014 and selected pilot Phase 1 clinical trials in other tumor types,
including breast, prostate and ovarian cancer, with both allogeneic and autologous cells

Manufacturing

The manufacturing process for CNDO-109 activated NK cells is currently under development. We have
produced a master cell bank and a working cell bank of CTV-1 cells in collaboration with BioReliance Corp.
Manufacture and testing of CNDO-109 activated NK cells for our ongoing Phase 1/2 clinical trial is being
conducted by Progenitor Cell Therapy, LLC or PCT. We have entered into master service agreements with both
companies as well as a supply agreement with PCT. The master service agreements provide the general
framework for the relationships, with specific terms to be established in connection with particular projects.
Indirectly, we also rely on Miltenyi Biotec GmbH to provide the equipment and reagents necessary for the
identification and selection of NK cells.

Strategic Alliances and Commercial Agreements

TSO

Sublicense Agreement with Ovamed GmbH

In January 2011, in connection with our acquisition of the assets of Asphelia relating to TSO, Asphelia assigned
the Exclusive Sublicense Agreement, dated December 2005, between Asphelia and Ovamed, as amended, or the
Ovamed License, and Manufacturing and Supply Agreement, dated March 2006, between Asphelia
Pharmaceuticals, Inc., or Asphelia, and Ovamed, as amended, or the Ovamed Supply Agreement, to us and we
assumed Asphelia’s obligations under these agreements. Under the Ovamed License, we received an exclusive
sublicense, with a right to grant additional sublicenses to third parties, under Ovamed’s patent rights and know-
how to make, use and sell products encompassing TSO in North America, South America and Japan. Ovamed’s
patent rights arise, in turn, from an exclusive license granted in 2005 by the University of Iowa Research
Foundation, or UIRF, to Ovamed covering inventions and related intellectual property rights that arose as a result
of research relating to TSO performed by Dr. Weinstock and his colleagues while employed by the University of
Iowa. In November 2011, we entered into an agreement with UIRF and Ovamed primarily amending certain
diligence provisions of the UIRF license agreement with Ovamed and obtaining certain rights in the event of an
Ovamed breach of this license.

Under the Ovamed License, we are required to make milestone payments to Ovamed totaling up to
approximately $5.45 million, of which $3.0 million has been paid, primarily upon the achievement of various
regulatory milestones for the first product that incorporates TSO, and additional milestone payments upon the
achievement of regulatory milestones relating to subsequent indications. In the event that TSO is
commercialized, we are obligated to pay to Ovamed royalties equal to 4% of net sales. Additionally, we are
obligated to pay to Ovamed a percentage of certain consideration we receive from sublicensees (ranging from
10% to 20% of such consideration depending on the stage of clinical development at the time of the sublicense),
as well as an annual license maintenance fee of $250,000 and reimbursement of patent costs. We are responsible
for all clinical development and regulatory activities and costs relating to licensed products in North America,
South America and Japan. Either party may also terminate the agreement under certain customary conditions of
breach and we have the right to terminate the Ovamed License with 30 days prior notice.

In January 2011, as part of the purchase price for the Asphelia assets, we paid Ovamed an aggregate of
approximately $3.4 million in satisfaction of Asphelia’s agreement to pay Ovamed for certain development costs,
the annual license maintenance fee and patent reimbursement costs.

Under the Ovamed Supply Agreement, Ovamed agreed to manufacture and supply us with and we are required to
purchase from Ovamed our clinical and commercial requirements of TSO at pre-determined prices. The Ovamed
Supply Agreement currently expires in March 2014 but will automatically renew for successive one-year periods,
unless we give 12 months’ prior notice of our election not to renew. The Ovamed Supply Agreement is subject to
early termination by either party under certain customary conditions of breach and by us in the event of specified
failures to supply or regulatory or safety failures.

In December 2012, we and Ovamed entered into the Second Amendment amending certain provisions of our
Exclusive Sublicense Agreement and our Manufacturing and Supply Agreement, between us and Ovamed, and
providing for certain additional agreements between the parties. Pursuant to the Second Amendment, our
exclusive license from Ovamed in the Coronado Territory was amended to include an exclusive license to make
and have made product containing TSO for the Coronado Territory and Ovamed’s exclusive supply rights in the
Coronado Territory will terminate once we establish an operational manufacturing facility in the United States.
The Ovamed License now terminates 15 years from first commercial sale in the United States, subject to earlier
termination under certain circumstances.

In exchange, we agreed to pay Ovamed a total of $1,500,000 in three equal installments of $500,000 in each of
December 2014, 2015, and 2016. Additionally, in lieu of product supply payments that would have been payable
to Ovamed as the exclusive supplier, we will pay Ovamed a manufacturing fee for product manufactured and
sold by us. The manufacturing fee will consist of the greater of (i) a royalty on net sales of product manufactured
by us or (ii) a specified amount per unit (the “Transfer Fee Component”). The Manufacturing Fee is subject to
certain adjustments and credits and we have a right to reduce the Transfer Fee Component by paying Ovamed an
agreed amount within ten business days following FDA approval of a Biologics License Application approving
the manufacturing, marketing and commercial sale of Product in the United States and an additional amount
within ninety days after the end of the first calendar year in which net sales in the Territory exceed an agreed
amount.

Simultaneously with the execution of the Second Amendment, Ovamed assigned to us a five-year property lease
in Woburn, MA for space in which we intend to establish a TSO manufacturing facility. Build out of the
manufacturing facility will commence in early 2013 and continue throughout the year. Ovamed agreed to assist
us in establishing this facility and the Second Amendment contemplates that we and Ovamed would act as
second source suppliers to each other at agreed transfer prices pursuant to a Second Source Agreement to be
negotiated between the parties.

Collaboration Agreement with Ovamed and Falk

In December 2011, we entered into a binding Terms of Agreement with Falk and Ovamed under which we
agreed to enter into collaboration agreement relating to the development of TSO for Crohn’s. In March 2012, the
parties entered into the Collaboration Agreement, under which Falk granted us exclusive rights and licenses
under certain Falk patent rights, pre-clinical data, and clinical data from Falk’s clinical trials of TSO in Crohn’s,
including the ongoing Falk Phase 2 clinical trial, for use in North America, South America and Japan. In
exchange, we granted Falk exclusive rights and licenses to our pre-clinical data and data from clinical trials of
TSO in Crohn’s for use in Europe.

In addition, we agreed to pay Falk a total of €5 million after receipt of certain preclinical and clinical data, half of
was paid in 2012 and half of which is expected to be paid by the first half of 2014, and a royalty equal to 1% of
net sales of TSO in North America, South America and Japan.

Under the Collaboration Agreement, a Steering Committee comprised of our representatives and representatives
of Falk and Ovamed will oversee the TSO development program for Crohn’s, under which we and Falk will each
be responsible for clinical testing on approximately 50% of the total number of patients required for regulatory
approval of TSO for Crohn’s in the United States and Europe and will share in certain pre-clinical development
costs.

The Collaboration Agreement may be terminated by either Falk or us under certain conditions including if the
other party fails to cure a material breach under the agreement, subject to prior notice and the opportunity to cure,
if the other party is subject to bankruptcy proceedings or if the terminating party terminates all development of
TSO.

Research Agreement with FU Berlin

On February 22, 2013, the Company and Freie Universität Berlin, or FU Berlin, entered into a Research
Agreement to, among other things, identify and evaluate secretory proteins from Trichuris suis, which we refer to
as the Project. The duration of the Project is expected to be four years, during which the Company will pay FU
Berlin a total maximum amount of approximately €648,000, or approximately $843,000, in research fees and FU
Berlin will periodically produce written progress reports on the Project. The Research Agreement terminates on
the later of the date that the last payment or report is due, subject to early termination by either party upon three
months written notice for cause or without cause. If the Company terminates the Research Agreement, the
Company must pay FU Berlin a termination fee comprised primarily of unpaid research fees due on the first
payment date after which termination occurred (subject to adjustment), except where termination is due to a
breach by FU Berlin which it fails to cure within 60 days notice or due to FU Berlin’s bankruptcy.

On February 22, 2013, the Company and FU Berlin also entered into a Joint Ownership and Exclusive License
Agreement or JOELA, pursuant to which the Company agreed to jointly own all intellectual property arising
from the Project, which we refer to as the Joint Intellectual Property. FU Berlin also granted the Company (a) an
exclusive worldwide license (including the right to sublicense) to its interest in the Joint Intellectual Property and
its know-how related to the Project, which we refer to as the Licensed IP, and (b) the right to commercialize
products that, without the licenses granted under the JOELA, would infringe the Licensed IP. FU Berlin retains
the non-exclusive and non-transferable right to use the Licensed IP for its own internal, academic purposes.
Pursuant to the JOELA, the Company must pay FU Berlin a total maximum amount of approximately
€3,830,000, or approximately $4,982,000, in potential milestone payments, based primarily on the achievement
of clinical development and regulatory milestones, and royalties on potential net sales of products ranging from
1% to 2.5%. The JOELA continues until the last-to-expire patent in any country, subject to early termination by
either party without penalty if the other party breaches the JOELA and the breach is not cured within 60 days
after receiving notice of the breach or if a party is in bankruptcy. The Company also has the right to terminate the
JOELA after giving FU Berlin 60 days written notice of a regulatory action that affects the safety, efficacy or
marketability of the Licensed Products or if the Company cannot obtain sufficient materials to conduct trials, or
upon 180 days written notice for any reason.

In connection with the Research Agreement and JOELA, the Company entered into a License and Sublicense
Agreement, which we refer to as the LSA, with Ovamed GmbH, or Ovamed, on February 22, 2013, pursuant to
which the Company licensed is rights to the Joint Intellectual Property and sublicensed its rights to the Licensed
IP to Ovamed in all countries outside North America, South America and Japan, which we refer to as the
Ovamed Territory. Pursuant to the LSA, Ovamed would pay the Company a total maximum amount of
approximately €1,025,000, or approximately $1,333,000 based primarily on the achievement of regulatory
milestones, and royalties on potential net sales of products ranging from 1% to 2.5%, subject to adjustment, in
each case equal to the comparable payments due under the JOELA. The LSA continues until the last-to-expire
patent in any country in the Ovamed Territory, subject to early termination by either party upon the same terms
as in the JOELA.

On February 22, 2013, Coronado, Ovamed and FU Berlin entered into a Letter Agreement to amend a Material
Transfer Agreement dated May 14, 2012 by and between Ovamed and FU Berlin. The Letter Agreement provides
that Ovamed will retain a 10% interest in FU Berlin’s rights to the Joint Intellectual Property in the Ovamed
Territory. It also grants Ovamed certain rights if FU Berlin terminates the JOELA due to the Company’s breach,
including the right to have the JOELA survive and the Company’s rights and obligations thereunder assigned to
Ovamed.

License Agreement with UCLB

In November 2007, we entered into a license agreement with UCLB under which we received an exclusive,
worldwide license to develop and commercialize CNDO-109 to activate NK cells for the treatment of cancer and
related conditions. Pursuant to a September 2009 amendment, we also received a non-exclusive license, without

the right to sublicense, to certain clinical data solely for use in the IND for CNDO-109. Under a May 2012
amendment, additional patent rights and rights to certain additional inventions were added to the license
agreement.

In consideration for the license, we will be required to make future milestone payments totaling up to approximately
$22 million contingent upon the achievement of various milestones related to regulatory events for the first three
indications for which CNDO-109 is developed. In March 2012, we recognized our obligation to pay UCLB a
$250,000 milestone related to the IND for CNDO-109. In the event that CNDO-109 is commercialized, we will be
obligated to pay to UCLB royalties ranging from 3% to 5% of net sales of the product or, if commercialized by a
sublicensee, a percentage of certain consideration we receive from such sublicensee (ranging from 20% to 30% of
such consideration depending on the stage of clinical development at the time of the sublicense). Under the terms of
the agreement, we must use diligent and reasonable efforts to develop and commercialize CNDO-109 activated NK
cells worldwide and may grant sublicenses to third parties without the prior approval of UCLB. In September 2012,
the U.S. Patent and Trade Office granted the first U.S. patent directed to CNDO-109. In June 2012 we were notified
by the FDA that CNDO-109 was granted orphan drug designation and in September 2012, the U.S. Patent and
Trademark Office issued the first U.S. patent covering CNDO-109. If CNDO-109 is commercialized, we will be
obligated to pay UCLB annual royalties based upon the net sales of product or if we sublicense CNDO-109, a
portion of sub-licensing revenue we receive, if any.

The agreement terminates upon the expiration of the last licensed patent right, unless the agreement is earlier
terminated. Either party may terminate the agreement in the event of material breach by the other party, subject
to prior notice and the opportunity to cure, or in the event the other party enters into bankruptcy or is dissolved
for any reasons other than in connection with a merger or acquisition. UCLB may terminate the license
agreement if we, or our affiliates, commence or assist in legal proceedings to challenge the validity or ownership
of the patents licensed to us under the agreement, or if we market or sell a competing product without UCLB’s
prior written consent. In addition, we may terminate the agreement by providing written notice to UCLB at least
30 days’ prior to any contemplated termination.

We have entered into consulting agreements with Dr. Mark Lowdell and UCL Consultants Limited (a wholly-
owned subsidiary of UCLB) that provide for Dr. Lowdell to provide various services to us relating to our CNDO-
109 program.

Services Agreement with PCT

In April 2010 and as amended in September 2012, we entered into a master contract services agreement, or the
PCT agreement, with PCT pursuant to which PCT may, from time to time, provide consulting, preclinical,
laboratory and/or clinical research-related services, product/process development services, manufacturing
services and other services to us in connection with the CNDO-109 development program. PCT is currently
performing services related to the development of manufacturing processes for CNDO-109 under the PCT
agreement. We pay for services under the PCT agreement pursuant to statements of work entered into from time
to time. Any product resulting from the services performed or product improvement, inventions or discoveries,
including new uses for product resulting from the services performed and related patent rights which arise as a
result of the services performed by PCT under the PCT agreement are owned solely and exclusively by and
assigned to us. Through December 31, 2012, we have entered into statements of work with PCT aggregating $2.7
million.

Intellectual Property

General

Our goal is to obtain, maintain and enforce patent protection for our product candidates, formulations, processes,
methods and any other proprietary technologies, preserve our trade secrets, and operate without infringing on the
proprietary rights of other parties, both in the United States and in other countries. Our policy is to actively seek

to obtain, where appropriate, the broadest intellectual property protection possible for our current product
candidates and any future product candidates, proprietary information and proprietary technology through a
combination of contractual arrangements and patents, both in the United States and abroad. However, patent
protection may not afford us with complete protection against competitors who seek to circumvent our patents.

We also depend upon the skills, knowledge, experience and know-how of our management and research and
development personnel, as well as that of our advisors, consultants and other contractors. To help protect our
proprietary know-how, which is not patentable, and for inventions for which patents may be difficult to enforce,
we currently rely and will in the future rely on trade secret protection and confidentiality agreements to protect
our interests. To this end, we require all of our employees, consultants, advisors and other contractors to enter
into confidentiality agreements that prohibit the disclosure of confidential information and, where applicable,
require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our
business.

TSO

Under the Ovamed License, we have exclusive rights to United States Patent Nos. 6,764,838, 7,250,173 and
7,833,537, owned by the University of Iowa and licensed by UIRF to Ovamed. These patents claim, respectively,
methods of producing a pharmaceutical composition comprising an helminthic parasite preparation,
pharmaceutical compositions suitable for oral administration comprising an isolated and purified T. suis
helminthic parasite preparation, and methods of treating inflammatory bowel disease, including Crohn’s and UC,
in an individual by the administration of a helminthic parasite preparation obtained from a group of helminthic
parasites. These patents are scheduled to expire in December 2018, except for the ‘537 patent, which is set to
expire approximately nine months later. Under the patent term restoration provisions of the patent laws, we may
choose to restore a portion of the term of one of these patents, or any other relevant patents that may be granted
prior to marketing approval of TSO, to recover at least a portion of the delays associated with obtaining
regulatory approval. We also have exclusive rights through the Ovamed License under a second patent family
owned by UIRF, which is directed to methods of using helminthic parasite preparations to treat patients with a
Th1 or Th2 related autoimmune disease. Any patents that mature from this second patent family would not expire
until at least November 2023.

Under the Collaboration Agreement, we have an exclusive license in North America and Japan to Falk’s interest
in two patent families: one directed to a process for the preparation of the pharmaceutical product comprised of
viable eggs of parasitic helminths and another directed to a method of determining biological activity of
embryonated Trichuris eggs. Applications for patents are pending in the United States, Canada and Japan for
both patent families.

Our success for preserving market exclusivity for our product candidates relies on our ability to obtain and
maintain a regulatory period of data exclusivity over an approved biologic, currently 12 years from the date of
marketing approval, and to preserve effective patent coverage. Once any regulatory period of data exclusivity
expires, depending on the status of our patent coverage, we may not be able to prevent others from marketing and
selling products that are biosimilar to or interchangeable with our product candidates. We are also dependent
upon the diligence of third parties, which control the prosecution of pending domestic and foreign patent
applications and maintain granted domestic and foreign patents.

In addition to any regulatory exclusivity we may be able to obtain, we also seek to protect additional intellectual
property rights such as trade secrets and know-how, including commercial manufacturing processes and proprietary
business practices.

CNDO-109

We have exclusive rights to International Patent Application No. PCT/GB2006/000960 and all pending United
States and foreign counterpart applications including granted U.S. Patent No. 8,257,970 and pending United
States Patent Application Serial No. 13/601,153 and the corresponding national phase applications filed in

Australia, Canada, Europe, India and Japan, directed to the stimulation of natural killer cells and related CNDO-
109 compositions and methods including methods for the treatment of cancer and other conditions. This patent
family has been in-licensed on an exclusive basis from UCLB. This CNDO-109 patent has an expiration date of
January 2029 in the absence of any patent term extension.

By way of an amendment to the license agreement with UCLB, we also have exclusive rights to International
Application No. PCT/GB2010/051135 and all pending United States and foreign counterpart applications
including pending United States Patent Application Serial No. 12/833,694 and the corresponding national phase
applications filed in Europe, Brazil, China, Israel, Singapore and South Africa, directed to the preservation of
activated natural killer cells and related compositions and methods. The CNDO-109 patents that may issue from
the former patent family would expire in July 2030 in the absence of any patent term extension. The amendment
includes rights to certain additional confidential technologies as well.

Competition

We expect TSO, if approved for the treatment of Crohn’s, to compete directly with Janssen Biotech Inc.’s (a
subsidiary of Johnson & Johnson) Remicade (infliximab), UCB S.A.’s Cimzia (certolizumab pegol) and Abbott
Laboratories’ Humira (adalimumab), each of which is currently approved for the treatment of various diseases,
including IBD, UC and Crohn’s, and several other products. TSO, if developed and approved for the treatment of
MS, would compete with Biogen Idec’s Avonex (interferon beta-1a), Bayer Healthcare Pharmaceuticals’
Betaseron (interferon beta-1b), Teva Pharmaceuticals Industries, Ltd.’s Copaxone (Glatiramer Acetate) and
Novartis AG’s Gilenya (fingolimod) and several other products. New developments, including the development
of other pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life
sciences industries at a rapid pace.

Each cancer indication for which we may develop products has a number of established therapies with which our
candidates will compete. Most major pharmaceutical companies and many biotechnology companies are
aggressively pursuing new cancer development programs, including both therapies with traditional, as well as
novel, mechanisms of action. Some of the anticipated competitor treatments for AML include Genzyme
Corporation’s Clolar (clofarabine), currently approved as a treatment for ALL, Eisai Corporation’s Dacogen
(decitabine), currently approved as a treatment for Myelodysplastic Syndromes, or MDS, Celgene Corporation’s
Vidaza (azacitidine), currently approved as a treatment for MDS, and Vion Pharmaceuticals, Inc.’s Onrigin
(laromustine) currently being developed as a treatment for AML, any or all of which could change the treatment
paradigm of acute leukemia. Each of these compounds is further along in clinical development than is the
CDNO–109 activated NK cell product.

Manufacturing

As of March 2013, we do not own or operate manufacturing facilities for the production of TSO or CNDO-109.
We do not plan to develop our own manufacturing operations in the foreseeable future for CNDO-109. We
currently have a five-year property lease in Woburn, MA for space in which we intend to establish a TSO

manufacturing facility. Build out and site preparation of the manufacturing facility are planned to commence in
the first half of 2013 and continue to enable production of Phase 3 supplies of TSO. Ovamed agreed to assist us
in establishing this facility and the Second Amendment contemplates that we and Ovamed would act as second
source suppliers to each other at agreed transfer prices pursuant to a Second Source Agreement to be negotiated
between the parties.

We currently depend on third-party contract manufacturers for all of our required raw materials, active
pharmaceutical ingredient and finished products for our preclinical and clinical trials. Pursuant to the Ovamed
Supply Agreement, we are required to purchase from Ovamed and Ovamed has agreed to manufacture and supply
us with Phase 2 clinical requirements of TSO at pre-determined prices. We may purchase at least a portion of our
Phase 3 supplies of TSO from Ovamed. PCT provides us with clinical services and supplies for CNDO-109. We do
not have a contractual arrangement for the manufacture of commercial supplies of CNDO-109.

We, Ovamed and our third party suppliers are required to comply with applicable FDA manufacturing
requirements contained in the FDA’s current good manufacturing practice standards, or cGMP, regulations.
cGMP regulations require among other things, quality control and quality assurance as well as the corresponding
maintenance of records and documentation. Pharmaceutical product manufacturers and other entities involved in
the manufacture and distribution of approved pharmaceutical products are required to register their
establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by
the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must
continue to expend time, money, and effort in the area of production and quality control to maintain cGMP
compliance. Discovery of problems with a product after approval may result in restrictions on a product,
manufacturer, or holder of an approved New Drug Application “NDA”/Biological License Application “BLA”,
including withdrawal of the product from the market. In addition, changes to the manufacturing process generally
require prior FDA approval before being implemented and other types of changes to the approved product, such
as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

Government Regulation and Product Approval

Government authorities in the United States, at the federal, state and local level, and other countries extensively
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 are developing.

United States Pharmaceutical Product Development Process

In the United States, the FDA regulates pharmaceutical (drug and biologic) products under the Federal Food,
Drug and Cosmetic Act, and implementing regulations. Pharmaceutical products are also subject to other federal,
state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent
compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of
substantial time and financial resources. Failure to comply with the applicable United States requirements at any
time during the product development process, approval process or after approval, may subject an applicant to
administrative or judicial sanctions. FDA sanctions could include refusal to approve pending applications,
withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial
suspension of production or distribution injunctions, fines, refusals of government contracts, restitution,
disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material
adverse effect on us. The process required by the FDA before a pharmaceutical product may be marketed in the
United States generally includes the following:

• Completion of preclinical laboratory tests, animal studies and formulation studies according to Good

Laboratory Practices or other applicable regulations;

•

Submission to the FDA of an IND, which must become effective before human clinical trials may begin
in the United States;

•

Performance of adequate and well-controlled human clinical trials according to the FDA’s current good
clinical practices, or GCPs, to establish the safety and efficacy of the proposed pharmaceutical product
for its intended use;

Submission to the FDA of an NDA or BLA for a new pharmaceutical product;

Satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the
pharmaceutical product is produced to assess compliance with the FDA’s cGMP, to assure that the
facilities, methods and controls are adequate to preserve the pharmaceutical product’s identity, strength,
quality and purity;

Potential FDA audit of the preclinical and clinical trial sites that generated the data in support of the
NDA/ BLA; and

FDA review and approval of the NDA/BLA.

The lengthy process of seeking required approvals and the continuing need for compliance with applicable
statutes and regulations require the expenditure of substantial resources and approvals are inherently uncertain.

Products for somatic cell therapy are derived from a variety of biologic sources, including directly harvested
autologous, allogeneic, or cultured cell lines. Product safety requires that these sources be well characterized,
uniform, and not contaminated with hazardous adventitious agents. Also, cells directly from humans pose
additional product safety issues. Because of the complex nature of these products a controlled, reproducible
manufacturing process and facility are required and relied on to produce a uniform product. The degree of
reliance on a controlled process varies depending on the nature of the product. Because complete chemical
characterization of a biologic product is not feasible for quality control, the testing of the biologic potency
receives particular attention and is costly.

Before testing any compounds with potential therapeutic value in humans, the pharmaceutical product candidate
enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity
and formulation, as well as animal studies to assess the potential safety and activity of the pharmaceutical
product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements
including good laboratory practices. The sponsor must submit the results of the preclinical tests, together with
manufacturing information, analytical data, any available clinical data or literature 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, unless the FDA places the IND on a clinical hold within that 30-day time period. In such a case, the IND
sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may
also impose clinical holds on a pharmaceutical product candidate at any time before or during clinical trials due
to safety concerns or non-compliance. Accordingly, we cannot be certain 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
clinical trial.

Clinical trials involve the administration of the pharmaceutical product candidate to healthy volunteers or
patients under the supervision of qualified investigators, generally physicians not employed by the sponsor.
Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial,
dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject
safety. Each protocol must be submitted to the FDA if conducted under a US IND. Clinical trials must be
conducted in accordance with the FDA’s good clinical practices requirements. Further, each clinical trial must be
reviewed and approved by an Investigator Review Board, or IRB or ethics committee if conducted outside of the
US, at or servicing each institution at which the clinical trial will be conducted. An IRB or ethics committee is
charged with protecting the welfare and rights of trial participants and considers such items as whether the risks
to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated
benefits. The IRB or ethics committee also approves the informed consent form that must be provided to each
clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. We

intend to use third party clinical research organizations to administer and conduct our planned clinical trials and
will rely upon such CROs, as well as medical institutions, clinical investigators and consultants, to conduct our
trials in accordance with our clinical protocols and to play a significant role in the subsequent collection and
analysis of data from these trials. The failure by any of such third parties to meet expected timelines, adhere to
our protocols or meet regulatory standards could adversely impact the subject product development program.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

•

Phase 1. The pharmaceutical product is usually 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, such as cancer treatments, especially when the product
may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is
often conducted in patients.

Phase 2. The pharmaceutical product is evaluated in a limited patient population to identify possible
adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted
diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an
expanded patient population at geographically dispersed clinical trial sites. These clinical trials are
intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for
product labeling. Generally, two adequate and well-controlled Phase 3 clinical trials are required by the
FDA for approval of an NDA/BLA or foreign authorities for approval of marketing applications.

Post-approval studies, or Phase 4 clinical trials, may be conducted after initial marketing approval. These studies
are used to gain additional experience from the treatment of patients in the intended therapeutic indication and
may be requested by the FDA as a condition of approval.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and
written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected
adverse events or any finding from tests in laboratory animals that suggests a significant risk for human 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 sponsor or, if used, 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 are being exposed to an
unacceptable health risk. Similarly, an IRB or ethics committee can suspend or terminate approval of a clinical
trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s or ethics
committee’s requirements or if the pharmaceutical product 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 and physical characteristics of the pharmaceutical product as well as
finalize a process for manufacturing the product in commercial quantities in accordance with cGMP
requirements. The manufacturing process must be capable of consistently producing quality batches of the
pharmaceutical product candidate and, among other things, must develop methods for testing the identity,
strength, quality and purity of the final pharmaceutical product. Additionally, appropriate packaging must be
selected and tested and stability studies must be conducted to demonstrate that the pharmaceutical product
candidate does not undergo unacceptable deterioration over its shelf life.

United States Review and Approval Processes

The results of product development, preclinical studies and clinical trials, along with descriptions of the
manufacturing process, analytical tests conducted on the chemistry of the pharmaceutical product, proposed
labeling and other relevant information are submitted to the FDA as part of an NDA/BLA requesting approval to
market the product.

The NDA/BLA review and approval process is lengthy and difficult and the FDA may refuse to approve an
NDA/BLA if the applicable regulatory criteria are not satisfied or may require additional clinical data or other
data and information. Even if such data and information is submitted, the FDA may ultimately decide that the
NDA/BLA does not satisfy the criteria for approval. If a product receives regulatory approval, the approval may
be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited,
which could restrict the commercial value of the product. Further, the FDA may require that certain
contraindications, warnings or precautions be included in the product labeling. Drug manufacturers and their
subcontractors are required to register their establishments with the FDA, and are subject to periodic
unannounced inspections by the FDA for compliance with cGMPs, which impose certain procedural and
documentation requirements upon us and our third-party manufacturers. We cannot be certain that we or our
suppliers will be able to comply with the cGMP and other FDA regulatory requirements.

Post-Approval Requirements

Any pharmaceutical products for which we receive FDA approvals are subject to continuing regulation by the
FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the
product, providing the FDA with updated safety and efficacy information, product sampling and distribution
requirements, complying with certain electronic records and signature requirements and complying with FDA
promotion and advertising requirements, which include, among others, standards for direct-to-consumer
advertising, promoting pharmaceutical products for uses or in patient populations that are not described in the
pharmaceutical product’s approved labeling (known as “off-label use”), industry-sponsored scientific and
educational activities, and promotional activities involving the internet. Failure to comply with FDA
requirements can have negative consequences, including adverse publicity, enforcement letters from the FDA,
mandated corrective advertising or communications with doctors, and civil or criminal penalties.

The FDA also may require post-marketing testing, known as Phase 4 testing, risk minimization action plans and
surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict
the distribution or use of the product.

Orphan Drugs

Under the Orphan Drug Act, special incentives exist for sponsors to develop products for rare diseases or
conditions, which are defined to include those diseases or conditions that affect fewer than 200,000 people in the
United States. Requests for orphan drug designation must be submitted before the submission of an NDA or
BLA. We intend to request orphan drug designation for CNDO-109 for the treatment of AML. In June 2012, we
were notified by the FDA that CNDO-109 was granted orphan drug designation and in September 2012, the U.S.
Patent and Trademark Office issued the first U.S. patent covering CNDO-109. If CNDO-109 is commercialized,
we will be obligated to pay UCLB annual royalties based upon the net sales of product or if we sublicense
CNDO-109, a portion of sub-licensing revenue we receive, if any.

If a product that has an orphan drug designation is the first such product to receive FDA approval for the disease
for which it has such designation, the product is entitled to orphan product exclusivity for that use. This means
that, subsequent to approval, the FDA may not approve any other applications to market the same drug for the
same disease, except in limited circumstances, for seven years. FDA may approve a subsequent application from
another person if the FDA determines that the application is for a different drug or different use, or if the FDA
determines that the subsequent product is clinically superior, or that the holder of the initial orphan drug approval
cannot assure the availability of sufficient quantities of the drug to meet the public’s need. If the FDA approves
someone else’s application for the same drug that has orphan exclusivity, but for a different use, the competing
drug could be prescribed by physicians outside its FDA approval for the orphan use, notwithstanding the
existence of orphan exclusivity. A grant of an orphan designation is not a guarantee that a product will be
approved. If a sponsor receives orphan drug exclusivity upon approval, there can be no assurance that the
exclusivity will prevent another person from receiving approval for the same or a similar drug for the same or
other uses.

Pediatric Information

Under the Pediatric Research Equity Act, or PREA, NDAs and BLAs or supplements to NDAs and BLAs must
contain data to assess the safety and effectiveness of the treatment for the claimed indications in all relevant
pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the
treatment is safe and effective. The FDA may grant full or partial waivers, or deferrals, for submission of data.
Unless otherwise required by regulation, PREA does not apply to any product for an indication for which orphan
designation has been granted.

The Best Pharmaceuticals for Children Act, or BPCA, provides BLA holders a six-month extension of any
exclusivity—patent or non-patent—for a product if certain conditions are met. Conditions for exclusivity include
the FDA’s determination that information relating to the use of a new drug in the pediatric population may
produce health benefits in that population, FDA making a written request for pediatric studies, and the applicant
agreeing to perform, and reporting on, the requested studies within a specific time frame.

Other Healthcare Laws and Compliance Requirements

In the United States, our activities are potentially subject to regulation by various federal, state and local
authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the
Health Care Financing Administration), other divisions of the United States Department of Health and Human
Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United
States Attorney offices within the Department of Justice, and state and local governments.

Pharmaceutical Coverage, Pricing and Reimbursement

In the United States and markets in other countries, sales of any products for which we receive regulatory
approval for commercial sale will depend in part on the availability of reimbursement from third-party payors,
including government health administrative authorities, managed care providers, private health insurers and other
organizations. Third-party payors are increasingly examining the medical necessity and cost-effectiveness of
medical products and services, in addition to their safety and efficacy, and, accordingly, significant uncertainty
exists as to the reimbursement status of newly approved therapeutics. Adequate third party reimbursement may
not be available for our products to enable us realize an appropriate return on our investment in research and
product development. We are unable to predict the future course of federal or state health care legislation and
regulations, including regulations that will be issued to implement provisions of the health care reform legislation
enacted in 2010, known as the Affordable Care Act. The Affordable Care Act and further changes in the law or
regulatory framework could have a material adverse effect on our business.

International Regulation

In addition to regulations in the United States, there are a variety of foreign regulations governing clinical trials
and commercial sales and distribution of any product candidates. The approval process varies from country to
country, and the time may be longer or shorter than that required for FDA approval.

Employees

As of December 31, 2012, we had 16 full time employees.

Available Information

Our website address is www.coronadobiosciences.com. We make available, free of charge through our website,
our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all
amendments to those reports as soon as is reasonably practicable after such material is electronically filed with,
or furnished to, the SEC, but other information on our website is not incorporated into this report. The SEC
maintains an internet site that contains these reports at www.sec.gov.

Item 1A. Risk Factors

Our business operations face a number of risks. These risks should be read and considered with other information
provided in this Annual Report on Form 10-K.

Risks Related to our Business and Industry

We are a development stage company and have a limited operating history upon which to base an investment
decision.

We are a clinical development stage biopharmaceutical company. We have engaged primarily in research and
development activities since inception, have not generated any revenues from product sales and have incurred
significant net losses since our inception. As of December 31, 2012, we had an accumulated deficit of
approximately $84.2 million. We have not demonstrated our ability to perform the functions necessary for the
successful commercialization of any of our products. The successful commercialization of any of our products
will require us to perform a variety of functions, including:

•

continuing to undertake pre-clinical development and clinical trials;

participating in regulatory approval processes;

formulating and manufacturing products; and

conducting sales and marketing activities.

Our operations to date have been limited to organizing and staffing our company, acquiring, developing and
securing the proprietary rights for, and undertaking pre-clinical development and clinical trials of our product
candidates. These operations provide a limited basis for our stockholders and prospective investors to assess our
ability to commercialize TSO, CNDO-109 or any other future products and the advisability of investing in our
securities.

Our product candidates are at an early stage of development and may not be successfully developed or
commercialized.

Our two product candidates, TSO and CNDO-109, are in the early stage of development and will require
substantial further capital expenditures, development, testing, and regulatory clearances prior to
commercialization. The development and regulatory approval process takes several years and it is not likely that
either TSO or CNDO-109, even if successfully developed and approved by the FDA, would be commercially
available for five or more years. Of the large number of drugs in development, only a small percentage
successfully completes the FDA regulatory approval process and is commercialized. Accordingly, even if we are
able to obtain the requisite financing to fund our development programs, we cannot assure you that our product
candidates will be successfully developed or commercialized. Our failure to develop, manufacture or receive
regulatory approval for or successfully commercialize any of our product candidates could result in the failure of
our business and a loss of all of your investment in our company.

Because we in-licensed our product candidates from third parties, any dispute with our licensors or non-
performance by us or by our licensors may adversely affect our ability to develop and commercialize the
applicable product candidates.

All of our product candidates, including related intellectual property rights, were in-licensed from third parties.
Under the terms of our license agreements, the licensors generally have the right to terminate such agreements in
the event of a material breach by us. Our licenses require us to make annual, milestone or other payments prior to
commercialization of any product and our ability to make these payments depends on our ability to generate cash
in the future. These agreements generally require us to use diligent and reasonable efforts to develop and
commercialize the product candidate. In the case of TSO, Ovamed licenses TSO from a third party, University of
Iowa Research Foundation, or UIRF, in exchange for annual and milestone payments, patent cost reimbursement,

royalties based on sales and diligence obligations. Our rights to TSO are, therefore, also subject to Ovamed’s
performance of its obligations to UIRF, any breach of which we may be required to remedy in order to preserve
our rights.

If there is any conflict, dispute, disagreement or issue of non-performance between us and our licensing partner
regarding our rights or obligations under the license agreement, including any conflict, dispute or disagreement
arising from our failure to satisfy payment obligations under such agreement, our ability to develop and
commercialize the affected product candidate may be adversely affected. Similarly, any such dispute or issue of
non-performance between Ovamed and UIRF that we are unable to cure could adversely affect our ability to
develop and commercialize TSO. Any loss of our rights under our license agreements could delay or completely
terminate our product development efforts for the affected product candidate.

Because the results of preclinical studies and early clinical trials are not necessarily predictive of future results,
any product candidate we advance into clinical trials may not have favorable results in later clinical trials, if
any, or receive regulatory approval.

Pharmaceutical development has inherent risk. We will be required to demonstrate through well-controlled
clinical trials that our product candidates are effective with a favorable benefit-risk profile for use in their target
indications before we can seek regulatory approvals for their commercial sale. Success in early clinical trials
does not mean that later clinical trials will be successful as product candidates in later-stage clinical trials may
fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing. We also
may need to conduct additional clinical trials that are not currently anticipated. Companies frequently suffer
significant setbacks in advanced clinical trials, even after earlier clinical trials have shown promising results. In
addition, only a small percentage of drugs under development result in the submission of a New Drug
Application, an NDA, or Biologics License Application, or BLA, to the FDA and even fewer are approved for
commercialization.

Any product candidates we advance into clinical development are subject to extensive regulation, which can be
costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to
commercialize our product candidates.

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import,
export, marketing and distribution of our product candidates, TSO and CNDO-109, are subject to extensive
regulation by the FDA in the United States and by comparable health authorities in foreign markets. In the United
States, we are not permitted to market our product candidates until we receive approval of a BLA from the FDA.
The process of obtaining BLA approval is expensive, often takes many years and can vary substantially based
upon the type, complexity and novelty of the products involved. Our development of CNDO-109, which is an
individualized immunotherapy, may in particular be affected because to date the FDA has only approved one
individualized immunotherapy treatment. In addition to the significant clinical testing requirements, our ability to
obtain marketing approval for these products depends on obtaining the final results of required non-clinical
testing, including characterization of the manufactured components of our product candidates and validation of
our manufacturing processes. The FDA may determine that our product manufacturing processes, testing
procedures or facilities are insufficient to justify approval. Approval policies or regulations may change and the
FDA has substantial discretion in the pharmaceutical approval process, including the ability to delay, limit or
deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical
development of product candidates, regulatory approval is never guaranteed.

The FDA or and other regulatory agency can delay, limit or deny approval of a product candidate for many
reasons, including, but not limited to:

•

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation
of our clinical trials;

• we may be unable to demonstrate to the satisfaction of the FDA that a product candidate is safe and

effective for any indication;

•

the FDA may not accept clinical data from trials which are conducted by individual investigators or in
countries where the standard of care is potentially different from the United States;

the results of clinical trials may not meet the level of statistical significance required by the FDA for
approval;

• we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its

safety risks;

•

the FDA may disagree with our interpretation of data from preclinical studies or clinical trials;

the FDA may fail to approve our manufacturing processes or facilities or those of third-party
manufacturers with which we or our collaborators contract for clinical and commercial supplies; or

the approval policies or regulations of the FDA may significantly change in a manner rendering our
clinical data insufficient for approval.

With respect to foreign markets, approval procedures vary among countries and, in addition to the
aforementioned risks, can involve additional product testing, administrative review periods and agreements with
pricing authorities. In addition, recent events raising questions about the safety of certain marketed
pharmaceuticals may result in increased cautiousness by the FDA and comparable foreign regulatory authorities
in reviewing new pharmaceuticals based on safety, efficacy or other regulatory considerations and may result in
significant delays in obtaining regulatory approvals. Any delay in obtaining, or inability to obtain, applicable
regulatory approvals would prevent us from commercializing our product candidates.

Any product candidate we advance into clinical trials may cause unacceptable adverse events or have other
properties that may delay or prevent their regulatory approval or commercialization or limit their commercial
potential.

Unacceptable adverse events caused by any of our product candidates that we advance into clinical trials could
cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of
regulatory approval by the FDA or other regulatory authorities for any or all targeted indications and markets.
This, in turn, could prevent us from commercializing the affected product candidate and generating revenues
from its sale. For example, in Phase 1/2 oncology trials, dose limiting toxicity, or DLT, stopping rules are
commonly applied. Our CNDO-109 Phase 1/2 trial is subject to a set of DLTs that could suspend or stop dose
escalation by predetermined criteria, including allergic reactions, prolonged aplasia or other organ toxicities of a
serious nature.

We have not yet completed testing of any of our product candidates for the treatment of the indications for which
we intend to seek product approval in humans, and we currently do not know the extent of adverse events, if any,
that will be observed in patients who receive any of our product candidates. If any of our product candidates
cause unacceptable adverse events in clinical trials, we may not be able to obtain regulatory approval or
commercialize such product or, if such product candidate is approved for marketing, future adverse events could
cause us to withdraw such product from the market.

Delays in the commencement of our clinical trials could result in increased costs and delay our ability to pursue
regulatory approval.

The commencement of clinical trials can be delayed for a variety of reasons, including delays in:

•

obtaining regulatory clearance to commence a clinical trial;

identifying, recruiting and training suitable clinical investigators;

reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and
trial sites, the terms of which can be subject to extensive negotiation, may be subject to modification
from time to time and may vary significantly among different CROs and trial sites;

•

obtaining sufficient quantities of a product candidate for use in clinical trials;

obtaining Investigator Review Board, or IRB, or ethics committee approval to conduct a clinical trial at
a prospective site;

identifying, recruiting and enrolling patients to participate in a clinical trial; and

retaining patients who have initiated a clinical trial but may withdraw due to adverse events from the
therapy, insufficient efficacy, fatigue with the clinical trial process or personal issues. Any delays in the
commencement of our clinical trials will delay our ability to pursue regulatory approval for our product
candidates. In addition, many of the factors that cause, or lead to, a delay in the commencement of
clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate.

Suspensions or delays in the completion of clinical testing could result in increased costs to us and delay or
prevent our ability to complete development of that product or generate product revenues.

Once a clinical trial has begun, patient recruitment and enrollment may be slower than we anticipate. Clinical
trials may also be delayed as a result of ambiguous or negative interim results or difficulties in obtaining
sufficient quantities of product manufactured in accordance with regulatory requirements and on a timely basis.
Further, a clinical trial may be modified, suspended or terminated by us, an IRB, an ethics committee or a data
safety monitoring committee overseeing the clinical trial, any clinical trial site with respect to that site, or the
FDA or other regulatory authorities due to a number of factors, including:

•

failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;

inspection of the clinical trial operations or clinical trial site by the FDA or other regulatory authorities
resulting in the imposition of a clinical hold;

stopping rules contained in the protocol;

unforeseen safety issues or any determination that the clinical trial presents unacceptable health risks;
and

lack of adequate funding to continue the clinical trial.

Changes in regulatory requirements and guidance also may occur and we may need to amend clinical trial
protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for
re-examination, which may impact the costs, timing and the likelihood of a successful completion of a clinical
trial. If we experience delays in the completion of, or if we must suspend or terminate, any clinical trial of any
product candidate, our ability to obtain regulatory approval for that product candidate will be delayed and the
commercial prospects, if any, for the product candidate may suffer as a result. In addition, many of these factors
may also ultimately lead to the denial of regulatory approval of a product candidate.

Even if approved, TSO, CNDO-109 or any other product candidates that we may develop and market may be
later withdrawn from the market or subject to promotional limitations.

We may not be able to obtain the labeling claims necessary or desirable for the promotion of our product
candidates if approved. We may also be required to undertake post-marketing clinical trials. If the results of such
post-marketing studies are not satisfactory or if adverse events or other safety issues arise after approval, the
FDA or a comparable regulatory agency in another country may withdraw marketing authorization or may
condition continued marketing on commitments from us that may be expensive and/or time consuming to
complete. In addition, if we or others identify adverse side effects after any of our products are on the market, or
if manufacturing problems occur, regulatory approval may be withdrawn and reformulation of our products,
additional clinical trials, changes in labeling of our products and additional marketing applications may be
required. Any reformulation or labeling changes may limit the marketability of our products if approved.

We currently rely completely on Ovamed, and other third parties to manufacture our preclinical and clinical
pharmaceutical supplies of TSO. We plan to establish a U.S. manufacturing facility to manufacture Phase 3
clinical supplies and commercial supplies of TSO. Our dependence on third party suppliers or our inability to
successfully produce TSO could adversely impact our business.

We currently rely exclusively on Ovamed to supply us with our requirements of TSO, which it is currently
producing at only one facility in Germany and where it also is producing product for third parties, including Falk.
If Ovamed becomes unable or unwilling to deliver sufficient quantities of TSO to us on a timely basis and in
accordance with applicable specifications and other regulatory requirements, there would be a significant
interruption of our TSO supply, which would materially adversely affect clinical development and potential
commercialization of the product. In the event that the FDA or such other agencies determine that we, Ovamed
or our third-party suppliers have not complied with cGMP, our clinical trials could be terminated or subjected to
a clinical hold until such time as we are able to obtain appropriate replacement material. Furthermore, if Ovamed,
we or any other contract manufacturer who supply Ovamed or us cannot successfully manufacture material that
conforms to our specifications and with FDA regulatory requirements, we will not be able to secure and/or
maintain FDA approval for TSO. We, Ovamed and our third-party suppliers are and will be required to maintain
compliance with cGMPs and will be subject to inspections by the FDA or comparable agencies in other
jurisdictions to confirm such compliance. Any delay, interruption or other issues that arise in the manufacture,
packaging, or storage of our products as a result of a failure of our or Ovamed’s facilities or operations or of our
third party suppliers to pass any regulatory agency inspection could significantly impair our ability to develop
and commercialize our products.

We do and will also rely on our manufacturers to purchase from third-party suppliers the materials necessary to
produce our product candidates for our anticipated clinical trials. There are a small number of suppliers for
certain capital equipment and raw materials that are used to manufacture TSO. We will and Ovamed does rely on
a single source of ova. We do not have any control over the process or timing of the acquisition of raw materials
by our manufacturers. Moreover, we currently do not have any agreements for the commercial production of
these raw materials. Any significant delay in the supply of a product candidate or the raw material components
thereof for an ongoing clinical trial could considerably delay completion of our clinical trials, product testing and
potential regulatory approval of our product candidates.

We or Ovamed may not have the resources or capacity to commercially manufacture TSO, if approved, and will
likely continue to be dependent upon third party manufacturers. Our inability or our dependence on third parties
to manufacture and supply us with clinical trial materials and any approved products may adversely affect our
ability to develop and commercialize TSO on a timely basis or at all.

We currently rely completely on Progenitor Cell Therapy, or PCT, and other third parties to manufacture our
preclinical and clinical pharmaceutical supplies of CNDO-109 and expect to continue to rely on these third
parties to produce commercial supplies of CNDO-109, and our dependence on third party suppliers could
adversely impact our business.

We are completely dependent on third party manufacturers for product supply of CNDO-109. We rely on
BioReliance Corporation, or BioReliance, and PCT for our CNDO-109 requirements and our CNDO-109 clinical
program would be adversely affected by a significant interruption in the supply of this product. Furthermore,
BioReliance and/or PCT or any other contract manufacturers cannot successfully manufacture material that
conforms to our specifications and with FDA regulatory requirements, we will not be able to secure and/or
maintain FDA approval for CNDO-109. Our third-party suppliers will be required to maintain compliance with
cGMPs and will be subject to inspections by the FDA or comparable agencies in other jurisdictions to confirm
such compliance. In the event that the FDA or such other agencies determine that our third-party suppliers have
not complied with cGMP, our clinical trials could be terminated or subjected to a clinical hold until such time as
we are able to obtain appropriate replacement material. Any delay, interruption or other issues that arise in the
manufacture, packaging, or storage of our products as a result of a failure of the facilities or operations of our
third party suppliers to pass any regulatory agency inspection could significantly impair our ability to develop
and commercialize our products.

We will also rely on our manufacturers to purchase from third-party suppliers the materials necessary to produce
our product candidates for our anticipated clinical trials. There are a small number of suppliers for certain capital
equipment and raw materials that are used to manufacture CNDO-109 We do not have any control over the
process or timing of the acquisition of these raw materials by our manufacturers. Moreover, we currently do not
have any agreements for the commercial production of these raw materials. Any significant delay in the supply of
CNDO-109 or the raw material components thereof for an ongoing clinical trial could considerably delay
completion of our clinical trials, product testing and potential regulatory approval of CNDO-109.

We do not expect to have the resources or capacity to commercially manufacture CNDO-109, if approved, and
will likely continue to be dependent upon third party manufacturers. Our dependence on third parties to
manufacture and supply us with clinical trial materials and any approved products may adversely affect our
ability to develop and commercialize NDO-109 on a timely basis or at all.

We rely on third parties to conduct our clinical trials. If these third parties do not meet our deadlines or
otherwise conduct the trials as required, our clinical development programs could be delayed or unsuccessful
and we may not be able to obtain regulatory approval for or commercialize our product candidates when
expected or at all.

We do not have the ability to conduct all aspects of our preclinical testing or clinical trials ourselves. We intend
and do use CROs to conduct our planned clinical trials and will and do rely upon such CROs, as well as medical
institutions, clinical investigators and consultants, to conduct our trials in accordance with our clinical protocols.
Our CROs, investigators and other third parties will and do play a significant role in the conduct of these trials
and the subsequent collection and analysis of data from the clinical trials.

There is no guarantee that any CROs, investigators and other third parties upon which we rely for administration
and conduct of our clinical trials will devote adequate time and resources to such trials or perform as
contractually required. If any of these third parties fail to meet expected deadlines, fail to adhere to our clinical
protocols or otherwise perform in a substandard manner, our clinical trials may be extended, delayed or
terminated. If any of our clinical trial sites terminate for any reason, we may experience the loss of follow-up
information on patients enrolled in our ongoing clinical trials unless we are able to transfer the care of those
patients to another qualified clinical trial site. In addition, principal investigators for our clinical trials may serve
as scientific advisors or consultants to us from time to time and receive cash or equity compensation in
connection with such services. If these relationships and any related compensation result in perceived or actual
conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized.

If our competitors develop treatments for the target indications of our product candidates that are approved
more quickly, marketed more successfully or demonstrated to be more effective than our product candidates, our
commercial opportunity will be reduced or eliminated.

We operate in highly competitive segments of the biotechnology and biopharmaceutical markets. We face
competition from many different sources, including commercial pharmaceutical and biotechnology enterprises,
academic institutions, government agencies, and private and public research institutions. Our product candidates,
if successfully developed and approved, will compete with established therapies, as well as new treatments that
may be introduced by our competitors. Many of our competitors have significantly greater financial, product
development, manufacturing and marketing resources than us. Large pharmaceutical companies have extensive
experience in clinical testing and obtaining regulatory approval for drugs. In addition, many universities and
private and public research institutes are active in cancer research, some in direct competition with us. We also
may compete with these organizations to recruit management, scientists and clinical development personnel.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative
arrangements with large and established companies. New developments, including the development of other
biological and pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and life
sciences industries at a rapid pace. Developments by competitors may render our product candidates obsolete or

noncompetitive. We will also face competition from these third parties in recruiting and retaining qualified
personnel, establishing clinical trial sites and patient registration for clinical trials and in identifying and in-
licensing new product candidates.

If we are unable to establish sales and marketing capabilities or fail to enter into agreements with third parties
to market, distribute and sell any products we may successfully develop, we may not be able to effectively market
and sell any such products and generate product revenue.

We do not currently have the infrastructure for the sales, marketing and distribution of any of our product
candidates, and must build this infrastructure or make arrangements with third parties to perform these functions
in order to commercialize any products that we may successfully develop. The establishment and development of
a sales force, either by us or jointly with a partner, or the establishment of a contract sales force to market any
products we may develop will be expensive and time-consuming and could delay any product launch. If we, or
our partners, are unable to establish sales and marketing capability or any other non-technical capabilities
necessary to commercialize any products we may successfully develop, we will need to contract with third
parties to market and sell such products. We may not be able to establish arrangements with third- parties on
acceptable terms, or at all.

If any product candidate that we successfully develop does not achieve broad market acceptance among
physicians, patients, healthcare payors and the medical community, the revenues that it generates from their
sales will be limited.

Even if our product candidates receive regulatory approval, they may not gain market acceptance among
physicians, patients, healthcare payors and the medical community. Coverage and reimbursement of our product
candidates by third-party payors, including government payors, generally is also necessary for commercial
success. The degree of market acceptance of any approved products will depend on a number of factors,
including:

•

the efficacy and safety as demonstrated in clinical trials;

the clinical indications for which the product is approved;

acceptance by physicians, major operators of hospitals and clinics and patients of the product as a safe
and effective treatment;

acceptance of the product by the target population;

the potential and perceived advantages of product candidates over alternative treatments;

the safety of product candidates seen in a broader patient group, including its use outside the approved
indications;

the cost of treatment in relation to alternative treatments;

the availability of adequate reimbursement and pricing by third parties and government authorities;

relative convenience and ease of administration;

the prevalence and severity of adverse events;

the effectiveness of our sales and marketing efforts; and

unfavorable publicity relating to the product.

If any product candidate is approved but does not achieve an adequate level of acceptance by physicians,
hospitals, healthcare payors and patients, we may not generate sufficient revenue from these products and may
not become or remain profitable.

We may expend our limited resources to pursue a particular product candidate or indication and fail to
capitalize on product candidates or indications for which there may be a greater likelihood of success.

Because we have limited financial and managerial resources, we have focused on two research programs and
product candidates, TSO and CNDO-109, for specific indications. As a result, we may forego or delay pursuit of
opportunities with other product candidates or, particularly with respect to TSO, for other indications for which
there may be a greater likelihood of success or may prove to have greater commercial potential. Notwithstanding
our investment to date and anticipated future expenditures on TSO and CNDO-109, we have not yet developed,
and may never successfully develop, any marketed treatments using these products. Research programs to
identify new product candidates or pursue alternative indications for current product candidates require
substantial technical, financial and human resources. Although we intend to and do support certain investigator-
sponsored clinical trials of TSO evaluating various indications, these activities may initially show promise in
identifying potential product candidates or indications, yet fail to yield product candidates or indications for
further clinical development.

We may incur substantial product liability or indemnification claims relating to the clinical testing of our
product candidates.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human
clinical trials, and claims could be brought against us if use or misuse of one of our product candidates causes, or
merely appears to have caused, personal injury or death. While we have and intend to maintain product liability
insurance relating to our clinical trials, our coverage may not be sufficient to cover claims that may be made
against us and we may be unable to maintain such insurance. Any claims against us, regardless of their merit,
could severely harm our financial condition, strain our management and other resources or destroy the prospects
for commercialization of the product which is the subject of any such claim. We are unable to predict if we will
be able to obtain or maintain product liability insurance for any products that may be approved for marketing.
Additionally, we have entered into various agreements where we indemnify third parties for certain claims
relating to our product candidates. These indemnification obligations may require us to pay significant sums of
money for claims that are covered by these indemnifications.

Healthcare reform and restrictions on reimbursements may limit our financial returns.

Our ability or the ability of our collaborators to commercialize any of our product candidates that we successfully
develop may depend, in part, on the extent to which government health administration authorities, private health
insurers and other organizations will reimburse consumers for the cost of these products. These third parties are
increasingly challenging both the need for and the price of new drug products. Significant uncertainty exists as to
the reimbursement status of newly approved therapeutics. Adequate third-party reimbursement may not be
available for our product candidates to enable us or our collaborators to maintain price levels sufficient to realize
an appropriate return on their and our investments in research and product development.

If we fail to attract and retain key management and clinical development personnel, we may be unable to
successfully develop or commercialize our product candidates.

We will need to expand and effectively manage our managerial, operational, financial and other resources in
order to successfully pursue our clinical development and commercialization efforts. As a company with a
limited number of personnel, we are highly dependent on the development, regulatory, commercial and financial
expertise of the members of our senior management, in particular Harlan F. Weisman, M.D., our chairman and
chief executive officer. The loss of this individual or the services of any of our other senior management could
delay or prevent the further development and potential commercialization of our product candidates and, if we
are not successful in finding suitable replacements, could harm our business. Our success also depends on our
continued ability to attract, retain and motivate highly qualified management and scientific personnel and we
may not be able to do so in the future due to the intense competition for qualified personnel among

biotechnology and pharmaceutical companies, as well as universities and research organizations. If we are not
able to attract and retain the necessary personnel, we may experience significant impediments to our ability to
implement our business strategy.

We use biological materials and may use hazardous materials, and any claims relating to improper handling,
storage or disposal of these materials could be time consuming or costly.

We may use hazardous materials, including chemicals and biological agents and compounds that could be
dangerous to human health and safety or the environment. Our operations also produce hazardous waste
products. Federal, state and local laws and regulations govern the use, generation, manufacture, storage, handling
and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may
be expensive, and current or future environmental laws and regulations may impair our product development
efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these
materials or wastes. We do not carry specific biological or hazardous waste insurance coverage and our property
and casualty and general liability insurance policies specifically exclude coverage for damages and fines arising
from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or
injury, we could be held liable for damages or penalized with fines in an amount exceeding our resources, and
our clinical trials or regulatory approvals could be suspended.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to
injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate
coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort
claims that may be asserted against us in connection with our storage or disposal of biological or hazardous
materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and
safety laws and regulations. These current or future laws and regulations may impair our research, development
or production efforts. Failure to comply with these laws and regulations also may result in substantial fines,
penalties or other sanctions.

Our success will depend upon intellectual property, proprietary technologies and regulatory market exclusivity
periods, and the intellectual property protection for our product candidates depends significantly on third
parties.

Our success will depend, in large part, on obtaining and maintaining patent protection and trade secret protection
for our product candidates and their formulations and uses, as well as successfully defending these patents
against third-party challenges. UIRF, Falk and Ovamed are responsible for prosecuting and maintaining patent
protection relating to their respective patents relating to TSO and UCLB is responsible for prosecuting and
maintaining patent protection for CNDO-109, in each case at our expense for our territories. If UIRF, Falk,
Ovamed and/or UCLB fail to appropriately prosecute and maintain patent protection for these product
candidates, our ability to develop and commercialize these product candidates may be adversely affected and we
may not be able to prevent competitors from making, using and selling competing products. This failure to
properly protect the intellectual property rights relating to these product candidates could have a material adverse
effect on our financial condition and results of operations.

The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that
we or our partners will be successful in protecting our product candidates by obtaining and defending patents.
These risks and uncertainties include the following:

•

patent applications may not result in any patents being issued;

patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked,
circumvented, found to be unenforceable, or otherwise may not provide any competitive advantage;

•

our competitors, many of which have substantially greater resources than we or our partners and many
of which have made significant investments in competing technologies, may seek, or may already have
obtained, patents that will limit, interfere with, or eliminate our ability to make, use, and sell our
potential products;

there may be significant pressure on the United States government and other international governmental
bodies to limit the scope of patent protection both inside and outside the United States for disease
treatments that prove successful as a matter of public policy regarding worldwide health concerns; and

countries other than the United States may have patent laws less favorable to patentees than those upheld
by United States courts, allowing foreign competitors a better opportunity to create, develop, and market
competing products.

In addition to patents, we and our partners also rely on trade secrets and proprietary know-how. Although we
have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality
agreements with third parties, and confidential information and inventions agreements with employees,
consultants and advisors, third parties may still obtain this information or come upon this same or similar
information independently.

We also intend to rely on our ability to obtain and maintain a regulatory period of market exclusivity for any of
our biologic product candidates that are successfully developed and approved for commercialization. Although
this period in the United States is currently 12 years from the date of marketing approval, there is a risk that the
U.S. Congress could amend laws to significantly shorten this exclusivity period, as proposed by President
Obama. Once any regulatory period of exclusivity expires, depending on the status of our patent coverage and the
nature of the product, we may not be able to prevent others from marketing products that are biosimilar to or
interchangeable with our products, which would materially adversely affect us.

In addition, United States patent laws may change which could prevent or limit us from filing patent applications
or patent claims to protect our products and/or technologies or limit the exclusivity periods that are available to
patent holders. For example, on September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith
Act, was signed into law, and includes a number of significant changes to United States patent law. These include
changes to transition from a “first-to-invent” system to a “first-to-file” system and to the way issued patents are
challenged. These changes may favor larger and more established companies that have more resources to devote
to patent application filing and prosecution. The United States Patent and Trademark Office is currently
developing regulations and procedures to administer the Leahy-Smith Act, and many of the substantive changes
to patent law associated with the Leahy-Smith Act will not become effective until one year or 18 months after its
enactment. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will ultimately have on the cost
of prosecuting our patent applications, our ability to obtain patents based on our discoveries and our ability to
enforce or defend our issued patents.

If we or our partners are sued for infringing intellectual property rights of third parties, it will be costly and time
consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business.

Our success also depends on our ability and the ability of any of our future collaborators to develop,
manufacture, market and sell our product candidates without infringing the proprietary rights of third parties.
Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties,
exist in the fields in which we are developing products, some of which may be directed at claims that overlap
with the subject matter of our intellectual property. Because patent applications can take many years to issue,
there may be currently pending applications, unknown to us, which may later result in issued patents that our
product candidates or proprietary technologies may infringe. Similarly, there may be issued patents relevant to
our product candidates of which we are not aware.

There is a substantial amount of litigation involving patent and other intellectual property rights in the
biotechnology and biopharmaceutical industries generally. If a third party claims that we or any of our licensors,
suppliers or collaborators infringe the third party’s intellectual property rights, we may have to:

•

obtain licenses, which may not be available on commercially reasonable terms, if at all;

abandon an infringing product candidate or redesign our products or processes to avoid infringement;

pay substantial damages, including the possibility of treble damages and attorneys’ fees, if a court
decides that the product or proprietary technology at issue infringes on or violates the third party’s
rights;

pay substantial royalties, fees and/or grant cross licenses to our technology; and/or

defend litigation or administrative proceedings which may be costly whether we win or lose, and which
could result in a substantial diversion of our financial and management resources.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be
expensive, time consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized
use, we may be required to file infringement claims, which can be expensive and time-consuming. An adverse
result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated,
found to be unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property
litigation, there is a risk that some of our confidential information could be compromised by disclosure during
this type of litigation.

We may be subject to claims that our consultants or independent contractors have wrongfully used or disclosed
alleged trade secrets of their other clients or former employers to us.

As is common in the biotechnology and pharmaceutical industry, we engage the services of consultants to assist
us in the development of our product candidates. Many of these consultants were previously employed at, or may
have previously been or are currently providing consulting services to, other biotechnology or pharmaceutical
companies, including our competitors or potential competitors. We may become subject to claims that we or
these consultants have inadvertently or otherwise used or disclosed trade secrets or other proprietary information
of their former employers or their former or current customers. Litigation may be necessary to defend against
these claims. Even if we are successful in defending against these claims, litigation could result in substantial
costs and be a distraction to management.

Risks Relating to our Finances, Capital Requirements and Other Financial Matters

We are a development stage company with a history of operating losses that are expected to continue and we are
unable to predict the extent of future losses, whether we will generate significant or any revenues or whether we
will achieve or sustain profitability.

We are a development stage company and our prospects must be considered in light of the uncertainties, risks,
expenses and difficulties frequently encountered by companies in their early stages of operations. We have
generated operating losses in all periods since our inception in September 2006, including losses of
approximately $10.0 million, $36.4 million and $27.6 million for the years ended December 31, 2010, 2011 and
2012, respectively. At December 31, 2012, we had an accumulated deficit of approximately $84.2 million. We
expect to make substantial expenditures and incur increasing operating costs and interest expense in the future
and our accumulated deficit will increase significantly as we expand development and clinical trial activities for
our product candidates. Our losses have had, and are expected to continue to have, an adverse impact on our
working capital, total assets and stockholders’ equity. Because of the risks and uncertainties associated with
product development, we are unable to predict the extent of any future losses, whether we will ever generate
significant or any revenues or if we will ever achieve or sustain profitability.

Our existing $15.0 million term loan agreement contains affirmative and negative covenants that impose
significant restrictions on our business and financing activities. If we default on our obligations, whether due to
events beyond our control or otherwise, the lender would have a right to foreclose on substantially all of our
assets, other than our intellectual property. A default could materially and adversely affect our operating results
and our financial condition. The loan agreement also contains several affirmative and negative covenants that
impose significant restrictions on our business and operations. . Our failure to comply with the covenants
contained in the loan agreement may result in the declaration of an event of default that, if not cured or waived,
could cause all amounts outstanding under the loan agreement to become due and payable immediately and could
cause the lender to foreclose on the collateral securing the indebtedness, including our cash, cash equivalents and
short-term investments. If an event of default occurs, we may not be able to cure it within any applicable cure
period, if at all. If the maturity of our indebtedness is accelerated, we may not have sufficient funds available for
repayment or we may not have the ability to borrow or obtain sufficient funds to replace the accelerated
indebtedness on terms acceptable to us, or at all. In addition, the loan agreement may limit our ability to finance
future operations or satisfy capital needs or to engage in, expand or pursue our business activities. It may also
prevent us from engaging in activities that could be beneficial to our business and our stockholders unless we
repay the outstanding debt, which may not be desirable or possible.

We will need substantial additional funding and may be unable to raise capital when needed, which would force
us to delay, curtail or eliminate one or more of our research and development programs or commercialization
efforts.

Our operations have consumed substantial amounts of cash since inception. During the years ended
December 31, 2010, 2011 and 2012 we incurred research and development expenses of approximately $8.3
million, $8.6 million and $17.5 million, respectively. Since our inception in 2006, we incurred research and
development expenses of approximately $42.0 million. We expect to continue to spend substantial amounts on
product development, including conducting clinical trials for our product candidates, establishing manufacturing
capabilities for TSO in the United States, and purchasing clinical trial materials from our suppliers. We believe
that our current cash will be sufficient to meet our anticipated cash requirements through the first quarter of 2014
and that we will require substantial additional funds to support our continued research and development
activities, including costs of preclinical studies and clinical trials, obtaining regulatory approvals and potential
commercialization and for the payment of principal and interest under our existing loan agreement. We have
based this estimation on assumptions that may prove to be wrong, and we could spend our available financial
resources much faster than we currently expect.

Until such time, if ever, as we can generate a sufficient amount of product revenue and achieve profitability, we
expect to seek to finance future cash needs through equity or debt financings or corporate collaboration or
licensing arrangements. We currently have no agreements to obtain any additional financing and we cannot be
certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional
capital, we will have to delay, curtail or eliminate one or more of our research and development programs.

Raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution
to our existing stockholders, restrict our operations or require us to relinquish proprietary rights.

To the extent that we raise additional capital by issuing equity securities, the share ownership of existing
stockholders will be diluted. Any future debt financing may involve covenants that restrict our operations,
including limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make
certain investments and engage in certain merger, consolidation or asset sale transactions, among other
restrictions. In addition, if we raise additional funds through licensing arrangements, it may be necessary to
relinquish potentially valuable rights to our product candidates, or grant licenses on terms that are not favorable
to us.

If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to
produce accurate and timely financial statements could be impaired, which could harm our operating results,
investors’ views of us and, as a result, the value of our common stock.

Pursuant to Section 404 of the Sarbanes Oxley Act of 2002 and related rules, or SOX, our management is be
required to report on, and our independent registered public accounting firm is required to attest to, the
effectiveness of our internal control over financial reporting. The rules governing the standards that must be met
for management to assess our internal control over financial reporting are complex and require significant
documentation, testing and possible remediation. To comply with the requirements of being a reporting company
under the Securities Exchange Act of 1934, or the Exchange Act, we may need to further upgrade our systems,
including information technology, implement additional financial and management controls, reporting systems
and procedures and hire additional accounting and finance staff. If material weaknesses or deficiencies in our
internal controls exist and go undetected, our financial statements could contain material misstatements that,
when discovered in the future could cause us to fail to meet our future reporting obligations and cause the price
of our common stock to decline.

Risks Associated with our Capital Stock

One of our directors and principal stockholders can individually control our direction and policies, and his
interests may be adverse to the interests of our other stockholders.

At December 31, 2012, Lindsay A. Rosenwald, M.D., a member of our board of directors, beneficially owned
approximately 14.72% of our issued and outstanding capital stock. By virtue of his holdings and his membership
on our board of directors, Dr. Rosenwald may influence the election of the members of our board of directors,
our management and our affairs and may make it difficult for us to consummate corporate transactions such as
mergers, consolidations or the sale of all or substantially all of our assets that may be favorable from our
standpoint or that of our other stockholders. In addition, Dr. Rosenwald is an affiliate of National Securities
Corporation, or National, which acted as an underwriter of our June 2012 public offering of common stock.
National received related commissions of $187,000 in connection with the offering. Dr. Rosenwald purchased at
the public offering price 200,000 shares of common stock in the offering.

In connection with our Series C Financing in 2011, National received commissions of $2.6 million and five-year
warrants to purchase an aggregate of 461,263 Series C shares at an exercise price of $5.59, which were
subsequently transferred by National to other individuals and entities and are now exercisable to purchase
458,276 shares of common stock.

The market price of our common stock may be volatile and may fluctuate in a way that is disproportionate to our
operating performance.

Our stock price may experience substantial volatility as a result of a number of factors, including:

•

sales or potential sales of substantial amounts of our common stock;

delay or failure in initiating or completing pre-clinical or clinical trials or unsatisfactory results of these
trials;

announcements about us or about our competitors, including clinical trial results, regulatory approvals or
new product introductions;

developments concerning our licensors, product manufacturers or our ability to produce TSO;

litigation and other developments relating to our patents or other proprietary rights or those of our
competitors;

conditions in the pharmaceutical or biotechnology industries;

governmental regulation and legislation;

variations in our anticipated or actual operating results; and

change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations.

Many of these factors are beyond our control. The stock markets in general, and the market for pharmaceutical
and biotechnological companies in particular, have historically experienced extreme price and volume
fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of
these companies. These broad market and industry factors could reduce the market price of our common stock,
regardless of our actual operating performance.

Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may
adversely impact the price of our common stock.

Almost all of our 24.4 million outstanding shares of common stock as of December 31, 2012, as well as a
substantial number of shares of our common stock underlying outstanding warrants, are available for sale in the
public market, either pursuant to Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, or
an effective registration statement. In addition, we recently filed a shelf registration statement on Form S-3 in
September 2012, pursuant to which we may sell up to $75 million of our equity securities over the next three
years. Sales of a substantial number of shares of our common stock, or the perception that such sales may occur,
may adversely impact the price of our common stock. We sold 3,361 shares of our common stock resulting in net
proceeds to us of $19,000 in 2012 and in the first quarter of 2013, through March 11, 2013 we sold 1,426,250
shares of our common stock resulting in net proceeds to us of $10.5 million pursuant to this Form S-3.

We have never paid and do not intend to pay cash dividends. As a result, capital appreciation, if any, will be your
sole source of gain.

We have never paid cash dividends on any of our capital stock and we currently intend to retain future earnings, if
any, to fund the development and growth of our business. In addition, the terms of existing and future debt
agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock
will be your sole source of gain for the foreseeable future.

Provisions in our certificate of incorporation, our bylaws and Delaware law might discourage, delay or prevent
a change in control of our company or changes in our management and, therefore, depress the trading price of
our common stock.

Provisions of our certificate of incorporation, our bylaws and Delaware law may have the effect of deterring
unsolicited takeovers or delaying or preventing a change in control of our company or changes in our
management, including transactions in which our stockholders might otherwise receive a premium for their
shares over then current market prices. In addition, these provisions may limit the ability of stockholders to
approve transactions that they may deem to be in their best interests. These provisions include:

•

the inability of stockholders to call special meetings; and

the ability of our Board of Directors to designate the terms of and issue new series of preferred stock
without stockholder approval, which could include the right to approve an acquisition or other change in
our control or could be used to institute a rights plan, also known as a poison pill, that would work to
dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not
been approved by our Board of Directors.

In addition, of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from
engaging in a business combination with an interested stockholder, generally a person which together with its
affiliates owns, or within the last three years, has owned 15% of our voting stock, for a period of three years after
the date of the transaction in which the person became an interested stockholder, unless the business combination
is approved in a prescribed manner.

The existence of the forgoing provisions and anti-takeover measures could limit the price that investors might be
willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company,
thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

On January 2, 2013, the President signed into law The American Taxpayer Relief Act of 2012. Under prior law, a
taxpayer was entitled to a research credit for qualifying amounts paid or incurred on or before December 31,
2011. The Taxpayer Relief Act extends the research credit for two years to December 31, 2013. The extension of
the research credit is retroactive and includes amounts paid or incurred after December 31, 2011. As a result of
the retroactive extension, a benefit for qualifying amounts incurred in 2012 will be recognized in the period of
enactment, which is the first quarter of 2013.

Item 1B. Unresolved Staff Comments.

None.

Item 2.

Properties.

Our principal executive offices at 24 New England Executive Park, Suite 105, Burlington, Massachusetts 01803
are occupied under a lease expiring in October 2017 for approximately 3,200 square feet of space providing for
rental payments of approximately $94,000 per year. Total rent expense for the term of this lease will approximate
$470,000. The Company took occupancy of this space in October 2012.

On December 2012, the Company assumed a lease from TSO Laboratories, Inc., a wholly owned subsidiary of
Ovamed for approximately 8,700 square feet of space in Woburn MA for the purpose of establishing a
manufacturing facility. Total rent expense for the lease term will approximate $590,000. Annual rental payments
will approximate $118,000 and the Company expects to occupy the space in the second half of 2013.

Item 3.

Legal Proceedings.

We are not involved in any litigation that we believe could have a material adverse effect on our financial
position or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our
executive officers, threatened against or affecting our company or our officers or directors in their capacities as
such.

Item 4.

Mine Safety Disclosures.

Not applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.

Market Information

Our common stock is listed for trading on The NASDAQ Capital Market, or NASDAQ, under the symbol
“CNDO.” From November 17, 2011 to December 16, 2011, our common stock was traded in the over-the-
counter market and quoted through the Over-The-Counter Bulletin Board, or OTCBB, under the same symbol.
The following table sets forth the high and low bid prices for our common stock from November 17, 2011, the
date trading of our common stock commenced, to December 16, 2011 as reported by the OTCBB, and the high
and low sale prices for our common stock from December 19, 2011 through December 31, 2012, as reported by
NASDAQ. The OTCBB quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not represent actual transactions.

First quarter
Second quarter
Third quarter
Fourth quarter

2012

2011 (1),(2)

High

Low

High

Low

$9.52
$8.50
$6.92
$5.97

$5.00
$4.93
$5.20
$4.36

N/A
N/A
N/A
$6.50

N/A
N/A
N/A
$6.00

(1) – December 19, 2011 through December 31, 2011.
(2) – November 17, 2011 to December 16, 2011 reported on OTCBB. The high and low bid prices for such

period were $9.50 and $6.00, respectively.

Holders of Record

As of March 10, 2013, there were 679 holders of record of our common stock.

Repurchases

None.

Dividends

We have never paid cash dividends and currently intend to retain our future earnings, if any, to fund the
development and growth of our business.

Securities Authorized for Issuance under Equity Compensation Plans

See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters” for a discussion of our equity compensation plans.

Coronado Biosciences, Inc.
Stock Price Index Chart
As of December 31, 2012

Stock Price Index

(1)

Coronado Biosciences, Inc.

NASDAQComposite

NASDAQBiotechnology

1.40

1.20

1.00

0.80

0.60

0.40

11/30/2011

12/31/2011

1/31/2012

2/29/2012

3/31/2012

4/30/2012

5/31/2012

6/30/2012

7/31/2012

8/31/2012

9/30/2012

10/31/2012

11/30/2012

12/31/2012

Notes:
(1) The chart is indexed based on the stock price on November 30, 2011.

Item 6.

Selected Consolidated Financial Data.

(In thousands except per share amounts)

2012

2011

2010

2009

2008

For the Years Ended December 31,

Operating expenses:

Research and development
. . . . . . . . .
General and administrative . . . . . . . . .
In-process research and

development

. . . . . . . . . . . . . . . . . .

Loss from operations . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . .
Warrant expense . . . . . . . . . . . . . . . . . . . . .

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stock dividend to Series A

17,468
8,665

8,583
5,755

8,341
900

2,270
343

2,895
348

1,043

(27,176)
236
(670)
—
—

(27,610)

20,706

(35,044)
165
(74)
—
(1,407)

(36,360)

—

(9,241)
61
(1,535)
733
—

(9,982)

—

(2,613)
—
(1,053)
—
—

(3,666)

—

(3,243)
18
(573)
—
—

(3,798)

Convertible Preferred Stockholders . . . .

—

(5,861)

—

Net loss attributed to Common

Stockholders . . . . . . . . . . . . . . . . . . . . . .

Basic and diluted net loss per common

share . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average common shares

(27,610) $ (42,221) $

(9,982) $

(3,666) $

(3,798)

(1.27) $

(5.51) $

(2.24) $

(1.01) $

(1.39)

outstanding—basic and diluted . . . . . . . .

21,654,984

7,662,984

4,453,786

3,612,769

2,731,212

23,160
23,375
3,493

$
$
$

14,862
14,939
1,559

$
$
$

1,510
1,687
11,207

$
$
$

7
461
6,964

750
19,132

— $

$
$
$ (15,897) $ (10,090) $

570

—
(6,503)

Financial Condition:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . .
Notes payable and other, net of current

portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity/(deficit) . . . . . . . . . . .

$
$
$

$
$

40,199
40,992
5,132

13,827
22,033

$
$
$

$
$

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with
our consolidated financial statements and the related notes thereto and other financial information appearing
elsewhere in this Form 10-K.

Overview

We are a clinical stage biopharmaceutical company focused on the development of novel immunotherapy
biologic agents for the treatment of autoimmune diseases and cancer. Our two principal pharmaceutical product
candidates in clinical development are:

• TSO, or CNDO-201, the microscopic eggs of the porcine whipworm, for the treatment of autoimmune

diseases, such as Crohn’s disease, ulcerative colitis, multiple sclerosis, autism, psoriasis, type 1 diabetes
and rheumatoid arthritis; and

• CNDO-109, a biologic that activates natural killer, or NK, cells of the immune system to seek and

destroy cancer cells, for the treatment of acute myeloid leukemia.

We acquired exclusive rights to TSO in January 2011 from Asphelia Pharmaceuticals, Inc., or Asphelia, for an
aggregate purchase price of $20.7 million, consisting of 2,525,677 shares of our Series B Convertible Preferred
Stock, or Series B Shares, valued at $6.38 per share, the assumption of a promissory note due to PCP in the
aggregate principal amount of $750,000, which was prepaid in September 2012 and the assumption of Asphelia’s
obligation to reimburse Ovamed for certain development costs. Of this purchase price, $3.8 million has been paid
in cash, including $3.4 million to Ovamed and $0.4 million for repayment of Asphelia’s debt, including $61,000
to a related party. Under the terms of a sublicense agreement with Ovamed that we acquired from Asphelia, we
are required to make annual license payments to Ovamed of $250,000, reimburse patent expenses, make
payments totaling up to $5.4 million, of which $3.0 million was paid, contingent upon the achievement of various
milestones related to regulatory events for the first product to be approved for marketing, and make additional
milestone payments, contingent upon the achievement of regulatory events related to subsequent indications for
TSO. In the event that TSO is commercialized, we will be obligated to pay annual royalties based upon net sales
of the product. If we sublicense TSO, we must pay Ovamed a portion of sublicense revenues we receive, if any.
We have been required to purchase our clinical requirements of TSO from Ovamed at pre-determined prices.

In December 2012, we and Ovamed entered into the Second Amendment amending certain provisions of our
Exclusive Sublicense Agreement and our Manufacturing and Supply Agreement, between us and Ovamed, and
providing for certain additional agreements between the parties. Pursuant to the Second Amendment, our
exclusive license from Ovamed in the North America, South America and Japan known as the “Coronado
Territory” was amended to include an exclusive license to make and have made product containing TSO in the
Coronado Territory and Ovamed’s exclusive supply rights in the Coronado Territory will terminate once we
establish an operational manufacturing facility in the United States. The Ovamed License, as amended,
terminates 15 years from the first commercial sale of TSO in the United States, subject to earlier termination
under certain circumstances.

In exchange, we agreed to pay Ovamed a total of $1,500,000 in three equal installments of $500,000 in each of
December 2014, 2015, and 2016. Additionally, in lieu of product supply payments that would have been payable
to Ovamed as the exclusive supplier, we will pay Ovamed a manufacturing fee for product manufactured and
sold by us. The manufacturing fee will be the greater of (i) a royalty on net sales of product we manufacture or
(ii) a specified amount per unit, the Transfer Fee Component. The manufacturing fee is subject to certain
adjustments and credits and we have a right to reduce the Transfer Fee Component by paying Ovamed an agreed
amount within 10 business days following FDA approval of a Biologics License Application authorizing the
manufacturing, marketing and commercial sale of product containing TSO in the United States and an additional
amount within ninety days after the end of the first calendar year in which net sales in the Coronado Territory
exceed an agreed amount.

Simultaneously with the execution of the Second Amendment, Ovamed assigned to us a five-year property lease
for space in Woburn, Massachusetts, where we intend to establish a TSO manufacturing facility. Build out of the
manufacturing facility are planned to commence in 2013 and continue throughout the year to enable production
of supplies of TSO, for use in Phase 3 clinical trials. Ovamed agreed to assist us in establishing this facility and
the Second Amendment contemplates that we and Ovamed may act as second source suppliers to each other at
agreed transfer prices pursuant to a Second Source Agreement to be negotiated between the parties.

In March 2012, we signed a Collaboration Agreement with Falk and Ovamed for the development of TSO for
treatment of Crohn’s disease. Under the Collaboration Agreement, Falk granted us exclusive rights and licenses
under certain Falk patent rights, pre-clinical data and clinical data from Falk’s clinical trials of TSO as a
treatment for Crohn’s disease, including Falk’s ongoing Phase 2 clinical trial, for use in the Coronado Territory.
We granted Falk exclusive rights and licenses to data from our clinical trials of TSO in Crohn’s disease for use in
Europe. Under the agreement, we agreed to pay Falk (i) a total of €5 million (approximately $6.5 million) after
receipt of certain pre-clinical and clinical data, of which €2.5 million (approximately $3.4 million) was paid in
2012 and the remaining €2.5 million is expected to be paid in the first half of 2014, and (ii) a royalty of 1% of net
sales of TSO in North America, South America and Japan. A steering committee comprised of our
representatives and representatives of Falk and Ovamed is overseeing the clinical development program of TSO
as a treatment for Crohn’s disease, under which we and Falk will each be responsible for clinical testing on
approximately 50% of the total number of patients required for regulatory approval of TSO for treatment of
Crohn’s disease in the United States and Europe and will share in certain pre-clinical development costs.

We acquired an exclusive worldwide license to CNDO-109 in November 2007 from University College of
London Business PLC, or UCLB. In consideration for the license, we paid UCLB initial license fees totaling $0.1
million and are required to make milestone payments totaling up to $22 million upon the achievement of various
milestones related to regulatory events for the first three indications. In March 2012, we recognized our $250,000
milestone obligation to UCLB related to our IND filed in February 2012 and in April 2012 we paid UCLB for
this milestone. In June 2012, we were notified by the FDA that CNDO-109 was granted orphan drug designation
and in September 2012, the U.S. Patent and Trademark Office issued the first U.S. patent covering CNDO-109. If
CNDO-109 is commercialized, we will be obligated to pay to UCLB annual royalties based upon net sales of the
product or if we sublicense CNDO-109, a portion of sublicensing revenues we receive, if any.

In September 2012, the Company filed a shelf registration statement on Form S-3 pursuant to which the
Company may sell up to $75.0 million of common stock over the next three years. In October 2012, the
Company entered into an At Market Issuance Sales Agreement, or ATM with MLV & Co. LLC, or MLV, to
issue and sell up to $30.0 million of common stock. Under the terms of the ATM we pay directly to MLV fees
equal to 3% of the gross proceeds. Through December 31, 2012, the Company sold 3,361 shares of common
stock for net proceeds of $19,000. From January 1, 2013 through March 11, 2013, the Company issued 1,426,250
shares of common stock pursuant to the ATM and received net proceeds of $10.5 million.

On December 28, 2012, the Company’s Board of Directors appointed current director Dr. Harlan F. Weisman, as
Chairman and Chief Executive Officer. At that time, the Company’s Executive Chairman, Dr. Glenn L. Cooper,
resigned his position as Executive Chairman and as a director of the Company. In addition, on December 28,
2012, Dr. Bobby W. Sandage, Jr.’s status as Chief Executive Officer and President of the Company changed to
President of the Company. Dr. Sandage remains a member of the Board of Directors. (See note 15 of Notes to
Consolidated Financial Statements.)

Critical Accounting Policies and Use of Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in
the United States, or GAAP. The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to accrued expenses and stock-based compensation. We base our estimates on
historical experience, known trends and events and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.

Our significant accounting policies are described in more detail in the notes to our consolidated financial
statements appearing elsewhere in this Form 10-K. We believe the following accounting policies to be most
critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued
research and development expenses. This process involves reviewing open contracts and purchase orders,
reviewing the terms of our license agreements, communicating with our applicable personnel to identify services
that have been performed on our behalf and estimating the level of service performed and the associated cost
incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of
our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued
expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances
known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and
make adjustments if necessary. Examples of estimated accrued research and development expenses as of
December 31, 2012 include fees to:

• Contract Research Organizations, or CROs, and other service providers in connection with clinical

studies;

•

Investigative sites in connection with clinical studies;

• Contract manufacturers in connection with production of clinical trial materials;

• Vendors in connection with the preclinical development activities; and

• Licensors for the achievement of milestone-related events.

We base our expenses related to clinical studies on our estimates of the services received and efforts expended
pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical studies on
our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and
may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on
factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing
service fees, we estimate the time period over which services will be performed and the level of effort to be
expended in each period. If the actual timing of the performance of services or the level of effort varies from our
estimate, we adjust the accrual accordingly. Our understanding of the status and timing of services performed
relative to the actual status and timing of services performed may vary and may result in our reporting changes in
estimates in any particular period. To date, our estimates have not materially differed from actual costs. Expenses
related to annual license fees are accrued on a pro rata basis throughout the year.

Stock-Based Compensation

We expense stock-based compensation to employees over the requisite service period based on the estimated
grant-date fair value of the awards and considering estimated pre-vesting forfeiture rates. For stock-based

compensation awards to non-employees, we re-measure the fair value of the non-employee awards at each
reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value
of these non-employee awards are recognized as compensation expense in the period of change.

Determining the appropriate fair value of stock-based awards requires the use of subjective assumptions. Prior to
November 17, 2011 in the absence of a public trading market for our common stock, we conducted periodic
assessments of the valuation of our common stock. These valuations were performed concurrently with the
achievement of significant milestones or with a significant financing. We use a Black-Scholes option-pricing
model to determine the fair value of stock options. The determination of the grant date fair value of options using
an option-pricing model is affected by our estimated common stock fair value as well as assumptions regarding a
number of other subjective variables. These variables include the fair value of our common stock, our expected
stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors,
risk-free interest rates, and expected dividends, which are estimated as follows:

•

Fair Value of our common stock. When our stock was not publicly traded, we estimated the fair value of
common stock as discussed in “Common Stock Valuations Prior to Becoming a Publicly Traded
Company” below. Since November 17, 2011, we have utilized the public trading price of our common
stock.

• Expected Term. Due to the limited exercise history of our own stock options, we determined the

expected term based on the stratification of option holder groups. Our employee options meet the criteria
for the Simplified Method under SAB 107 while the expected term for our non-employees is the
remaining contractual life for both options and warrants.

• Volatility. As we have a very limited trading history for our common stock, the expected stock price

volatility for our common stock was estimated by taking the average historic price volatility for industry
peers based on daily price observations over a period equivalent to the expected term of the stock option
grants. Industry peers consist of several public companies in the biopharmaceutical industry similar in size,
stage of life cycle and financial leverage. We did not rely on implied volatilities of traded options in our
industry peers’ common stock because the volume of activity was relatively low. We intend to continue to
consistently apply this process using the same or similar public companies until a sufficient amount of
historical information regarding the volatility of our own common stock share price becomes available, or
unless circumstances change such that the identified companies are no longer similar to us, in which case,
more suitable companies whose share prices are publicly available would be utilized in the calculation.

• Risk-free Rate. The risk-free interest rate is based on the yields of United States Treasury securities with

maturities similar to the expected term of the options for each option group.

• Dividend Yield. We have never declared or paid any cash dividends and do not presently plan to pay
cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual
results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative
adjustment in the period in which estimates are revised. We consider many factors when estimating expected
forfeitures, including types of awards, employee class and historical experience. Actual results, and future
changes in estimates, may differ substantially from our current estimates.

For the years ended December 31, 2012, 2011, and 2010, stock-based compensation expense was $3.6 million,
$1.5 million, and $2.3 million, respectively. As of December 31, 2012, we had approximately $4.5 million of
total unrecognized compensation expense, related to unvested stock options and warrants granted to employees
and non-employees, which we expect to recognize over a weighted-average period of approximately 1.4 years.

If any of the assumptions used in a Black-Scholes model changes significantly, stock-based compensation for
future awards may differ materially compared with the awards granted previously.

Common Stock Valuations Prior to Becoming a Publicly Traded Company

Prior to our becoming a publicly-traded company on November 17, 2011, the fair value of the common stock
underlying our stock options, common stock warrants and restricted stock was determined by our board of
directors, which intended all options granted to be exercisable at a price per share not less than the per share fair
value of our common stock underlying those options on the date of grant. However, certain options granted on
October 5, 2010 were granted with an exercise price that was below the fair value of our common stock as
subsequently determined by an independent valuation as of that date. All other options previously granted or to
be granted in the future are granted at the determined grant date fair value. The valuations of our common stock
were determined in accordance with the guidelines outlined in the American Institute of Certified Public
Accountants, or AICPA, Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as
Compensation, or the Guidelines. The assumptions we use in the valuation model are based on future
expectations combined with management judgment. In the absence of a public trading market, our board of
directors, with input from management, exercised significant judgment and considered numerous objective and
subjective factors to determine the fair value of our common stock as of the date of each option, restricted stock
and warrant grant, including the following factors:

•

arm’s length private transactions involving our preferred stock, including the sale of our Series A
Convertible Preferred Stock, or Series A Shares, at $8.39 per share in 2010 and our Series C Convertible
Preferred Stock, or Series C Shares, at $5.59 per share in 2011;

independent valuations performed by knowledgeable experts in the field;

our operating and financial performance;

• market conditions;

•

developmental milestones achieved;

business risks; and

• management and board experience.

In valuing our common stock, we have used a variety of methodologies that have evolved as the life cycle of our
company has progressed. For the underlying valuations of our common stock in periods prior to December 31,
2009, given the early stage of our company and its development programs, we used a cost approach to estimate
the fair value of our common stock. The cost approach is based on the premise that an investor would pay no
more for an asset than its replacement or reproduction cost. The cost to replace the asset would include the cost
of constructing a similar asset of equivalent utility at prices applicable at the time of the valuation analysis.
Under this methodology, a valuation analysis is performed for a company’s identified fixed, financial, intangible
and other assets. The derived aggregate fair value of the assets is then netted against the estimated fair value of
all existing and potential liabilities, resulting in an indication of the fair value of total equity. This approach was
considered an appropriate indication of value as the programs were still in early stages of the development cycle.

As our business and programs evolved, beginning in 2010, we migrated away from the cost approach to a market
approach to incorporate the indication of value established through our development efforts and reflected in our
Series A Share issuances during 2010. Under this approach, the business enterprise value was established based
on the contemporaneous equity offerings. Pursuant to the AICPA Guidelines, an option pricing method was used
to value the shares using a contingent claims analysis, which applies a series of call options whose inputs reflect
the liquidation preferences and conversion behavior of the different classes of equity. The value of our common
stock was then derived by analyzing the fair value of these options. After the equity value of the business
enterprise was determined, the total equity value of any equity instruments such as preferred stock, stock options,
restricted stock and warrants outstanding and the concluded common stock value on a converted basis is
allocated. Next, the option pricing method was used to allocate the residual equity value (inclusive of any
infusion of cash from in-the-money options and warrants) to our common stock. Since our shares were not
publicly traded, a discount for lack of marketability was applied. This lack of marketability discount was
estimated to be 10% prior to becoming a publicly-traded company. A theoretical put option model was used to
capture the cost to ensure stock could be sold at the price prevailing at the valuation date after the time required

to finding a market, or the time until an expected liquidity event. The put option model considers the expected
time to a liquidity event, estimated volatility based on peer company data, risk free interest rates and
management judgment. The ultimate fair values of our common stock were used as an input in determining the
fair value of the warrants, restricted stock and stock options at various periods of time. As our development
programs continue we expect to incur an increase in research and development expenses.

Results of Operations

General

To date, we have not generated any revenues from operations and, at December 31, 2012, we had an accumulated
deficit of $84.2 million primarily as a result of research and development expenses, purchases of in-process
research and development and general and administrative expenses. While we may in the future generate revenue
from a variety of sources, including license fees, milestone payments, research and development payments in
connection with strategic partnerships and/or product sales, our product candidates are at an early stage of
development and may never be successfully developed or commercialized. Accordingly, we expect to continue to
incur substantial losses from operations from our operations for the foreseeable future and there can be no
assurance that we will ever generate significant revenues.

Research & Development Expenses

Conducting research and development is central to our business. For the years ended December 31, 2010, 2011
and 2012 research and development expenses were $8.3 million, $8.6 million and $17.5 million, respectively,
and such expenses were $42.0 million for the period from inception (June 28, 2006) to December 31, 2012.
Noncash, stock-based compensation expense included in research and development in 2012 and from inception
through 2012 was $3.6 million and $7.5 million, respectively. Research and development expenses consist
primarily of:

•

employee-related expenses, which include salaries and benefits, and rent expense;

non cash stock-based compensation expense;

license fees and milestone payments related to in-licensed products and intellectual property;

expenses incurred under agreements with CROs, investigative sites and consultants that conduct or
provide other services relating to our clinical trials and our preclinical activities;

the cost of acquiring clinical trial materials from third party manufacturers; and

costs associated with non-clinical activities, patent filings and regulatory filings.

We expect to continue to incur substantial expenses related to our research and development activities for the
foreseeable future as we continue product development. Since product candidates in later stages of clinical
development generally have higher development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later stage clinical trials, we expect that our research and
development expenses will increase in the future. In addition, if our product development efforts are successful,
we expect to incur substantial costs to prepare for potential commercialization of any late-stage product
candidates and, in the event one or more of these product candidates receive regulatory approval, to fund the
launch of the product. From inception through December 31, 2012, direct, external development costs incurred
for our TSO product development program were $13.8 million, including $0.2 million, $2.7 million and $10.9
million for the years ended December 31, 2010, 2011 and 2012, respectively. Excluded from these costs is $21.7
million of in-process research and development costs, consisting of $20.7 million related to our acquisition of
certain rights to TSO in 2011 and $1.0 million related to our domestic manufacturing rights for TSO. From
inception through December 31, 2012, direct, external development costs incurred for our CNDO–109 product
development program were $6.2 million, including $2.1 million, $1.9 million and $1.9 million, for the years
ended December 31, 2010, 2011 and 2012, respectively. Our results of operations for the years ended

December 31, 2010 and 2011 include direct, external development costs incurred in connection with two product
development programs that have been discontinued. From inception through December 31, 2012, such expenses
totaled $5.2 million. No costs were incurred for these programs in 2012.

General and Administrative Expenses

General and administrative expenses consist principally of personnel-related costs, professional fees for legal,
consulting, audit and tax services, rent and other general operating expenses not otherwise included in research
and development expenses. From inception to December 31, 2012, G&A expenses were $16.3 million, including
$0.9 million, $5.8 million, and $8.7 million for the years ended December 31, 2010, 2011 and 2012, respectively.
Non cash, stock-based compensation expense included in general and administrative in 2012 and from inception
through 2012, was $3.6 million and $7.5 million, respectively. We anticipate general and administrative expenses
will increase in future periods, reflecting continued and increasing costs associated with:

•

support of our expanded research and development activities; and

an expanding infrastructure and increased professional fees and other costs associated with the
regulatory requirements and increased compliance associated with being a public reporting company.

Comparison of Years Ended December 31, 2012 and 2011

For the year ended
December 31,

2012

2011

Variance

Operating expenses:

. . . . . . . . . . . . . . . . . . . .
Research and development
General and administrative . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
In-process research and development

$ 17,468
8,665
1,043

$ 8,583
5,755
20,706

$ 8,885
2,910
(19,663)

Loss from operations . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrant expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(27,176)
236
(670)
—

(35,044)
165
(74)
(1,407)

(7,868)
71
596

(1,407) NM

104%
51%
(95%)

(22%)
43%
805%

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(27,610)

$(36,360)

$ (8,750)

(24%)

NM–Not meaningful

Research and development expenses increased $8.9 million, or 104%, from the year ended December 31, 2011 to
the year ended December 31, 2012. This increase was primarily due to $8.3 million of increased external
development costs related to TSO. In 2012, we incurred $4.0 million of expense related to our Phase 2 study for
TSO. We also incurred an increase in contractual milestone-related costs in 2012. In 2011 we incurred a
milestone-related charge of $1.5 million related to the filing of an IND for TSO, and in 2012 we incurred $3.3
million of milestone-related charges in connection with our agreement with Falk and a $0.2 million milestone-
related charge pursuant to our agreement with Ovamed. Additionally, we purchased $2.0 million of TSO clinical
supply from Ovamed. Personnel costs increased $0.4 million in 2012, primarily due to increased staffing. In
addition, in 2012, stock-based compensation expense increased $0.5 million, of which $0.3 million related to the
modification of options issued to certain of our executive officers (see Note 15). CNDO–109 development costs
were essentially unchanged. We expect our research and development expenses to increase in future quarters as
our clinical programs for TSO continue.

General and administrative expenses increased $2.9 million, or 51%, from the year ended December 31, 2011 to the
year ended December 31, 2012, reflecting a substantial increase in the level of our business activity during 2012,

our first full year as a public company. The increase in general and administrative expenses to support these
activities consisted primarily of a $1.7 million increase in stock compensation expense, including $0.3 million
related to the modification of options issued to certain of our executive officers (see Note 15 of Notes to the
Consolidated Financial Statements), $0.3 million related to warrants issued to consultants and $1.0 million related to
options granted to new employees and directors. Personnel-related costs increased $1.0 million, primarily due to the
addition of our new Chief Operating Officer in September 2011, and Chief Financial Officer in February 2012.

In January 2011, we acquired a sublicense for TSO from Asphelia, entered into related agreements for TSO and
assumed certain liabilities of Asphelia. In connection with these transactions, we issued 2,525,677 Series B
Shares valued at $6.38 per share, assumed the PCP Note, in the principal amount of $750,000 and made cash
payments totaling $3.8 million, including $3.4 million to Ovamed and $0.4 million for repayment of Asphelia’ s
debt, including a $61,000 payment to a related party. The total consideration paid in connection with the
acquisition of our rights to TSO from Asphelia was $20.7 million, which was recorded as in-process research and
development expense in 2011. In 2012, we acquired from Ovamed manufacturing rights for TSO in the
Coronado Territory and agreed to pay Ovamed $1.5 million, which obligation was recorded as in-process
research and development expense in 2012 at its estimated net present value of $1.0 million. This liability is
included in other long-term liabilities at December 31, 2012. Payments will be made in three equal annual
installments of $500,000, commencing in December 2014.

Interest expense of $0.7 million in 2012 included $0.6 million related to the Hercules Note and the remaining
$0.1 million related to the PCP Note which was paid in full in September 2012. In 2011, we recognized interest
expense of $74,000 related to the PCP Note.

The increase in interest income in 2012 compared to the same period last year was primarily due to higher cash
balances.

Warrant expense of $1,407,000 in 2011 was a noncash expense related to the marking-to-market of the warrants
for Series C Shares issued to the placement agent for its services in connection with the issuance and sale of the
Series C Shares. A warrant liability of $1,286,000 was established at June 30, 2011 upon the issuance of the
warrants. This liability was valued for a final time at $2,693,000 on November 15, 2011 upon the effectiveness of
our resale registration statement on Form S-1. The expense represents the change in value from June 30, 2011 to
November 15, 2011. This liability was reclassified to equity upon effectiveness of the Form S-1.

Comparison of Years Ended December 31, 2011 and 2010

For the year ended
December 31,

2011

2010

Variance

Operating expenses:

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,583
5,755
20,706

$ 8,341 $
900
—

242
4,855
20,706 NM

3%
539%

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrant expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(35,044)
165
—
(74)
(1,407)

(9,241)
61
733
(1,535)
—

25,803
104
(733) NM

279%
170%

(1,461)
1,407 NM

(95)%

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(36,360) $(9,982) $26,378

264%

NM–Not meaningful

Research and development expenses increased $242,000, or 3%, from the year ended December 31, 2010 to the
year ended December 31, 2011. This increase was primarily due to $2.5 million of external development costs
related to TSO, including a milestone-related charge of $1.5 million recognized in connection with the filing of an
IND for TSO and $0.6 million of increased consulting expenses, severance-related costs, and other general
expenses, primarily offset by a $1.4 million decrease in stock-based compensation expense related to the 2010
vesting of restricted common stock issued to non-employees in 2007, a $1.2 million decrease in development costs
related to discontinued product candidates and a $0.3 million decrease in CNDO–109 development costs. General
and administrative expenses increased $4.9 million from the year ended December 31, 2010 to the year ended
December 31, 2011, reflecting a substantial increase in the level of our business activity during 2011 and transition
to a public company. The increase in G&A expenses to support these activities consisted primarily of a $1.9 million
increase in professional fees, consisting of legal and accounting fees, a $1.3 million increase in personnel costs, a
$0.5 million increase in stock compensation expense, and a $0.4 million increase in expenses relating to consulting
and outside services.

In 2011, we incurred interest expense of $74,000 related to the PCP Note. Interest expense of $1,535,000 in 2010
related to an aggregate of $9.9 million of debt, which was either repaid or converted to our Series A Shares
between April 2010 and December 2010.

The increase in interest income in 2011 compared to 2010 was primarily due to higher cash balances.

Liquidity and Capital Resources

At December 31, 2012, we had cash and cash equivalents of $40.2 million. To date, we have funded our
operations through the sale of debt and equity securities aggregating $93.3 million of net proceeds. As of
December 31, 2010, all notes and other debt then-outstanding were either repaid or converted into our Series A
Shares. In September 2012, we repaid the $750,000 PCP Note. As of December 31, 2012 and 2011, no shares of
our preferred stock were outstanding.

In June 2012, we completed an underwritten public offering of 5,750,000 shares of our common stock, including
750,000 shares subject to an over-allotment option exercised by the underwriters, at a price of $5.00 per share,
for proceeds, net of underwriting commissions and other offering expenses, of approximately $26.4 million. In
August 2012, we received net proceeds of $14.7 million from a $15.0 million term loan from Hercules. In
October 2012, our registration statement filed in September 2012 on Form S-3 registering to sell, from time to
time in one or more offerings, any combination of common stock, preferred stock, warrants, or units having a
maximum aggregate offering price of $75.0 million, was declared effective. On October 5, 2012, we entered into
an ATM with MLV, pursuant to which we may issue and sell shares of our common stock having an aggregate
offering price of up to $30.0 million from time to time through MLV, as our sales agent. The offering pursuant to

the ATM will terminate upon the earlier of (i) October 5, 2015; (ii) the sale of all shares of common stock subject
to the ATM, or (iii) termination of the ATM. The ATM may be terminated by either party at any time upon 10
days’ notice to the other party, or by MLV at any time in certain circumstances, including upon the occurrence of
a material adverse change in our company. In 2012, we sold 3,361 shares of common stock for $19,000 of net
proceeds pursuant to the Sales Agreement. From January 1, 2013 through March 8, 2013, we issued 1,426,250
shares of common stock pursuant to the Sales Agreement and received net proceeds of $10.5 million. We intend
to continue to utilize this financing vehicle at opportune times during 2013.

We expect to incur substantial expenditures in the foreseeable future for the development of our product
candidates. We will require additional financing to develop our product candidates, prepare regulatory filings and
obtain regulatory approvals, fund operating losses, and, if deemed appropriate, establish manufacturing, sales and
marketing capabilities. We believe that our current cash and cash equivalents are sufficient to fund operations
through the first quarter of 2014 based on our current business plan. Our failure to raise capital as and when
needed would have a material adverse impact on our financial condition and our ability to pursue our business
strategies. If needed, we will seek to raise capital through additional equity or debt financings, collaborative or
other arrangements with corporate sources, or through other sources of financing. Adequate additional funding
may not be available to us on acceptable terms or at all. If adequate funds are not available to us, we may be
required to delay, curtail or eliminate one or more of our research and development programs.

Cash Flows for the Three Years Ended December 31, 2012, 2011 and 2010

(In thousands)

Statement of Cash Flows Data:
Total cash provided by (used in):

For the Year Ended December 31,

2012

2011

2010

Operating activities . . . . . . . . . . . . . . . . . . . . . . . . .
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . .

$(23,194)
(279)
40,512

$(10,952)
(3,843)
23,093

$ (5,677)
(13)
19,042

Increase in cash and cash equivalents . . . . . . . . . . . . . . .

$ 17,039

$ 8,298

$13,352

Operating Activities

Net cash used in operating activities increased $12.2 million from the year ended December 31, 2011 to the year
ended December 31, 2012. Net loss decreased $8.8 million and stock-based compensation increased $2.2 million
due to an increase in the number of stock options and warrants outstanding and the impact of our higher stock
price on the value of options and warrants held by non-employees. Offsetting these increases to cash from
operations was a $19.7 million decrease in the amount of acquired in-process research development from the
year ended December 31, 2011 to the year ended December 31, 2012. This decrease was due to our recognition
in 2011 of a $20.7 million noncash expense for in-process research and development in connection with our
acquisition of certain rights related to TSO. In 2012, we recognized a $1.0 million noncash expense in connection
with our acquisition of TSO manufacturing rights from Ovamed. A $0.3 million decrease in accounts payable
and accrued expenses and the absence of the $1.4 million increase in the fair value of the Series C warrant
liability in 2011 were additional factors leading to the increase in cash used in operations.

Net cash used in operating activities increased $5.3 million from the year ended December 31, 2010 to the year
ended December 31, 2011. The increase in net loss of $26.4 million, included a $1.4 million increase in the fair
market value of the Series C warrant liability and a $1.9 million increase in accounts payable and accrued
expenses, which were offset by $20.7 million of noncash expense for in-process research and development in
connection with our acquisition of certain rights related to TSO, a $0.9 million decrease in stock-based
compensation and a $0.8 million decrease in the change in fair value of a warrant-embedded conversion feature.

Investing Activities

Net cash used in investing activities was $0.3 million in 2012 and consisted primarily of a $225,000 deposit for
leasehold improvements for our new manufacturing facility and $54,000, related to the purchase of office
furniture and equipment and leasehold improvements.

Net cash used in investing activities was $3.8 million in 2011 and consisted solely of cash payments related to
our acquisition of certain rights related to TSO from Asphelia.

Financing Activities

Net cash provided by financing activities of $40.5 million in the year ended December 31, 2012 reflected $26.4
million of net proceeds from our underwritten public offering and $14.7 million of net proceeds from a $15
million term loan from Hercules, offset by our payment of $750,000 in satisfaction of our obligations under the
PCP Note.

Net cash provided by financing activities in the year ended December 31, 2011 of $23.1 million consisted of $22.9
million of net proceeds from our issuance of the Series C Shares and $193,000 received upon the exercise of employee
stock options.

Cash provided by financing activities of $19.0 million in the year ended December 31, 2010 primarily reflects our
issuance of the Series A Shares for net proceeds of $19.4 million.

Contingent Contractual Payments

The following table summarizes our contractual obligations as of December 31, 2012, excluding amounts related
to contingent milestone payments, as described below.

($ in thousands)

Note Payable and interest (1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual license fees (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and other obligations . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments due by period

Total

$18,221
1,559
8,750
14,964

Less than
1 year

$ 3,184
709
250
9,814

1 to 3
years

4 to 5
years

After 5
years

$15,037
423
5,250
5,150

$ — $ —
20
1,750
—

407
1,500
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$43,494

$13,957

$25,860

$1,907

$1,770

(1) Relates to Hercules Note.
(2) Relates to Burlington, Massachusetts and Woburn, Massachusetts leases.
(3) Annual sublicense fees are projected through 2025 and include payments to Ovamed, Falk and UCLB.

As of December 31, 2012, approximately $0.4 million of contingent contractual payments reflected in accrued
expenses and in purchase and other obligations in the table above.

Our purchase and other obligations are primarily associated with our clinical trials, including approximately
$10.4 million for our Phase 2 trial evaluating TSO as a treatment for Crohn’s disease, including $0.8 million of
product supply from Ovamed and approximately $4.4 million for services associated with our planned Phase 1/2
CNDO-109 trial.

In December 2012, the Company assumed a lease from TSO Laboratories, Inc. a wholly owned subsidiary of
Quamed for approximately 8,700 square feet of space in Woburn, Massachusetts. Annual average rent will
approximate $118,000 and the Company expects to occupy the space in the second half of 2013.

In December 2012, we signed the Manufacturing Agreement with Ovamed, which provides us with the exclusive
right to manufacture TSO for sale in the Coronado Territory. Under this agreement, we agreed to pay Ovamed
$1.5 million, in three equal annual installments commencing December 2014, which is included in annual license
fees.

Off-Balance Sheet Arrangements

We do not have any financings or other relationships with unconsolidated entities or other persons.

Quantitative and Qualitative Disclosures about Market Risks

We held no marketable securities at December 31, 2011 and 2012. The Company’s Loan and Security with
Hercules Technology Growth Capital, Inc., or the Hercules Note, pursuant to which the Company issued a $15
million note, bears interest at a rate per annum equal to the greater of (i) 9.25% or (ii) 9.25% plus the sum of the
prevailing prime rate minus 3.25%. To the extent the prevailing prime rate exceeds 3.25%, the Company will pay
a higher rate of interest on any then-outstanding principal balance.

Net Operating Loss Tax Carry-Forwards

As of December 31, 2012, we had net federal operating loss carryforwards of approximately $53.5 million to
offset future federal income taxes which expire beginning in 2026 and state operating loss carryforwards of $16.8
million to offset future state taxes which expire beginning in 2030. Current federal and state tax laws include
substantial restrictions on the utilization of net operating loss and tax credits in the event of an ownership change.
Even if the carryforwards are available, they may be subject to substantial annual limitations, due to ownership
change limitations provided by the Internal Revenue Code of 1986 as amended, or IRC and similar state
provisions. At December 31, 2011 and 2012, we recorded a 100% valuation allowance against our deferred tax
assets, as our management believes it is more likely than not that they will not be realized. If we determine in the
future that we will be able to realize all or a portion of our net operating loss carryforwards, an adjustment to our
net operating loss carryforwards would increase net income in the period in which we make such a
determination.

Recently Issued Accounting Pronouncements

Refer to Note 2 of Notes to the Consolidated Financial Statements for a discussion of recent accounting standards
and pronouncements.

Overview

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8.

Financial Statements and Supplementary Data.

The information required by this Item is set forth in the consolidated financial statements and notes thereto
beginning at page F-1 of this Annual Report.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

Controls and Procedures

Disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) are designed only
to provide reasonable assurance that they will meet their objectives. Under the supervision and with the
participation of our management, including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness, as of December 31, 2012, of the design and operation of our
disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e).
Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of
such date, our disclosure controls and procedures are effective to ensure that information required to be disclosed
by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including our principal executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Management’s Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial
reporting refers to the process designed by, or under the supervision of, our principal executive officer and
principal financial officer, and effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles, and includes those policies
and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the

transactions and dispositions of our assets;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only
in accordance with authorization of our management and directors; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use

or disposition of our assets that could have a material effect on the financial statements.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a
process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or
improper management override. Because of such limitations, there is a risk that material misstatements may not
be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31,
2012. In making the assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.

Based on our assessment, our management has concluded that, as of December 31, 2012, our internal controls
over financial reporting were effective based upon those criteria.

The effectiveness of our internal controls over financial reporting as of December 31, 2012 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which
is included herein.

Changes in Internal Controls over Financial Reporting.

As of December 28, 2012, Harlan Weisman was hired as the Chairman of the Board of Directors and Chief
Executive Officer.

Item 9B. Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

The following table sets forth certain information about our executive officers, key employees and directors as of
the date of this Form 10-K. Directors serve until the next annual meeting or their successors have been elected
and qualified.

Name

Age

Position

Harlan W. Weisman, M.D.
Bobby W. Sandage, Jr., Ph.D.
Noah D. Beerman
Lucy Lu, M.D.
Karin M. Hehenberger, M.D., Ph.D.
Dale Ritter
Eric K. Rowinsky, M.D.
David J. Barrett
Jimmie Harvey, Jr., M.D.
J. Jay Lobell
Michael W. Rogers
Lindsay A. Rosenwald, M.D.

President and Director

Senior Vice President, Finance and Chief Accounting Officer

61 Chairman of the Board of Directors and Chief Executive Officer
59
51 Executive Vice President and Chief Operating Officer
38 Executive Vice President and Chief Financial Officer
40 Executive Vice President and Chief Medical Officer
62
56 Director, Vice Chairman
37 Director
61 Director
50 Director
53 Director
58 Director

The following is a brief account of the business experience during the past five years (and, in some instances, for
prior years) of each director and executive officer of our company.

Executive Officers

Harlan F. Weisman, M.D. has served as a director since August 2012 and our chairman and chief executive
officer since December 2012. Dr. Weisman is the founder and Managing Director of And-One Consulting, LLC,
a consulting firm which was formed in March 2012 and focuses on assisting companies to formulate and lead
successful global strategies for accelerating medical product development, regulatory approval and market
acceptance. From October 2005 to March 2012, Dr. Weisman was chief science and technology officer of
Johnson & Johnson’s Medical Device and Diagnostics business. Dr. Weisman is a graduate of the University of
Maryland and the University of Maryland School of Medicine. Dr. Weisman served his residency at Mount Sinai
Hospital in New York and was a fellow in cardiovascular disease at Johns Hopkins Hospital. Based on
Dr. Weisman’s medical background, our board of directors believes that Dr. Weisman has the appropriate set of
skills to serve as a member of the board of directors in light of our business and structure.

Bobby W. Sandage, Jr., Ph.D. has served as our president and chief executive officer from April 2011 to
December 2012 and since December 2012 has served as our president. Dr. Sandage has over 30 years of
experience in the pharmaceutical industry, most recently as the vice president and head of oncology research and
development for Covidien Pharmaceuticals, a specialty pharmaceuticals company, a position he held from March
2010 until March 2011. From November 1991 to December 2009, Dr. Sandage held various positions at Indevus
Pharmaceuticals, Inc., a specialty pharmaceuticals company, including executive vice president of research and
development and chief scientific officer, prior to the sale of the company to Endo Pharmaceuticals. From
December 2009 to March 2010, Dr. Sandage was transitioning from his position at Endo Pharmaceuticals to his
position at Covidien Pharmaceuticals. Prior to joining Indevus Pharmaceuticals, from 1981 to 1991, Dr. Sandage
held senior drug development positions at DuPont Merck Pharmaceutical Company, DuPont Critical Care
(formerly American Critical Care) and Merrell Dow Pharmaceuticals. Dr. Sandage is currently a member of the
board of directors of Gentium S.p.A., a pharmaceutical company. Dr. Sandage has also served as a member of
the board of directors of Osteologix, Inc. and Genta Incorporated. Dr. Sandage has a B.S. in pharmacy from the
University of Arkansas and a Ph.D. in clinical pharmacy from Purdue University. Based on Dr. Sandage’s

position as the president and chief executive officer, his substantial experience in the pharmaceutical industry and
service on boards of directors in the biotechnology and pharmaceutical industries, our board of directors believes
that Dr. Sandage has the appropriate set of skills to serve as a member of the board in light of our business and
structure.

Noah D. Beerman has served as our executive vice president and chief operating officer since September 26,
2011. Mr. Beerman has over 25 years of experience in the biopharmaceutical industry. Mr. Beerman, who was a
consultant to our company from May to September 2011, served as president and chief executive officer and a
director of Galena Biopharma, Inc., formerly RXi Pharmaceuticals Corporation, from November 2009 until April
2011. Prior to April 2011, he spent more than 10 years at Indevus Pharmaceuticals, Inc., serving most recently as
executive vice president and chief business officer from September 2004 until the sale of the company to Endo
Pharmaceuticals, Inc. in 2009. Mr. Beerman received an M.B.A. from Northeastern University’s High
Technology Program and a B.S. in molecular genetics from the University of Rochester.

Lucy Lu, M.D. has served as our executive vice president and chief financial officer since February 22, 2012.
Dr. Lu has over 10 years of experience in the healthcare industry. From February 2007 through January 2012,
Dr. Lu was a senior biotechnology equity analyst with Citigroup Investment Research. From 2004 until joining
Citigroup, she was with First Albany Capital, serving as Vice President from April 2004 until becoming a
Principal of the firm in February 2006. Dr. Lu holds an M.D. degree from the New York University School of
Medicine and an M.B.A. from the Leonard N. Stern School of Business at New York University. Dr. Lu obtained
a B.A. from the University of Tennessee’s College of Arts and Science.

Karin M. Hehenberger. M.D., Ph.D. joined us as senior vice president of scientific affairs in December 2011
and has served as our executive vice president and chief medical officer since April 19, 2012. Dr. Hehenberger
has over 15 years of experience in the healthcare industry. From January 2010 until joining our company,
Dr. Hehenberger was Senior Vice President for Strategic Alliances at the Juvenile Diabetes Research Foundation,
or JDRF, where she was responsible for advancing JDRF’s involvement with scientific, financial, and
commercial partners in the diabetes community. From February 2008 until January 2010, she served as Vice
President of Metabolic Strategy and Business Development at Johnson & Johnson. From October 2005 through
February 2008, Dr. Hehenberger served as Senior Investment Director and Partner at Scandinavian Life Science
Venture. Dr. Hehenberger holds M.D. and Ph.D. degrees from the Karolinska Institute in Stockholm, Sweden and
continued her research as a JDRF post-doctoral fellow at the Joslin Diabetes Center at Harvard Medical School.

Dale Ritter has served as our senior vice president, finance, and chief accounting officer since May 2011.
Mr. Ritter also served as acting chief financial officer until February 2012. Mr. Ritter has over 20 years of
experience in the pharmaceutical industry. From September 2009 until joining us in May 2011, he was an
independent consultant, serving as a financial consultant to Helicos BioSciences Corporation, an innovative
genetic analysis technologies company. From 1994 to 2009, Mr. Ritter was the senior vice president of finance
and chief accounting officer at Indevus Pharmaceuticals until the sale of the company to Endo Pharmaceuticals.
Mr. Ritter has a B.A. from Syracuse University and an M.B.A. from Babson College Graduate School of
Business Administration.

Non-Employee Directors

Eric K. Rowinsky, M.D. has served as a member of our board of directors, as our vice chairman and a consultant
since October 2010 and is responsible for overseeing our clinical development plan for acute myeloid leukemia
and solid tumor malignancies. Dr. Rowinsky is an internationally renowned expert in oncology with a
distinguished background in academics and industry. Following an oncology fellowship at Johns Hopkins, he
became an assistant professor of oncology at Johns Hopkins and then an associate professor at Johns Hopkins.
Dr. Rowinsky then became a professor of medicine and director for drug development, cancer therapy and
research at University of Texas, San Antonio. In 2004, Dr. Rowinsky became chief medical officer and senior
vice president (later promoted to executive vice president) of ImClone Systems, Inc., a cancer therapeutics
company, and spear-headed the further clinical development of Erbitux (cetuximab injection) and eight

additional monoclonal antibodies, prior to ImClone’s acquisition by Eli Lilly & Company in 2008. He remained
at ImClone as a consultant until December 2010. Dr. Rowinsky is and has been a consultant to multiple biotech
companies in cancer drug development and serves on the boards of directors of Biogen-Idec Inc., Neoprobe Inc.,
PreScience Labs Inc., and DLVR, Inc., each of which are life sciences companies. During the past five years,
Dr. Rowinsky has also served on the boards of directors of Tapestry Pharmaceuticals, Inc. and Adventrx
Pharmaceuticals, Inc., which are life sciences companies. Dr. Rowinsky has been an advisor to academic,
industrial and FDA advisory boards and has more than 300 peer-reviewed publications. Dr. Rowinsky received
his B.A. from New York University and his M.D. from Vanderbilt University School of Medicine. Based on
Dr. Rowinsky’s service on boards of directors in the biotechnology and pharmaceutical industries and his
extensive experience and background in oncology, our board of directors believes that Dr. Rowinsky has the
appropriate set of skills to serve as a member of the board in light of our business and structure.

David J. Barrett has served as a member of our board of directors since May 2011. In July 2010, after
transitioning from Neuro-Hitech, Inc., Mr. Barrett became the chief financial officer of Ventrus Biosciences,
Inc., a pharmaceutical company focused on the late-stage clinical development of gastrointestinal products. From
April 2006 to September 2009, Mr. Barrett served as chief financial officer of Neuro-Hitech, Inc., a publicly
traded company focused on developing, marketing and distributing branded and generic pharmaceutical products.
From September 2003 to April 2006, Mr. Barrett was the chief financial officer/vice president of finance of
Overture Asset Managers and Overture Financial Services, which, at the time, was a start-up asset management
firm that assembled investment products and platforms to distribute turnkey and unbundled investment solutions
to financial intermediaries and institutional investors. From July 1999 to September 2003, Mr. Barrett was
employed as a manager at Deloitte & Touche, LLP. Mr. Barrett received his B.S. in accounting and economics in
May 1998 and his M.S. in accounting in May 1999 from the University of Florida. He is a certified public
accountant. Based on Mr. Barrett’s management experience, particularly in areas of finance and investment
management, our board of directors believes that Mr. Barrett has the appropriate set of skills to serve as a
member of the board in light of our business and structure.

Jimmie Harvey, Jr., M.D. has served as a member of our board of directors since December 2008. Dr. Harvey in
1984 founded Birmingham Hematology and Oncology Associates L.L.C., a private medical company located in
Birmingham, Alabama. Dr. Harvey has experience in clinical trial execution and management and has recently
been a principal investigator in two trials, one investigating a novel monoclonal antibody and the other a small
molecule used to treat immunologic malignancies. Dr. Harvey holds a B.A. degree in Chemistry from Emory
University and received his M.D. from Emory University School of Medicine. Dr. Harvey completed his medical
oncology training at the Vincent T. Lombardi Cancer Center at Georgetown University. Based on Dr. Harvey’s
medical background, including his oncology expertise, our board of directors believes that Dr. Harvey has the
appropriate set of skills to serve as a member of the board in light of our business and structure.

J. Jay Lobell has served as a member of our board of directors since June 2006. Mr. Lobell is president of
Meridian Capital Group, LLC, a commercial real estate mortgage company, which he joined as a senior officer in
January 2010. Mr. Lobell also is a founder of, and since December 2009 has served as vice chairman of, Beech
Street Capital, LLC, a real estate lending company. Since January 2005, Mr. Lobell has served as president and
chief operating officer of Paramount Biosciences, LLC, or PBS, a biotechnology investment and development
company. In that capacity, he had substantial responsibility for the assembly and oversight of companies founded
and incubated by PBS, including Coronado and Asphelia. Mr. Lobell previously has served on the board of
directors of NovaDel Pharma Inc., Innovive Pharmaceuticals, Inc. and ChemRx Corporation. Mr. Lobell was a
partner in the law firm Covington & Burling LLP from October 1996 through January 2005, where he advised
companies and individuals as a member of the firm’s securities litigation and white collar defense practice group.
Mr. Lobell received his B.A. (summa cum laude, Phi Beta Kappa) from the City University of New York and his
J.D. from Yale Law School, where he was senior editor of the Yale Law Journal. Based on Mr. Lobell’s
biotechnology, legal and financial experience, as well as his in-depth understanding of drug commercialization
and corporate governance, our board of directors believes that Mr. Lobell has the appropriate set of skills to serve
as a member of the board in light of our business and structure.

Michael W. Rogers has served as a member of our board of directors since May 2011. From June 2009 to
October 2012, Mr. Rogers served as the executive vice president, chief financial officer and treasurer of BG
Medicine, Inc., a life sciences company focused on the discovery, development, and commercialization of novel
diagnostic tests. Prior to joining BG Medicine, Inc. and since 1999, Mr. Rogers held the position of executive
vice president, chief financial officer and treasurer at Indevus Pharmaceuticals, Inc., a specialty pharmaceuticals
company, which was acquired by Endo Pharmaceuticals in 2009. In 1998, Mr. Rogers was executive vice
president and chief financial and corporate development officer at Advanced Health Corporation, a publicly
traded healthcare information technology company. From 1995 to 1997, he was vice president, chief financial
officer and treasurer of AutoImmune, Inc., a publicly-traded biopharmaceutical company. From 1994 to 1995,
Mr. Rogers was vice president, investment banking at Lehman Brothers, Inc. From 1990 to 1994, he was
associated with PaineWebber, Inc., serving most recently as vice president, investment banking division.
Mr. Rogers serves as a director of pSivida, Inc., a publicly-traded medical device company. Mr. Rogers received
an M.B.A. from the Darden School at the University of Virginia and a B.A. from Union College. Based on
Mr. Rogers’s management experience, particularly in areas of finance and corporate development, our board of
directors believes that Mr. Rogers has the appropriate set of skills to serve as a member of the board.

Lindsay A. Rosenwald, M.D. has served as a member of our board of directors since October 2009. Since
November 2008, Dr. Rosenwald has served as Co-Portfolio Manager & Partner of Opus Point Partners, LLC, or
Opus, an asset management and broker dealer in the life sciences industry. Prior to that, from August 1991 to
October 2008, he served as the Chairman of Paramount BioCapital, Inc., or PBC. Over the last 23 years,
Dr. Rosenwald has acted as a biotechnology entrepreneur and been instrumental in the founding and
recapitalization of numerous public and private biotechnology and life sciences companies. Dr. Rosenwald
received his B.S. in finance from Pennsylvania State University and his M.D. from Temple University School of
Medicine. Based on Dr. Rosenwald’s biotechnology and pharmaceutical industry experience and in-depth
understanding of our business, our board of directors believes that Dr. Rosenwald has the appropriate set of skills
to serve as a member of the board in light of our business and structure.

Director Independence

Board Leadership Structure

Our board of directors has a chairman, currently Dr. Weisman, who has authority, among other things, to call and
preside over board meetings, to set meeting agendas and to determine materials to be distributed to the board of
directors. Accordingly, the chairman has substantial ability to shape the work of the board of directors.
The board of directors believes that having our CEO serve as chairman of the board of directors is suitable for
our company at its present stage. Dr. Weisman possesses detailed and in-depth knowledge of the issues,
opportunities and challenges facing our company and its business, and is well positioned to develop agendas that
ensure the board of director’s time and attention are focused on the most critical matters. Furthermore, the board
believes that having our chief executive officer serve as chairman of the board of directors strengthens his ability
to develop and implement strategic initiatives and respond efficiently to various situations. The board of directors
is aware of potential conflicts that might arise when an employee chairs the board of directors, but believes these
potential conflicts are offset by the fact that independent directors comprise each of the committees of the board
of directors and a majority of the board of directors. Additionally, the board of directors believes Dr. Weisman’s
combined role enables decisive leadership and ensures clear accountability. Until December 28, 2012,
Dr. Sandage was our chief executive officer and president and, since that time, he remains our president.

There is no lead independent director for our board of directors, but we believe that our current leadership
structure is appropriate, as the majority of our board of directors is composed of independent directors and each
committee of our board of directors is chaired by an independent director. The board of directors considers all of
its members equally responsible and accountable for oversight and guidance of its activities.

Role of the Board in Risk Oversight

The board of directors is responsible for our company’s risk oversight and has delegated that role to the audit
committee. Our audit committee is primarily responsible for overseeing our risk management processes on behalf
of the full board of directors. The audit committee receives reports from management at least quarterly regarding
our assessment of risks. In addition, the audit committee reports regularly to the full board of directors, which
also considers our risk profile. The audit committee and the full board of directors focus on the most significant
risks we face and our general risk-management strategies. While the board oversees our risk management,
management is responsible for day-to-day risk management processes. Our board of directors expects
management to consider risk and risk management in each business decision, to proactively develop and monitor
risk-management strategies and processes for day-to-day activities and to effectively implement
risk-management strategies adopted by the audit committee and the board of directors. We believe this division
of responsibilities is the most effective approach for addressing the risks we face and that our board leadership
structure, which also emphasizes the independence of the board in its oversight of its business and affairs,
supports this approach.

Board Committees

The audit committee comprises Messrs. Rogers, Barrett and Lobell, each of whom is an independent director as
defined in Rule 5605(a)(2) of the NASDAQ Marketplace Rules and Section 10A(m)(3) of the Exchange Act.
Mr. Rogers serves as the chair of the audit committee.

The functions of the audit committee include, among other things:

•

evaluating the performance, independence and qualifications of our independent auditors and determining
whether to retain our existing independent auditors or engage new independent auditors;

reviewing and approving the engagement of our independent auditors to perform audit services and any
permissible non- audit services;

reviewing our annual and quarterly financial statements and reports and discussing the statements and reports
with our independent auditors and management;

reviewing with our independent auditors and management significant issues that arise regarding accounting
principles and financial statement presentation, and matters concerning the scope, adequacy and effectiveness
of our financial controls;

establishing procedures for the receipt, retention and treatment of complaints received by us regarding
financial controls, accounting or auditing matters and other matters;

•

preparing the report that the SEC will require in our annual proxy statement;

reviewing and providing oversight with respect to any related party transactions and monitoring compliance
with a code of ethics that we will adopt;

•

reviewing our investment policy on a periodic basis; and

reviewing and evaluating, at least annually, the performance of the audit committee, including compliance of
the audit committee with its charter.

Our board of directors has determined that each member of the audit committee meets the financial literacy
requirements under the applicable NASDAQ Marketplace Rules and that Mr. Rogers’ employment
experience qualifies him as an audit committee financial expert within the meaning of SEC rules and
regulations.

The compensation committee comprises Mr. Rogers and Drs. Harvey and Rosenwald. Mr. Rogers serves as
the chair of the compensation committee. The functions of the compensation committee include, among
other things:

•

reviewing our corporate goals and objectives relevant to our executives’ compensation, evaluating the
executives’ performance in light of such goals and objectives and determining, either as a committee or
together with the other independent directors, executive compensation levels based on such evaluations;

reviewing and making recommendations to the Board with respect to non-executive officer compensation and
independent director compensation;

•

administering our incentive compensation and equity-based plans;

preparing the report that the SEC will require in our annual proxy statement and Form 10-K; and

reviewing and evaluating, at least annually, the performance of the compensation committee, and the
adequacy of its charter.

The nominating and corporate governance committee of the board originally comprised Mr. Lobell and
Dr. Rosenwald. Mr. Lobell serves as the chair of the nominating and corporate governance committee. The
functions of the nominating and corporate governance committee include, among other things:

• making recommendations to the Board regarding the size and composition of the Board;

•

establishing procedures for the nomination process and screening and recommending candidates for
election to the Board;

•

establishing and administering a periodic assessment procedure relating to the performance of the Board as a
whole and its individual members; and

• making recommendations to the Board regarding corporate governance matters and practices, including
formulating and periodically reviewing corporate governance guidelines to be adopted by the Board.

Each of the above-referenced committees operates pursuant to a formal written charter. The charters for each
committee, which have been adopted by the Board, contain a detailed description of the respective committee’s
duties and responsibilities and are available under Committee Charting in the Investors – Governance section of
our website at www.coronadobiosciences.com.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own
more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock and other equity securities. These executive officers,
directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all
Section 16(a) forms filed by such reporting persons.

Based solely on our review of such forms furnished to us, we believe that during the prior fiscal year, all of our
executive officers and directors and every person who is directly or indirectly the beneficial owner of more than
10% of any class of our security complied with the filing requirements of Section 16(a) of the Exchange Act.

Code of Ethics

We adopted a Code of Ethics that applies to all directors, officers and employees. Our Code of Ethics is available
on our website at www.coronadobiosciences.com. A copy of our code of ethics will also be provided to any
person without charge, upon written request sent to us at our offices located at 24 New England Executive Park,
Burlington, Massachusetts 01803.

Material Changes to the Procedures by which Security Holders May Recommend Nominees to the Board
of Directors

There have been no material changes to the procedures by which security holders may recommend nominees to
the board of directors.

Item 11.

Executive Compensation.

Compensation Committee Interlocks and Insider Participation

The members of the board of directors who served on the compensation committee in 2012 are Jimmie Harvey,
Jr., M.D., Michael W. Rogers and Lindsay A. Rosenwald, M.D. None of these individuals has ever served as an
officer or employee of ours. None of the members of the compensation committee serves or in the past has
served as one of our officers or has been employed by us and none of our executive officers have served on the
compensation committee or board of any company that employed any member of our compensation committee
or board of directors.

In June 2012, we issued an aggregate of 5,750,000 shares of common stock in an underwritten offering, or the
June 21012 Offering, for an aggregate purchase price of $28.8 million. Dr. Rosenwald, who serves on our
compensation committee and is also a principal stockholder, purchased an aggregate of 200,000 shares of our
common stock in the June 2012 Offering. For additional discussion regarding the June 2012 Offering, please see
Item 13 “Certain Relationships and Related Transactions, and Director Independence” below.

Compensation Committee Report

The compensation committee has reviewed and discussed the following Compensation Discussion and Analysis
(“CD&A”) with our Company’s management. Based on this review and discussion, the compensation committee
recommended to the board of directors that the CD&A be included in this Annual Report on Form 10-K for the
fiscal year ended December 31, 2012.

THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

Michael W. Rogers, chair

Jimmie Harvey, Jr., M.D.

Lindsay A. Rosenwald, M.D.

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis explains our compensation philosophy, policies and practices with
respect to our named executive officers. The compensation committee of the board is responsible for creating and
reviewing the compensation of our executive officers, as well as overseeing our compensation and benefit plans
and policies and administering our equity incentive plans.

Compensation Philosophy

We believe in providing a competitive total compensation package to our executive management team through a
combination of base salary, discretionary bonuses, grants under an equity incentive compensation plan, severance
and change in control benefits and broad-based benefits programs. Our executive compensation programs are
designed to achieve the following objectives:

•

attract, motivate and retain executives of outstanding ability and potential;

reward achievement; and

ensure that executive compensation is meaningfully related to the creation of stockholder value.

Our board of directors believes that our executive compensation programs should include short- and long-term
components, including cash and equity-based compensation, and should reward consistent performance that

meets or exceeds expectations. The board evaluates both performance and compensation to make sure that the
compensation provided to executives remains competitive relative to compensation paid by companies of similar
size and stage of development operating in the life sciences industry, taking into account our relative
performance and our own strategic objectives.

Setting Executive Compensation

We have historically conducted a review of the aggregate level of our executive compensation, as well as the mix
of elements used to compensate our executive officers. We have based this review primarily on the experience of
the members of our board of directors, many of whom sit on the boards of directors of numerous companies in
the life sciences and healthcare fields. It is expected that in the future, our compensation committee will take into
account publicly available data relating to the compensation practices and policies of other companies within and
outside our industry. Although we expect the compensation committee to use such survey data as a tool in
determining executive compensation, we expect that members of the compensation committee will continue to
apply their subjective discretion to make compensation decisions. Our board has not yet determined to
benchmark executive compensation against any particular group of companies or use a formula to set executive
compensation in relation to such survey data.

Elements of Executive Compensation

The compensation program for our executive officers consists principally of three components:

•

base salary;

annual discretionary bonuses; and

long-term compensation in the form of stock options or other equity-based awards.

Base Salary

Base salaries for our executives are initially established through arm’s-length negotiation at the time the
executive is hired, taking into account such executive’s qualifications, experience, prior salary, the scope of his
or her responsibilities, and competitive market compensation paid by other companies for similar positions
within the industry. Base salaries are reviewed annually, typically in connection with our annual performance
review process, and adjusted from time to time to realign salaries with market levels after taking into account
individual responsibilities, performance and experience. In making decisions regarding salary increases, we may
also draw upon the experience of members of our board of directors with other companies. The board of directors
has not previously applied specific formulas to determine increases, although it has generally awarded increases
as a percentage of an executive officer’s then-current base salary. This strategy is consistent with our intent of
offering base salaries that are cost-effective while remaining competitive.

We hired our former executive chairman, Dr. Cooper, in July 2010. Initially, Dr. Cooper was compensated as a
consultant for a monthly fee of $25,000. This amount was determined as part of the negotiation of Dr. Cooper’s
compensation, conducted on our behalf by Dr. Rosenwald and our former chief executive officer and approved
by the board of directors. In April 2011, Dr. Cooper’s consulting arrangement was transitioned into an
employment arrangement and his annual base salary of $300,000 was approved by the board of directors at that
time. In connection with Dr. Cooper’s resignation from the board of directors in December 2012,, we entered into
a one-year consulting agreement with Dr. Cooper that provides for monthly payments of $25,000.

We hired Bobby W. Sandage, Jr., Ph.D. to serve as our president and chief executive officer in April 2011.
Dr. Sandage’s annual base salary for 2011 was set at $375,000. This salary was determined as part of the
negotiation of Dr. Sandage’s employment agreement, which was conducted by Dr. Cooper on our behalf and
approved by the board of directors. In approving the salary, the board considered Dr. Sandage’s requested salary
and the salaries of other members of the management team. Dr. Sandage’s salary was most similar to that of the

preceding chief executive officer, reflective of the fact that Dr. Sandage succeeded such person as our president
and chief executive officer. In February 2012, Dr. Sandage’s base salary was increased to $395,000 to recognize
his performance and achievements in 2011. Dr. Sandage’s salary was increased to $406,850 reflecting a 3% cost
of living adjustment.

We hired Noah D. Beerman to serve as our executive vice president and chief operating officer in September
2011. Mr. Beerman’s base salary for 2011 was set at $325,000. This salary was determined as part of the
negotiation of Mr. Beerman’s employment agreement, which was conducted by Drs. Cooper and Sandage on our
behalf and approved by the board of directors. In approving the salary, the board considered Mr. Beerman’s
requested salary and the salaries of other members of the management team. In February 2012, Mr. Beerman’s
base salary was increased to $328,000 and in 2013 it was increased to $337,840 reflecting a 3% cost of living
adjustment.

We hired Lucy Lu, M.D. to serve as our executive vice president and chief financial officer in February 2012.
Dr. Lu’s base salary for 2012 was set at $300,000. This salary was determined as part of the negotiation of
Dr. Lu’s employment agreement, which was conducted by Dr. Sandage on our behalf and approved by the board
of directors. In approving the salary, the board considered Dr. Lu’s requested salary and the salaries of other
members of the management team. In 2013, Dr. Lu’s base salary was increased to $307,875 reflecting a 3% cost
of living adjustment.

We hired Karin M. Hehenberger, M.D., Ph.D. to serve as our senior vice president of scientific affairs in
December 2011 and appointed Dr. Hehenberger executive vice president and chief medical officer on April 19,
2012. Dr. Hehenberger’s base salary for 2012 was set at $300,000. This salary was determined as part of the
negotiation of Dr. Hehenberger’s employment agreement, which was conducted by Dr. Sandage on our behalf
and approved by the board of directors. In approving the salary, the board considered Dr. Hehenberger’s
requested salary and the salaries of other members of the management team. In 2013, Dr. Hehenberger’s base
salary was increased to $309,000 reflecting a 3% cost of living adjustment.

We hired Dale Ritter to serve as our senior vice president, finance, chief accounting officer and acting chief
financial officer in May 2011. Mr. Ritter’s base salary for 2011 was set at $250,000. This salary was determined
as part of the negotiation of Mr. Ritter’s employment agreement, which was conducted by Drs. Cooper and
Sandage on our behalf and approved by the board of directors. In approving the salary, the board considered
Mr. Ritter’s requested salary and the salaries of other members of the management team. Mr. Ritter’s salary was
most similar to that of the preceding chief financial officer, reflective of the fact that Mr. Ritter succeeded to
much of the preceding chief financial officer’s responsibilities, while taking in account the fact this his role as
acting chief financial officer was temporary until such time as we retained Dr. Lu as our full-time chief financial
officer. In February 2012, Mr. Ritter’s base salary was increased by the board of directors to $275,000 as an
incentive to retain Mr. Ritter’s services subsequent to the hiring of Dr. Lu and in 2013 it was increased to
$283,250 reflecting a 3% cost of living adjustment.

We hired Harlan W. Weisman, M.D. to serve as our chairman and chief executive officer in December 2012 and
entered into an employment agreement with Dr. Weisman on January 7, 2013. Dr. Weisman’s annual base salary
for 2013 was set at $600,000. This salary was determined as part of the negotiation of Dr. Weisman’s
employment agreement, which was conducted by Dr. Rosenwald on our behalf and approved by the board of
directors. In approving the salary, the board considered Dr. Weisman’s requested salary and the salaries of other
members of the management team.

Annual Discretionary Bonuses

In addition to the payment of base salaries, we believe that discretionary bonuses can play an important role in
providing appropriate incentives to our executives to achieve our strategic objectives. As part of the annual
performance reviews, the compensation committee reviews and analyzes each executive officer’s overall
performance against such executive’s goals as approved by the compensation committee. Dr. Sandage,

Mr. Beerman, Dr. Lu, Dr. Hehenberger and Mr. Ritter are eligible for a maximum discretionary bonus of 50%,
45%, 40%, 40% and 40%, respectively, of their respective salaries pursuant to the terms of their employment
agreements. In addition, Dr. Sandage is eligible for additional bonuses of $137,500, $125,000, $250,000, and
$500,000 based on the achievement of milestones tied to reaching a market capitalization of $125 million, $250
million, $500 million and $1 billion, respectively. Mr. Beerman and Dr. Lu are also eligible for additional
discretionary bonuses of $46,875, $93,750, $187,500, and $375,000 based on the achievement of milestones tied
to reaching a market capitalization of $125 million, $250 million, $500 million and $1 billion, respectively. In
2013, the first additional bonuses were earned and paid as follows: $137,500 to Dr. Sandage and $46,875 to each
of Mr. Beerman and Dr. Lu.

Following the end of 2011, our board of directors reviewed the annual performances in 2011 of Dr. Sandage,
Mr. Beerman and Mr. Ritter, the only executive officers eligible for a discretionary bonus, as well as our overall
performance and approved the payments of discretionary bonuses to Dr. Sandage in the amount of $140,000,
Mr. Beerman in the amount of $39,000 and Mr. Ritter in the amount of $62,000. Such discretionary bonuses
were paid in cash in 2012 and were provided in order to continue to motivate the executives to achieve our
financial and business objectives and was paid in part based on achievements made by the executives and by us
during 2011.

Following the end of 2012, our compensation committee of board of directors reviewed the annual performances
in 2012 of Dr. Sandage, Mr. Beerman, Dr. Lu, Dr. Hehenberger and Mr. Ritter, the only executive officers
eligible for a discretionary bonus. The compensation committee reviewed the 2012 performance targets which
included goals related to initiating and conducting clinical trials, business development, transactions, and
maintenance of cash balances, the weight given to each target, specific comments and circumstances surrounding
each target and the Company’s overall performance. After detailed discussion, the compensation committee
approved that 2012 executive bonuses be paid at 90% of the full bonus amount and approved bonuses, prorated
for the time each person was employed by Coronado, to Mr. Beerman in the amount of $132,840, Dr. Lu in the
amount of $92,492, Dr. Hehenberger in the amount of $108,000 and Mr. Ritter in the amount of $99,000.
Dr. Sandage received a bonus of $200,000 pursuant to his amended employment agreement.

Dr. Weisman is eligible for an annual bonus. At the beginning of each calendar year, but no later than
February 15 of such calendar year, or later as agreed between Dr. Weisman and the compensation committee in
writing, Dr. Weisman and the compensation committee shall meet and establish the parameters of Dr. Weisman’s
annual bonus. The parameters of his annual bonus shall establish a target and range of bonus amounts as a
percent of his base salary. The amount of bonus to be paid shall be based on Dr. Weisman’s attainment of certain
financial, clinical development, and/or business milestones, or the Weisman Milestones, to be established and
agreed to annually by the compensation committee and Dr. Weisman. The Weisman Milestones shall be defined
business objectives, and whether or not any such objectives have been met shall not be subject to the Company’s
discretion.

On December 28, 2012, in connection with the amendment of Dr. Sandage’s employment agreement, the board
of directors approved the payment to Dr. Sandage of his 2012 performance bonus of $200,000 as well as a
retention bonus of $100,000 payable on December 31, 2013, if he remains employed through that date.

Long-Term Incentive Plan.

We believe that by providing our executives the opportunity to increase their ownership of our stock, the interests
of our executives will be more closely aligned with the best interests of our stockholders and we will encourage
long-term performance. The stock awards enable our executive officers to participate in the appreciation of the
value of our stock, while personally participating in the risks of business setbacks. We have not adopted stock
ownership guidelines and our stock incentive plan has provided our executive officers a means to acquire equity
or equity-linked interests in our company. We do not have any program, plan or obligation that requires us to
grant equity compensation on specified dates. Authority to make equity grants to executive officers rests with our

board of directors, which considers the recommendations of the executive chairman and the chief executive
officer for officers other than themselves, and will in the future take into account the recommendation of the
compensation committee.

We have granted equity awards primarily through our 2007 Stock Incentive Plan, or the 2007 Plan, which was
adopted by our board of directors and stockholders to permit the grant of stock options, stock bonuses and
restricted stock to our officers, directors, employees and consultants. The material terms of our 2007 Plan are
further described under “2007 Stock Incentive Plan” below.

Dr. Sandage was awarded an option in April 2011 to purchase 300,000 shares of our common stock under the
2007 Plan in connection with the commencement of his employment. The number of shares was determined as
part of the negotiation of his overall employment package and was approved by our board of directors. In
approving the number of shares, the board considered the number of shares requested by Dr. Sandage and the
equity ownership of other members of our management team.

Mr. Beerman was awarded an option to purchase 225,000 shares of our common stock under the 2007 Plan in
connection with the commencement of his employment in September 2011. The number of shares was
determined as part of the negotiation of his overall employment package and was approved by our board of
directors. In approving the number of shares, the board considered the number of shares requested by
Mr. Beerman and the equity ownership of other members of our management team.

Dr. Lu was awarded an option to purchase 225,000 shares of our common stock under the 2007 Plan in
connection with the commencement of her employment in February 2012. The number of shares was determined
as part of the negotiation of her overall employment package and was approved by our board of directors. In
approving the number of shares, the board considered the number of shares requested by Dr. Lu and the equity
ownership of other members of our management team.

Dr. Hehenberger was awarded an option to purchase 100,000 shares of our common stock under the 2007 Plan in
connection with the commencement of her employment in December 2011 and was awarded an option to
purchase 125,000 shares of our common stock under the 2007 Plan in connection with her appointment as
executive vice president and chief medical officer on April 19, 2012. The number of shares was determined as
part of the negotiation of her overall employment packages and was approved by our board of directors. In
approving the number of shares, the board considered the number of shares requested by Dr. Hehenberger and
the equity ownership of other members of our management team.

Mr. Ritter was awarded an option to purchase 120,000 shares of our common stock under the 2007 Plan in
connection with the commencement of his employment in May 2011. The number of shares was determined as
part of the negotiation of his overall employment package and was approved by our board of directors. In
approving the number of shares, the board considered the number of shares requested by Mr. Ritter and the
equity ownership of other members of our management team. In February 2012, Mr. Ritter was awarded an
option to purchase an additional 30,000 shares of our common stock under the 2007 Plan.

In connection with his resignation as our executive chairman and his execution of a one-year consulting agreement
with us, Dr. Cooper was awarded an option to purchase 25,000 shares of our common stock that will vest on
December 28, 2013 if he remains a consultant through that date. The exercise price of the option is $4.75 per share.

Dr. Weisman was awarded an option in January 2013 to purchase 1,686,590 shares of our common stock under
the 2007 Plan in connection with his employment agreement. The number of shares was determined as part of the
negotiation of his overall employment package and was approved by our board of directors. In approving the
number of shares, the board considered the number of shares requested by Dr. Weisman and the equity
ownership of other members of our management team.

Prior to November 2011, there was no public trading market for our common stock. In the absence of a public
trading market for our common stock at the time any of the grants described above were made, the board of
directors determined the fair market value of our common stock in good faith based upon consideration of a
number of relevant factors including the status of development efforts, financial status and market conditions and
valuations obtained from an independent valuation firm. All options granted after November 2011 were granted
at the fair market value of our common stock as determined by the closing price of our shares on NASDAQ on
the date of grant.

All option grants typically vest over three years, with one-third of the shares subject to the stock option vesting
on each anniversary of the vesting commencement date. All options have a 10-year term. Additional information
regarding accelerated vesting upon or following a change in control is discussed below under “Potential
Payments Upon Termination or Change in Control.”

Executive Employment Agreements

We entered into employment agreements with Dr. Sandage in April 2011, with Mr. Ritter in May 2011, with
Mr. Beerman in September 2011, with Dr. Lu in February 2012, with Dr. Hehenberger in April 2012 and with
Dr. Weisman in January 2013. All employment agreements provide for at-will employment, base salary,
incentive bonuses, standard employee benefit plan participation and recommendations for initial stock option
grants. The employment agreements were each subject to execution of standard proprietary information and
assignment of invention agreements and proof of identity and work eligibility in the United States.

Dr. Sandage, Mr. Beerman, Dr. Lu, Dr. Hehenberger, Mr. Ritter and Dr. Weisman are each entitled to severance
and change in control benefits pursuant to their employment agreements, the terms of which are described below
under “Potential Payments Upon Termination or Change in Control” below. We believe that these severance and
change in control benefits help us from a retention standpoint and they are particularly necessary in an industry,
such as ours, where there has been market consolidation. We believe that they help our executive officers
maintain continued focus and dedication to their assigned duties to maximize stockholder value if there is a
change in control. We believe that these severance and change in control benefits are an essential element of our
overall executive compensation package.

On January 7, 2013, we entered into an employment agreement with Dr. Weisman, our chairman and chief
executive officer. Pursuant to the employment agreement, we will pay Dr. Weisman an annual base salary of
$600,000. At the discretion of our board of directors, he will also be eligible for an annual cash bonus based on
the attainment of financial, clinical development and/or business milestones to be established by our board.
Pursuant to the employment agreement, we also granted Dr. Weisman an option to purchase 1,686,590 shares of
our common stock, which is equal to 6% of our fully diluted capitalization. The option has an exercise price of
$5.57 per share. One-third of the shares underlying the option will vest on December 28, 2013 and each
anniversary thereafter, subject to Dr. Weisman’s continued employment with our company. Dr. Weisman will be
entitled to four weeks paid vacation.

Perquisites

From time to time our board of directors has provided certain of our named executive officers with perquisites
that the board believes are reasonable. We do not view perquisites as a significant element of comprehensive
compensation structure, but do believe they can be useful in attracting, motivating and retaining the executive
talent for which we compete. We believe that these additional benefits may assist our executive officers in
performing their duties and provide time efficiencies for executive officers in appropriate circumstances, and we
may consider providing additional perquisites in the future. All future practices regarding perquisites will be
approved and subject to periodic review by the compensation committee.

Other Compensation

Consistent with our compensation philosophy, we intend to continue to maintain the current benefits for
executive officers which are also available to our other employees; however, the compensation committee, in its
discretion, may in the future revise, amend or add to the benefits of any executive officer if it deems it advisable.

Deductibility of Compensation under Section 162(m)

Section 162(m) of the Code generally limits our deduction for federal income tax purposes to $1 million of
compensation paid to certain executive officers in a calendar year. However, compensation above $1 million that
is considered “performance-based compensation” may be deducted. However, it is expected that the
compensation committee will evaluate the effects of the deduction limits of Section 162(m) on any compensation
it proposes to grant in the future and that future compensation will be provided in a manner consistent with our
best interests and those of our stockholders.

Risk Analysis of our Compensation Program

Our board of directors has reviewed our compensation policies as generally applicable to our employees and
believes that the policies do not encourage excessive and unnecessary risk taking, and that the level of risk that
they do encourage is not reasonably likely to have a material adverse effect on us. The design of our
compensation policies and programs encourage the employees to remain focused on both short- and long-term
goals. For example, while our cash bonus plans measure performance on an annual basis, the equity awards
typically vest over a number of years, which we believe encourages employees to focus on sustained stock price
appreciation, thus limiting the potential value of excessive risk- taking.

Summary Compensation Table

The following table provides information regarding the compensation paid during the years ended December 31,
2011 and 2012 to our principal executive officer and certain of our other executive officers, who are collectively
referred to as “named executive officers” elsewhere in this Form 10-K. Since none of our named executive
officers served us during the year ended December 31, 2010, we have no information to disclose regarding
compensation paid during that year.

Name and Principal Position

Year

Salary

Bonus(3)

Option
Awards(1)

All Other
Compensation(2)

Total

Harlan W. Weisman, M.D. . . . . . . . . . . . . . . 2012 $

Chairman and Chief Executive Officer

2011
2010

Bobby W. Sandage, Jr. Ph.D. . . . . . . . . . . . . 2012
2011
2010

President and Former Chief Executive
Officer

Noah D. Beerman . . . . . . . . . . . . . . . . . . . . . 2012
2011
2010

Executive Vice President and Chief
Operating Officer

Lucy Lu, M.D.

Executive Vice President and Chief
Financial Officer

. . . . . . . . . . . . . . . . . . . . . . . . 2012
2011
2010

Karin M. Hehenberger, M.D., Ph.D. . . . . . . 2012
2011
2010

Executive Vice President and Chief
Medical Officer

Dale Ritter . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012
2011
2010

Senior Vice President, Finance and Chief
Accounting Officer

4,615 $ — $ 120,250
—
—
—
—

—
—

395,000
284,135
—

328,000
87,500
—

256,923
—
—

300,000
17,115
—

272,128
149,939
—

200,000
140,000
—

132,840
36,000
—

—
257,280
—

—
484,425
—

92,492
—
—

1,523,250
—
—

108,000
5,135
—

99,000
62,000
—

763,750
481,440
—

203,100
102,912
—

$ 13,125
—
—

3,926
133,929
—

3,820
—
—

683
—
—

820
—
—

8,340
7,875
—

$ 137,990
—
—

598,926
795,344
—

464,660
607,925
—

1,873,348

—
—

1,172,570
503,690
—

582,568
322,726
—

(1) Option awards for Dr. Weisman consists of an option to purchase 25,000 shares of our common stock

granted to Dr. Weisman upon his appointment to our board of directors in August 2012. Represents the

aggregate grant date fair value computed in accordance with FASB Accounting Standards Codification
Topic 718, Stock Compensation, as modified or supplemented. One-third of the shares subject to each of the
options granted to our named executive officers vest on each anniversary of the grant date such that all of
the shares subject to the options will be vested three years after such date.

(2) All other compensation for Dr. Weisman reflects fees earned and paid as a non-employee director in 2012;
for Dr. Sandage includes: for 2012, $3,926 for reimbursement of life insurance premiums; for 2011,
$130,321 related to reimbursement of moving expenses Dr. Sandage owed his prior employer pursuant to his
termination of employment and $3,608 for reimbursement of life insurance premiums; for Mr. Beerman: for
2012, $3,000 for reimbursement of life insurance premiums and $820 for long-term disability premiums; for
Dr. Lu: for 2012, $683 for long-term disability premiums; for Dr. Hehenberger: for 2012, $820 for long-term
disability premiums; for Mr. Ritter: for 2012, $8,340 for reimbursement of life insurance premiums. In
addition to the above, we agreed to provide Dr. Weisman mutually agreeable living accommodations in New
York, New York at our sole cost. We also agreed to reimburse him for any taxes associated with such
residence during his employment with us.

(3) Bonus amounts in 2011 represent amounts awarded for 2011 and paid in 2012. Bonus amounts in 2012

represent amounts awarded for 2012, to be paid in 2013.

Potential Payments Upon Termination or Change in Control

Regardless of the manner in which a named executive officer’s employment terminates, the named executive
officer is entitled to receive amounts earned during his term of employment, including salary and unused
vacation pay. In addition, each of our named executive officers that are currently employed by us is entitled to
severance and change in control benefits described below.

Dr. Bobby W. Sandage, Jr.

In April 2011, we entered into an employment agreement with Dr. Sandage, our then-current president and chief
executive officer, which provided that if we terminate Dr. Sandage without cause or he resigns for good reason,
he will be entitled to: (i) severance payments at a rate equal to his base salary then in effect for a period of one
year following his termination date; and (ii) accelerated vesting of one-third of his stock option shares. In
addition, if Dr. Sandage is terminated without cause within six months following a change in control, 100% of
the shares subject to options and other equity awards granted to him will fully vest as of the date of his execution
of a release in connection with such termination.

Cause is defined as:

•

his willful failure, disregard or refusal to perform his material duties or obligations under the employment
agreement which, to the extent it is curable by Dr. Sandage, is not cured within thirty (30) days after we give
written notice to him;

any willful, intentional or grossly negligent act having the effect of materially injuring (whether financially or
otherwise) the business or reputation of us or any of our affiliates;

• willful misconduct by him with respect to any of the material duties or obligations under the employment
agreement, including, without limitation, willful insubordination with respect to lawful directions received
from the board of directors which, to the extent it is curable by Dr. Sandage, is not cured within thirty
(30) days after we give written notice to him;

•

indictment of any felony involving moral turpitude (including entry of a nolo contendere plea);
the determination, after a reasonable and good-faith investigation by us, that he engaged in some form of
harassment or discrimination prohibited by law (including, without limitation, age, sex or race harassment or
discrimination), unless the actions were specifically directed by the board of directors;

• material misappropriation or embezzlement of the property of us or our affiliates (whether or not a

misdemeanor or felony); or

•

a material breach of any of the provisions of the employment agreement, of any company policy, and/or of
his proprietary information and inventions agreement.

Good reason is defined as:

•

a material reduction of Dr. Sandage’s base salary unless such reduction occurs in connection with a company-
wide decrease in executive compensation;

a material breach of the employment agreement by us; or

a material adverse change in his duties, authority, or responsibilities relative to his duties, authority, or
responsibilities in effect immediately prior to such reduction.

On December 28, 2012, Dr. Sandage became president of the Company. He remains a member of our board of
directors. Dr. Sandage’s change in status from chief executive officer and president to president entitles him to
terminate his employment agreement for good reason, in which case we would be obligated to pay Dr. Sandage
his salary for 12 months. In addition, under the terms of his employment agreement, any options that will vest on
the next anniversary date of their respective grant date would automatically vest.

Also effective December 28, 2012, we entered into an amendment to Dr. Sandage’s employment agreement
pursuant to which he will retain until June 28, 2013, the right to terminate his employment for good reason, be
paid his severance allowance equal to his salary of $395,000 for 12 months and have any unvested options vest in
full. Also, the amended employment agreement provides that in the event Dr. Sandage terminates his
employment for good reason, he will have two years from such termination to exercise his options. In addition, if
Dr. Sandage terminates his employment, we will be required to pay his COBRA premiums for 12 months after
such termination. Also on December 28, 2012, our board of directors approved the payment to Dr. Sandage of his
2012 performance bonus of $200,000 as well as a retention bonus of $100,000 payable on December 31, 2013, if
he remains employed through that date.

Dr. Harlan Weisman

Dr. Weisman’s employment agreement is terminable upon his death or disability, in which event we will
continue to pay his salary for 90 days following the date of such termination, we will pay him a pro rata share of
his annual bonus if such bonus is awarded, and any options that would have vested on the next anniversary date
of their respective grant date will automatically vest. If we terminate the employment agreement without cause or
Dr. Weisman terminates his employment with good reason, then we will continue to pay Dr. Weisman his then-
current salary for 12 months following the date of such termination, we will pay Dr. Weisman a pro rata share of
his annual bonus if such bonus is awarded, and any options that would have vested on the next anniversary date
of their respective grant date will automatically vest. If termination without cause or for good reasonoccurs on
the date of, or within six months of a change in control of our company, then we will continue to pay
Dr. Weisman his then-current salary for 12 months following such termination, we will pay Dr. Weisman a pro
rata share of his annual bonus if such bonus is awarded, and all unvested options will automatically vest in full.
The employment agreement provides that no compensation or benefit that qualifies as a nonqualified deferred
compensation plan under Section 409A of the Internal Revenue Code of 1986, as amended, or the Code, will be
paid or provided to Dr. Weisman before the earlier of his death or the day that is six months plus one day after
the termination date. In addition, if an excess parachute payment is made to Dr. Weisman in the event of a
change in control, we will make a gross-up payment to Dr. Weisman to reimburse him for any taxes due pursuant
to Section 4999 of the Code with respect to the excess parachute payment as well as for the taxes on such
reimbursement. The employment agreement prohibits Dr. Weisman from competing with us in the United States
during the term of his employment with us or while he is receiving severance benefits under the employment
agreement and for six months thereafter.

Cause is defined as:

•

his conviction for fraud, embezzlement or misappropriation with respect to the Company, or his conviction or
plea of nolo contendere in respect of a felony or a misdemeanor involving moral turpitude;

•

his material breach of a material term of his employment agreement;

his material breach of his proprietary information and inventions agreement;

any material breach of his fiduciary duties to our Company;

• willful failure or refusal to perform his material duties under his employment agreement, or failure to follow

any specific lawful instructions of our board of directors;

•

any willful or negligent misconduct that has a material adverse effect on the property, business or reputation
of the Company.

Good Reason is defined as:

•

a material reduction of his base salary unless such reduction occurs in connection with a company-wide
decrease in executive compensation;

a material diminution of his authority, duties, or responsibilities;

the relocation of his office from the New York, New York/New Jersey metro area;

a material breach of his employment agreement by us; or

the closing of a transaction resulting in dilution of his percentage ownership of our Company where he has
stated his disapproval of such transaction and voted against its authorization in his capacity as a director.

Change in Control is defined as the occurrence, in a single transaction or in a series of related transactions, of any
one or more of the following events:

•

the acquisition by a third party of securities of our Company representing more than fifty percent (50%) of
the combined voting power of our Company’s then-outstanding securities other than by virtue of a merger,
consolidation or similar transaction;

a merger, consolidation or similar transaction following which our stockholders immediately prior thereto do
not own at least fifty percent (50%) of the combined outstanding voting power of the surviving entity (or that
entity’s parent) in such merger, consolidation or similar transaction;

the dissolution or liquidation of our Company; or

the sale, lease, exclusive license or other disposition of all or substantially all of the assets of our Company.

Mr. Dale Ritter

In May 2011, we entered into an employment agreement with Mr. Ritter, our senior vice president, finance, chief
accounting officer and then-acting chief financial officer, which provides that if we terminate Mr. Ritter without
cause or he resigns for good reason, he will be entitled to: (i) severance payments at a rate equal to his base
salary then in effect for a period of six months following his termination date; and (ii) accelerated vesting of one-
third of his stock option shares. In addition, if Mr. Ritter is terminated without cause within six months following
a change in control, he will be entitled to an additional six months of severance payments (for a total of 12
months) and 100% of the shares subject to options and other equity awards granted to him will fully vest as of
the date of his execution of a release in connection with such termination. Cause and good reason are defined as
they are for Dr. Sandage and described above.

Mr. Noah Beerman

In September 2011, we entered into an employment agreement with Mr. Beerman, our executive vice president
and chief operating officer, which provides that if we terminate Mr. Beerman without cause or he resigns for
good reason, he will be entitled to: (i) severance payments at a rate equal to his base salary then in effect for a
period of six months following his termination date; and (ii) accelerated vesting of one-third of his stock option

shares. In addition, if Mr. Beerman is terminated without cause within six months following a change in control,
he will be entitled to an additional six months of severance payments (for a total of 12 months) and 100% of the
shares subject to options and other equity awards granted to him will fully vest as of the date of his execution of a
release in connection with such termination. Cause and good reason are defined as they are for Dr. Sandage and
described above.

Dr. Lucy Lu

In February 2012, we entered into an employment agreement with Dr. Lu, our executive vice president and chief
financial officer, which provides if we terminate Dr. Lu without cause or she resigns for good reason, she will be
entitled to: (i) severance payments at a rate equal to her base salary then in effect for a period of six months
following her termination date; and (ii) accelerated vesting of one-third of her stock option shares. In addition, if
Dr. Lu is terminated without cause within six months following a change in control, she will be entitled to an
additional six months of severance payments (for a total of 12 months) and 100% of the shares subject to options
and other equity awards granted to her will fully vest as of the date of her execution of a release in connection
with such termination. Cause and good reason are defined as they are for Dr. Sandage and described above.

Dr. Karin Hehenberger

In April 2012, we entered into an employment agreement with Dr. Hehenberger, our executive vice president and
chief medical officer, which provides if we terminate Dr. Hehenberger without cause or she resigns for good
reason, she will be entitled to:

(i) severance payments at a rate equal to her base salary then in effect for a period of six months following her
termination date; and (ii) accelerated vesting of one-third of her stock option shares. In addition, if Dr. Hehenberger
is terminated without cause within six months following a change in control, she will be entitled to an additional six
months of severance payments (for a total of 12 months) and 100% of the shares subject to options and other equity
awards granted to her will fully vest as of the date of her execution of a release in connection with such termination.
Cause and good reason are defined as they are for Dr. Sandage and described above.

The following table sets forth potential payments payable to our named executive officers upon: (i) termination
of employment without cause, or resignation for good reason; and (ii) termination of employment without cause,
or resignation for good reason, following a change in control. The table below reflects amounts payable to our
executive officers assuming their employment was terminated on December 31, 2012 and, if applicable, a change
in control also occurred on such date.

Name

Upon Termination without Cause or
Resignation for Good reason — No
Change of Control

Upon Termination without Cause or
Resignation for Good reason —

Change of Control

Cash
Severance

Value of
Accelerated
Vesting (1)

Total

Cash
Severance

Value of
Accelerated
Vesting (1)

Total

Harlan Weisman, M.D. (2) . . . . . . . . . . . . . . . . $ — $ — $ — $ — $ — $ —
911,000
Bobby W. Sandage, Jr., Ph.D. (3) . . . . . . . . . . .
Noah D. Beerman (4) . . . . . . . . . . . . . . . . . . . .
562,000
— 300,000
Lucy Lu, M.D. (4)
. . . . . . . . . . . . . . . . . . . . . .
— 300,000
Karin M. Hehenberger, M.D., Ph.D. (4) . . . . . .
481,400
Dale Ritter (4) . . . . . . . . . . . . . . . . . . . . . . . . . .

653,000
281,000
— 150,000
— 150,000
240,700

395,000
164,000
150,000
150,000
137,500

395,000
328,000
300,000
300,000
275,000

516,000
234,000

258,000
117,000

103,200

206,400

(1) The value of accelerated vesting is equal to $4.51 per share, the closing price per share of our common stock

as quoted on NASDAQ on December 31, 2012 for the purposes hereof, multiplied by the number of shares
subject to accelerated vesting, less the stock option exercise price.

(2) Dr. Weisman’s employment agreement was entered into on January 7, 2013 and he was not eligible for

termination benefits as of December 31, 2012.

(3) Dr. Sandage’s employment agreement provides that: (a) if he is terminated without cause or resigns for

good reason, not in connection with a change in control, he will receive 12 months of salary continuation
and accelerated vesting of 1/3rd of the number of options outstanding and (b) if he is terminated without
cause or resigns for good reason within six months following a change in control, he will receive 12 months
of salary continuation and accelerated vesting of 100% of the number of options outstanding.

(4) Mr. Beerman’s, Dr. Lu’s, Dr Hehenberger’s, and Mr. Ritter’s employment agreements provide that: (a) if he
or she is terminated without cause or resigns for good reason, not in connection with a change in control, he
or she will receive six months of salary continuation and accelerated vesting of 1/3rd of the number of
options outstanding and (b) if he or she is terminated without cause or resigns for good reason within six
months following a change in control, he or she will receive 12 months of salary continuation and
accelerated vesting of 100% of the number of options outstanding.

Grants of Plan-Based Awards

All stock options granted to our named executive officers are incentive stock options to the extent permissible
under the Code. The exercise price per share of each stock option granted to our named executive officers was
equal to the fair market value of our common stock as determined in good faith by our board of directors taking
into consideration independently prepared valuation reports on the date of the grant. All stock options were
granted under the 2007 Plan.

The following table sets forth certain information regarding grants of plan-based awards to our named executive
officers for 2012.

Name

All other option
awards: number of
securities underlying
options (#)

Grant
Date

Exercise or base
price of option
awards (1)

Grant date fair
value of option
award (2)

Harlan Weisman, M.D.(3) . . . . . . . . . . . . . . . 8/16/12
Lucy Lu, M.D. Ph.D. . . . . . . . . . . . . . . . . . . . 2/22/12
. . . . . . . 4/19/12
Karin M. Hehenberger, M.D., Ph.D.
2/2/12
Dale Ritter . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,000
225,000
125,000
30,000

$5.72
$6.85
$7.84
$6.85

$ 120,250
$1,523,250
$ 763,750
$ 203,100

(1) Represents the per share fair market value of our common stock, as determined in good faith by our board of

directors on the grant date.

(2) Amounts listed represent the aggregate fair value amount computed as of the grant date of each option and
award during 2012 in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these
amounts are included in Note 14, Stock-Based Compensation, of the Notes to the Financial Statements. As
required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-
based vesting conditions. Our named executive officers will only realize compensation to the extent the
trading price of our common stock is great than the exercise price of such stock options.

(3) Consists of an option to purchase our common stock granted to Dr. Weisman upon his appointment to our

board of directors in August 2012.

Outstanding Equity Awards at 2012 Fiscal Year-End

The following table sets forth certain information regarding all outstanding equity awards held by our named
executive officers as of December 31, 2012.

Name

. . . . . . . . . .
Bobby W. Sandage, Jr., Ph.D.
Noah D. Beerman . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Lucy Lu, M.D.
. . . . .
Karin M. Hehenberger, M.D., Ph.D.
Karin M. Hehenberger, M.D., Ph.D.
. . . . .
Dale Ritter . . . . . . . . . . . . . . . . . . . . . . . . .
Dale Ritter . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Harlan Weisman, M.D. (2)

Number of Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of Securities
Underlying
Unexercised
Options (#)
Unexercisable

100,000
75,000
—
—
33,333
40,000
—
—

200,000
150,000
225,000
125,000
66,667
80,000
30,000
25,000

Option
Exercise
Price

Option
Expiration
Date (1)

4/12/2021
$1.93
9/25/2021
2.95
2/22/2022
$6.85
$7.84
4/19/2022
$6.00 12/18/2021
5/15/2021
$1.93
2/22/2022
$6.85
—
—

(1) 1/3rd of the total of number of shares subject to each option vest on each anniversary of the applicable grant.
(2) Consists of an option to purchase 25,000 shares of our common stock granted to Dr. Weisman upon his

appointment to our board of directors in August 2012.

Option Exercises and Stock Vested

Our named executive officers did not exercise any stock option awards during the year ended December 31,
2012.

Pension Benefits

None of our named executive officers participate in or have account balances in qualified or non-qualified
defined benefit plans sponsored by us.

Non-Qualified Deferred Compensation

None of our named executive officers participate in or have account balances in qualified or non-qualified
defined contribution plans or other nonqualified compensation plans sponsored by us.

Equity Incentive Plans

2007 Stock Incentive Plan

Our board of directors adopted and our stockholders approved our 2007 Plan in June 2007 and January 2008,
respectively. As of December 31, 2012, 138,040 shares of common stock have been issued under the 2007 Plan
pursuant to the exercise of options, 1,517,960 shares, net of cancellations, of common stock were issued as
restricted stock awards under the 2007 Plan, 2,657,110 options to purchase shares of common stock, net of
cancellations, were granted and options to purchase an aggregate of 2,519,070 shares of common stock were
outstanding.

The purpose of the 2007 Plan is to provide us with the flexibility to use shares, cash, options or other awards
based on our common stock as part of an overall compensation package to provide performance-based
compensation to attract and retain qualified personnel. We believe that awards under the 2007 Plan may serve to
broaden the equity participation of key employees and further link the long-term interests of management and
stockholders. Awards under the 2007 Plan may include shares, cash, options, stock appreciation rights, or a
similar right with a fixed or variable price related to the fair market value of the shares and with an exercise
or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions. Such awards include, without limitation, options, stock appreciation

rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent rights, and an award may
consist of one such security or benefit, or two or more of them in any combination or alternative.

There are 6,000,000 shares of common stock reserved for issuance under the 2007 Plan, of which 1,824,930
shares were available for issuance as of December 31, 2012.

Administration

The 2007 Plan is administered by our board of directors or a committee designated by the board of directors.
With respect to grants of awards to our officers or directors, the 2007 Plan is administered by our board of
directors or a designated committee in a manner that permits such grants to be exempt from Section 16(b) of the
Exchange Act. Grants of awards to covered employees as defined under Section 162(m) of the Code will be
made only by a committee comprised solely of two or more directors eligible to serve on a committee making
awards. The board of directors has the full authority to select recipients of the grants, determine the extent of the
grants, establish additional terms, conditions, rules or procedures to accommodate rules or laws of applicable
non-U.S. jurisdictions, adjust awards and to take any other action deemed appropriate; however, no action should
be taken that is inconsistent with the terms of the 2007 Plan.

Available Shares

Subject to adjustment upon certain corporate transactions or events, a maximum of 6,000,000 shares of our
common stock may be issued under the 2007 Plan. In addition, subject to adjustment upon certain corporate
transactions or events, a participant in the 2007 Plan may not receive awards with respect to more than 1,000,000
shares of common stock in any year (and an additional 500,000 shares in connection with a grantee’s
commencement of continuous service). Any shares covered by an award which is forfeited, canceled or expires
shall be deemed to have not been issued for purposes of determining the maximum aggregate number of shares
which may be issued under the 2007 Plan, except that the maximum aggregate number of shares which may be
issued pursuant to the exercise of incentive stock options shall not exceed 6,000,000. Shares that actually have
been issued under the 2007 Plan pursuant to an award shall not be returned to the 2007 Plan and shall not become
available for future issuance under the 2007 Plan. To the extent not prohibited by the listing requirements of any
established stock exchange or national market system on which our common stock may be traded and any
applicable law, any shares covered by an award which are surrendered (i) in payment of the award exercise or
purchase price or (ii) in satisfaction of tax withholding obligations incident to the exercise of an award shall be
deemed not to have been issued for purposes of determining the maximum number of shares which may be
issued pursuant to all awards under the 2007 Plan, unless otherwise determined by the plan administrator.

Eligibility and Types of Awards

The 2007 Plan permits us to grant stock awards, including stock options to our employees, directors and
consultants and the employees, directors and consultants of PBS and its affiliates. A stock option may be an
incentive stock option, within the meaning of section 422 of the Code, or a nonstatutory stock option. However,
only employees may be granted incentive stock options.

Stock Options

Incentive and nonstatutory stock options are granted pursuant to option agreements adopted by the plan
administrator. The plan administrator determines the exercise price for a stock option, within the terms and
conditions of the 2007 Plan, provided that the exercise price of a stock option cannot be less than 100% of the
fair market value of our common stock on the date of grant. Options granted under the 2007 Plan vest at the rate
specified by the plan administrator.

The plan administrator determines the term of the stock options granted under the 2007 Plan, up to a maximum
of 10 years, except in the case of certain incentive stock options, as described below. Unless the terms of an

optionholder’s stock option agreement provide otherwise, if an optionholder’s relationship with us, or any of our
affiliates, ceases for any reason other than disability or death, the optionholder may exercise any options vested
as of the date of termination but only during the post-termination exercise period designated in the optionholder’s
stock option agreement. The plan administrator may determine such other portion of the optionholder’s unvested
award that may be exercised during the post-termination exercise period. The optionholder’s stock option
agreement may provide that upon the termination of the optionholder’s relationship with us, for cause, the
optionholder’s right to exercise its options shall terminate concurrently with the termination of the relationship. If
an optionholder’s service relationship with us, or any of its affiliates, ceases due to disability or death, or an
optionholder dies within a certain period following cessation of service, the optionholder or beneficiary may
exercise any vested options for a period of 12 months. The option term may be extended in the event that
exercise of the option following termination of service is prohibited by applicable securities laws or such longer
period as specified in the stock option agreement but in no event beyond the expiration of its term.

Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option will be
determined by the plan administrator and may include (a) cash or check, (b) surrender of a promissory note
acceptable to the plan administrator (subject to minimum interest provisions set forth in the 2007 Plan) (c) a
broker-assisted cashless exercise, (d) the tender of common stock previously owned by the optionholder, (e) a net
exercise of the option, (f) past or future services rendered and (g) any other legal consideration approved by the
plan administrator.

Unless the plan administrator provides otherwise, options generally are not transferable except by will, the laws
of descent and distribution, or pursuant to a domestic relations order. An optionholder may designate a
beneficiary, however, who may exercise the option following the optionholder’s death.

Incentive stock options may be granted only to our employees. The aggregate fair market value, determined at
the time of grant, of shares of our common stock with respect to incentive stock options that are exercisable for
the first time by an optionholder during any calendar year under the 2007 Plan may not exceed $100,000. No
incentive stock option may be granted to any employee who, at the time of the grant, owns or is deemed to own
stock possessing more than 10% of the total combined voting power or that of any of our affiliates unless (a) the
option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of
grant and (b) the term of the incentive stock option does not exceed five years from the date of grant.

Corporate Transactions

Effective upon the consummation of a corporate transaction, all outstanding awards under the 2007 Plan shall
terminate. However, all such awards shall not terminate to the extent they are assumed in connection with the
corporation transaction.

The plan administrator shall have the authority, exercisable either in advance of any actual or anticipated
corporate transaction or change in control or at the time of an actual corporate transaction or change in control
and exercisable at the time of the grant of an award under the 2007 Plan or any time while an award remains
outstanding, to provide for the full or partial automatic vesting and exercisability of one or more outstanding
unvested awards under the 2007 Plan and the release from restrictions on transfer and repurchase or forfeiture
rights of such awards in connection with a corporate transaction of change in control, on such term and
conditions as the plan administrator may specify. The plan administrator shall also have the authority to
condition any such award vesting and exercisability or release from such limitations upon the subsequent
termination of the continuous service of the holder of the award within a specified period following the effective
date of the corporate transaction or change in control. The plan administrator may provide that any awards so
vested or released from such limitations in connection with a change in control, shall remain fully exercisable
until the expiration or sooner termination of the award. Our executive officers’ employment agreements provide
for acceleration of vesting under certain conditions, see “Other Compensation, Potential Payments Upon
Termination or Change in Control.”

Amendment and Termination

Our board of directors may amend, suspend or terminate the 2007 Plan as it deems advisable, except that it may
not amend the 2007 Plan in any way that would adversely affect a participant with respect to an award previously
granted. In addition, our board of directors may not amend the 2007 Plan without stockholder approval if such
approval is then required pursuant to Section 422 of the Code, the regulations promulgated thereunder or the
rules of any stock exchange or similar regulatory body.

Stock Awards and Restricted Stock

A stock award consists of the transfer by us to a participant of shares of common stock. The consideration for the
shares to be issued shall be determined by the plan administrator. Shares of common stock acquired pursuant to a
stock award may, but need not be, subject to a share repurchase option in our favor in accordance with a vesting
schedule to be determined by the plan administrator.

Other Awards

In the case of other awards granted under the 2007 Plan, the administrator has the authority to determine the
exercise or purchase price, if any.

Employee Stock Purchase Plan

On December 19, 2011, our board of directors approved the 2012 Coronado Employee Stock Purchase Plan, or
the ESPP, providing for the issuance of up to 200,000 shares of common stock to eligible employees, including
our executive officers, subject to stockholder approval of the ESPP. Eligible employees can purchase our
common stock at the end of a predetermined offering period at a price equal to 85% of the lesser of the fair
market value at the beginning or end of the offering period. The first period commenced February 1, 2012 and
ended on November 30, 2012 resulting in 21,644 shares issued. Thereafter, offerings will be six months in
duration and will commence on December 1 and June 1 of each year. Employee contributions will be made
through payroll deductions throughout the offering period and, subject to certain limitations, will be used to
purchase shares at the end of each offering period. As of December 31, 2012, 178,356 shares were available for
issuance under the ESPP. The ESPP is compensatory and will result in stock-based compensation expense.

Non-Executive Director Compensation

The following table and related footnotes show the compensation paid to or accrued for the benefit of our non-
executive directors during the fiscal year ended December 31, 2012.

Name

Fees Earned
or paid in Cash (1)

Option
Awards (2)

All Other
Compensation (3)

David J. Barrett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Glenn L. Cooper, M.D. . . . . . . . . . . . . . . . . . . . . . . . .
J. Jay Lobell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Jimmie Harvey, M.D.
Michael W. Rogers . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lindsay A. Rosenwald, M.D.
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Eric K. Rowinsky, M.D.

$37,500
30,000
47,500
35,000
55,000
40,000
30,000

$102,750
308,250
102,750
102,750
102,750
102,750
102,750

$ —
330,000

—
—
—
—
250,000

Total

$140,250
668,250
150,250
137,750
157,750
142,750
382,750

(1) Represents director and committee fees accrued in or paid for 2012.
(2) Amounts listed represent the aggregate fair value amount computed as of the grant date of each option and
award during 2012 in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these
amounts are included in Note 13, Stock-Based Compensation, of the Notes to the Consolidated Financial
Statements. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures

related to service-based vesting conditions. Our directors will only realize compensation to the extent the
trading price of our common stock is greater than the exercise price of such stock options. The aggregate
number of shares subject to outstanding option awards as of December 31, 2012 was 15,000 shares, with the
exception of a 25,000 share award made to Dr. Weisman upon his appointment to the board of directors in
2012 and 45,000 granted to Dr. Cooper, as Chairman of the board. 1/3 of the total of number of shares
subject to all options vest on each annual anniversary of the applicable grant date for so long each of the
board members continue to serve on our board of directors. For Dr. Cooper, includes an option to purchase
25,000 shares of our common stock, granted in connection with his consulting agreement.

(3) For Dr. Cooper, represents $300,000 earned and paid in 2012 pursuant to his employment arrangement and
$30,000 of severance that will be paid during 2013; for Dr. Rowinsky, represents amount earned and paid in
2012 pursuant to his consulting arrangement.

In October 2010, our board of directors adopted a compensation program for our non-employee directors, or the
Non-Employee Director Compensation Policy. Pursuant to the Non-Employee Director Compensation Policy,
each member of our board of directors who is not our employee and who is not otherwise receiving
compensation from us pursuant to another arrangement, will receive an annual cash retainer of $30,000, payable
quarterly, and will receive an initial option grant to purchase up to 25,000 shares of our common stock. Such
stock options vest in three annual installments. In July 2011, the Non-Employee Director Compensation Policy
was modified to include additional fees for committee participation whereby committee members and committee
chairs will receive additional annual cash retainers of $5,000 and $10,000, respectively, payable quarterly. The
Non-Employee Director Compensation Policy was further amended in February 2012 by providing for annual
option grants.

Our amended and restated certificate of incorporation limits the liability of our directors to the maximum extent
permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable
for monetary damages for breach of their fiduciary duties as directors, except for liability for any:

•

breach of their duty of loyalty to the corporation or its stockholders;

act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in
Section 174 of the Delaware General Corporation Law; or

transaction from which the directors derived an improper personal benefit.

Our amended and restated certificate of incorporation does not eliminate a director’s duty of care and, in
appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain
available under Delaware law. These limitations also do not affect a director’s responsibilities under any other
laws, such as the federal securities laws or other state or federal laws. Our amended and restated bylaws provide
that we will indemnify our directors and executive officers, and may indemnify other officers, employees and
other agents, to the fullest extent permitted by law. Our amended and restated bylaws also provide that we may
advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by us and secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his or her actions in connection with their
services to us, regardless of whether our amended and restated bylaws permit such indemnification. We have
obtained a directors’ and officers’ liability insurance policy.

We have entered, and intend to continue to enter, into separate indemnification agreements with our directors and
executive officers, in addition to the indemnification provided for in our amended and restated bylaws. These
agreements, among other things, require us to indemnify our directors and executive officers for certain
expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive
officer in any action or proceeding arising out of their services as one of our directors or executive officers, or

any of our subsidiaries or any other company or enterprise to which the person provides services at our request.
We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation
and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for
breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and
officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment
may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers
pursuant to these indemnification provisions.

At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to
which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding
that may result in a claim for indemnification.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth, as of December 31, 2012, certain information related to our compensation plans
under which shares of our common stock are authorized for issuance.

Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)

Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and
Rights
(b)

Number of Securities
Remaining Available for
Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)

Plan Category

Equity compensation plans approved by

stockholders . . . . . . . . . . . . . . . . . . . . .

2,519,070

$3.37

1,824,930

Equity compensation plans not approved

by stockholders . . . . . . . . . . . . . . . . . . .

1,207,433

$5.81

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,726,503

—

1,824,930

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 8, 2013, certain information concerning the beneficial ownership of
our common stock by (i) each stockholder known by us to own beneficially five percent or more of our
outstanding common stock; (ii) each director; (iii) each named executive officer; and (iv) all of our executive
officers and directors as a group, and their percentage ownership and voting power.

Name and Address of Beneficial Owner(1)

Elliott Associates, L.P.(4) . . . . . . . . . . . .
Lindsay A. Rosenwald, M.D.(5) . . . . . . .
RA Capital Management, LLC(6)
. . . . .
LAR Family Trusts(7) . . . . . . . . . . . . . . .
Brookline Investments Inc.(8) . . . . . . . . .
J. Jay Lobell(9)
. . . . . . . . . . . . . . . . . . . .
Bobby W. Sandage, Jr., Ph.D.(10) . . . . . .
Noah Beerman(11) . . . . . . . . . . . . . . . . . .
Dale Ritter(12) . . . . . . . . . . . . . . . . . . . . .
Lucy Lu, M.D.(13) . . . . . . . . . . . . . . . . . .
Karin Hehenberger, M.D., Ph.D.(14)
. . .
Eric K. Rowinsky, M.D.(15) . . . . . . . . . .
Jimmie Harvey, Jr. M.D.(16) . . . . . . . . . .
Michael W. Rogers(17) . . . . . . . . . . . . . .
David J. Barrett(18) . . . . . . . . . . . . . . . . .
Harlan Weisman(19)
. . . . . . . . . . . . . . . .
All officers and directors as a group

Shares Beneficially
Owned(2)

Percentage Beneficially
Owned(3)

3,731,279
3,594,511
1,775,154
1,464,869
1,352,825
346,066
325,311
85,000
60,000
85,000
95,925
133,993
21,667
13,333
13,333
20,000

14.3%
13.8%
6.8%
6.8%
5.2%
1.3%
1.2%
*
*
*
*
*
*
*
*
*

(12 persons)

. . . . . . . . . . . . . . . . . . .

4,794,139

18.4%

Less than 1%.

*
(1) Unless otherwise indicated, the address of such individual is c/o Coronado Biosciences, Inc., 24 New

(2)

England Executive Park, Burlington, Massachusetts 01803.
Includes common stock, as well as options that are exercisable during the 60-day period following March 8,
2013.

(3) Based upon 26,023,484 shares of common stock issued and outstanding as of March 8, 2013.
(4) Based on information contained in Schedule 13G/A filed with the SEC on June 26, 2012 by Elliott
Associates, L.P. (“Elliott Associates”), Elliott International, L.P. (“Elliott International”) and Elliott
International Capital Advisors Inc. (“International Advisors”). Includes 792,328 shares of common stock
held directly by Elliott Associates, 1,284,053 shares of common stock held directly by Manchester
Securities Corp., a wholly owned subsidiary of Elliott Associates (“Manchester”) and 1,654,898 shares of
common stock held directly by Elliott International and indirectly by International Advisors. Manchester’s
address is 712 Fifth Avenue, New York, New York 10019. On Schedule 13G/A, Elliott Associates, Elliott
International and International Advisors did not list any natural persons having voting and/or dispositive
powers over the shares held of record by the company.
Includes 3,594,511 shares of common stock, 2,659,001 shares of which are held directly by Dr. Rosenwald,
170,983 shares of which are held by Capretti Grandi, LLC, 742,861 shares of which are held by PBS, and
21,666 shares of which are issuable upon the exercise of options exercisable within 60 days of March 8,
2013. Dr. Rosenwald has voting and dispositive control over the shares held by Capretti Grandi, LLC and
PBS. Does not include (i) 453,822 shares of common stock held by the LAR Family Trusts and the Lindsay
A. Rosenwald M.D. 2000 Family Trust (ii) 11,047 shares of common stock underlying warrants held by the
LAR Family Trusts, or (iii) 1,000,000 shares of common stock held by trusts established for the benefit of
Dr. Rosenwald’s family, over which Dr. Rosenwald does not have any voting or dispositive control.

(5)

(6) Based on information contained in Schedule 13G/A filed with the SEC on February 14, 2013 by RA Capital
Management, LLC (“Capital”), Peter Kolchinsky and RA Capital Healthcare Fund, L.P. (“Fund”). Includes

983,382 shares of common stock held directly by the Fund and 1,735,597 shares of common stock held
indirectly by: (i) Capital, as the investment adviser and sole general partner of the Fund and investment
adviser to an account owned by a separate investment vehicle, and (ii) Mr. Kolchinsky as the manager of
Capital. Mr. Kolchinsky, by virtue of his position as manager of Capital, has the sole authority to vote and
dispose of all shares of common stock held by the Fund and Capital. The principal business office of the
Fund, Capital and Mr. Kolchinsky is 20 Park Plaza, Suite 1200, Boston, MA 02116.

(7) Mr. Gross is the trustee of four trusts established for the benefit of Lindsay Rosenwald and his family,

which own an aggregate of 1,000,000 shares of our capital stock as follows: (a) Lindsay A. Rosenwald 2000
Irrevocable Indenture of Trust dated May 24, 2000 (Delaware) owns 720,000 shares of common stock;
(b) Lindsay A. Rosenwald Alaska Irrevocable Indenture of Trust dated August 28, 2001 owns 80,000 shares
of common stock; (c) Lindsay A. Rosenwald Nevada Irrevocable Indenture of Trust dated January 6, 2003
owns 100,000 shares of common stock; and (d) Lindsay A. Rosenwald Rhode Island Irrevocable Indenture
of Trust dated August 28, 2001 owns 100,000 shares of common stock. Mr. Gross may be deemed to
beneficially own the shares held by these trusts because he has sole voting and dispositive control over all
shares held by these trusts. Mr. Gross’s address is c/o AmTrust Financial Services, 59 Maiden Lane, 6th
Floor, New York, NY 10038.

(8) These shares are held by Brookline Coronado Investment Fund LLC, CSA Biotechnology Fund I, LLC and
CSA Biotechnology Fund II (collectively, “Brookline”). The address of these entities is c/o Brookline
Investments, Inc., 2501 Twentieth Place South, Suite 275, Birmingham, AL 35223. Mr. Rainer Twiford has
voting and dispositive power over these shares.
Includes 346,066 shares of common stock, 321,000 shares of which are held directly by Mr. Lobell, 21,667
shares of which are issuable upon the exercise of options exercisable within 60 days of March 8, 2013 and
3,399 shares of which are issuable upon the exercise of warrants exercisable within 60 days of March 8,
2013.

(9)

(10) Includes 325,311 shares of common stock, 15,311 shares of which are held directly by Dr. Sandage and

300,000 shares of which are issuable upon the exercise of options exercisable within 60 days of March 8,
2013.

(11) Includes 85,000 shares of common stock, 10,000 shares of which are held directly by Mr. Beerman and 75,000

shares of which are issuable upon the exercise of options exercisable within 60 days of March 8, 2013.

(12) Includes 60,000 shares of common stock, 5,000 shares of which are held jointly by Mr. Ritter and his spouse
and 50,000 shares of which are issuable upon exercise of options exercisable within 60 days of March 8, 2013.

(13) Includes 85,000 shares of common stock, 10,000 shares of which are held directly by Dr. Lu and 75,000
shares of which are issuable upon exercise of options exercisable within 60 days of March 8, 2013.

(14) Includes 95,925 shares of common stock, 20,925 shares of which are held directly by Dr. Hehenberger and
75,000 shares of which are issuable upon exercise of options exercisable within 60 days of March 8, 2013.

(15) Includes 133,993 shares of common stock, all of which are issuable upon exercise of options exercisable

within 60 days of March 8, 2013.

(16) Includes 21,667 shares of common stock, all of which are issuable upon exercise of options exercisable

within 60 days of March 8, 2013.

(17) Includes 13,333 shares of common stock, all of which are issuable upon exercise of options exercisable

within 60 days of March 8, 2013.

(18) Includes 13,333 shares of common stock, all of which are issuable upon exercise of options exercisable

within 60 days of March 8, 2013.

(19) Includes 20,000 shares of common stock held directly by Dr. Weisman.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

Five of our directors, Michael W. Rogers, David J. Barrett, Jimmie Harvey, Jr., J. Jay Lobell and Lindsay A.
Rosenwald are independent directors as that term is defined under NASDAQ Marketplace Rules. All of the
members of our audit committee, compensation committee and nominating and corporate governance committee
are independent.

Transactions with Related Parties

The following is a description of transactions since January 1, 2012 to which we have been a party, in which the
amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or
beneficial owners of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had
or will have a direct or indirect material interest, other than compensation, termination and change-in-control
arrangements, which are described under “Executive Compensation.”

2012 Underwritten Common Stock Offering

In June 2012, we issued an aggregate of 5,750,000 shares of common stock in our June 2012 Offering, for an
aggregate purchase price of $28.8 million. The following table sets forth the number of shares of common stock
purchased by our officers, directors and principal stockholders in the June 2012 Offering :

Name
Glenn L. Cooper, M.D. . . . . . . . . . . . . .
CSA/Brookline . . . . . . . . . . . . . . . . . . .
Dale and Debra Ritter . . . . . . . . . . . . . .
Lindsay A. Rosenwald, M.D.
. . . . . . . .
Manchester Securities Corp. (2) . . . . . .
RA Capital . . . . . . . . . . . . . . . . . . . . . . .
J. Jay Lobell
. . . . . . . . . . . . . . . . . . . . .
Bobby W. Sandage, Jr,. Ph.D. . . . . . . . .
Noah D. Beerman . . . . . . . . . . . . . . . . .
Lucy Lu. M.D. . . . . . . . . . . . . . . . . . . . .
Karin M. Hehenberger, M.D., Ph.D. . . .

Number of common shares Purchased

10,000
300,000
5,000
200,000
2,000,000
1,500,000
25,000
10,000
5,000
10,000
20,000

(1) Additional detail regarding these stockholders and their equity holdings is provided in “Security Ownership

of Certain Beneficial Owners and Management.”

(2) Represents 613,438 shares of common stock purchased by Elliot Associates and 1,386,562 shares of

common stock purchased by Elliot International.

Asphelia Asset Purchase

In January 2011, we acquired certain assets of Asphelia relating to CNDO-201 pursuant to an asset purchase
agreement. The consideration paid for the assets included the assumption of certain Asphelia liabilities and the
issuance of 2,525,677 Series B shares. At the time of such acquisition, Mr. Lobell, one of our directors, was the
chief executive officer and a director of Asphelia and Dr. Rosenwald, one of our directors and a principal
stockholder, was a significant stockholder of Asphelia. One liability assumed from Asphelia was the PCP Note
dated January 2009, issued by Asphelia to PCP, an entity affiliated with Dr. Rosenwald and Mr. Lobell, in the
principal amount of $750,000. Interest on the PCP Note is at the rate of 10% per annum payable quarterly, in
arrears. The outstanding principal and accrued but unpaid interest on the PCP Note was repaid in full in
September 2012. We paid $74,000 of interest on the PCP Note in 2012.

We have entered into employment arrangements with our executive officers, as more fully described in
“Executive and Director Compensation—Executive Employment Agreements” and “—Potential Payments Upon
Termination or Change in Control.”

Transactions with Related Persons

The written charter of our audit committee authorizes and the NASDAQ Marketplace Rules require our
audit committee to review and approve related party transactions. In reviewing related party transactions, our
audit committee applies the basic standard that transactions with affiliates should be made on terms no less

favorable to us than could have been obtained from unaffiliated parties. Therefore, the audit committee reviews
the benefits of the transactions, terms of the transactions and the terms available from unrelated third parties, as
applicable. All transactions other than compensatory arrangements between us and our officers, directors,
principal stockholders and their affiliates will be approved by our audit committee or a majority of the
disinterested directors, and will continue to be on terms no less favorable to us than could be obtained from
unaffiliated third parties.

Item 14.

Principal Accounting Fees and Services.

PricewaterhouseCoopers LLP served as our independent registered public accounting firm for the fiscal years
ended December 31, 2012 and 2011. The following table shows the fees that were billed for audit and other
services provided by this firm during the fiscal years indicated.

Years Ended December 31,

2012

2011

Audit Fees(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees(4)

$505,500

18,300
1,800

$506,500
27,400
—
—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$525,600

$533,900

(1) Audit Fees—This category includes the audit of our annual financial statements, review of financial

statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by
independent auditors in connection with the engagement for fiscal years.

(2) Audit-Related Fees—This category consists of fees reasonably related to the performance of the audit or
review of our financial statements that are not reported as “Audit Fees.” Audit related fees of $26,400
related to due diligence for a corporate transaction.

(3) Tax Fees—This category consists of tax compliance, tax advice and tax planning work.
(4) All Other Fees—This category consists of fees for other miscellaneous items.

Pre-Approval Policies and Procedures of the Audit Committee

The audit committee has adopted policies and practices relating to the approval of all audit and non-audit
services that are to be performed by our registered public accounting firm. This policy generally provides that we
will not engage our registered public accounting firm to render audit or non-audit services unless the service is
specifically approved in advance by the audit committee or the engagement is entered into pursuant to one of the
pre-approval procedures described below. From time to time, the audit committee may pre-approve specified
types of services that are expected to be provided to us by our registered public accounting firm during the next
12 months. Any pre-approval is detailed as to the particular service or type of services to be provided and is
subject to a maximum dollar amount.

PART IV

Item 15.

Exhibits, Financial Statement Schedules.

Exhibit
Number

Description

3.1

3.2

3.3

3.4

3.6

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.10

4.11

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8*

10.9*

10.10†

Amended and Restated Certificate of Incorporation of the Registrant. (1)

First Certificate of Amendment of Amended and Restated Certificate of Incorporation. (1)

Certificate of Designation, Preferences and Rights of the Series B Preferred Stock. (1)

Certificate of Designation, Preferences and Rights of the Series C Preferred Stock. (1)

Amended and Restated Bylaws of the Registrant. (1)

Form of Common Stock Certificate. (1)

Form of Series A Preferred Stock Certificate. (1)

Form of Series B Preferred Stock Certificate. (1)

Form of Series C Preferred Stock Certificate. (1)

Form of Warrant for the Purchase of Shares of Common Stock issued by the Registrant in connection
with the 2008 bridge financing. (1)

Form of Warrant for the Purchase of Shares of Common Stock issued by the Registrant in connection
with the 2009 bridge financing. (1)

Form of Warrant for the Purchase of Shares of Common Stock issued by the Registrant in connection
with the Series A financing. (1)

Form of Series C Convertible Preferred Stock Purchase Warrant issued by the Registrant in
connection with the 2011 Series C financing. (1)

Form of Consultant/Agent Warrant to Purchase Common Stock. (1)

Warrant to Purchase Common Stock issued by the Registrant in connection with the 2012 secured
loan facility with Hercules Technology Growth Capital, Inc. (2)

Form of Note Purchase Agreement relating to the 2008 bridge financing. (1)

Form of Note Purchase Agreement relating to the 2009 bridge financing. (1)

Form of Subscription Agreement relating to the initial Series A financing. (1)

Form of Subscription Agreement relating to the second Series A financing. (1)

Form of Subscription Agreement relating to the Series C financing. (1)

Form of Consent and Support Agreement. (1)

Letter Agreement, dated April 29, 2011, by and between Manchester Securities Corp. and the
Registrant. (1)

2007 Stock Incentive Plan. (1)

Form of 2007 Stock Incentive Plan and Award Agreement. (1)

Exclusive Sublicense Agreement, effective as of December 12, 2005, by and between Ovamed
GmbH & Co KG and Collingwood Pharmaceuticals, Inc. (1)

Exhibit
Number

10.11†

Description

Manufacturing and Supply Agreement, dated March 29, 2006, by and among Collingwood
Pharmaceuticals, Inc. and Ovamed GmbH. (1)

10.12†

Licence Agreement, dated November 5, 2007, between UCL Business PLC and the Registrant. (1)

10.13†

10.14†

10.15†

10.16†

10.17†

10.18

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25

10.26

10.27

10.28

10.29

10.30*

10.31

Letter Agreement, dated November 8, 2007, by and between Asphelia Pharmaceuticals, Inc. and
Ovamed GmbH. (1)

Amendment No. 1 to License Agreement, effective as of September 30, 2009, by and between the
Registrant and UCL Business PLC. (1)

Master Contract Services Agreement, effective as of April 1, 2010, by and between the Registrant
and Progenitor Cell Therapy, LLC. (1)

Term Sheet in causa Ovamed/Asphelia, dated June 8, 2010, by and between Ovamed GmbH and
Asphelia, Inc. (1)

Amendment and Agreement, dated January 7, 2011, by and among Asphelia Pharmaceuticals, Inc.,
the Registrant and OvaMed GmbH. (1)

Asset Purchase Agreement, dated as of January 7, 2011, by and between the Registrant and Asphelia
Pharmaceuticals, Inc. (1)

Employment Agreement, dated as of March 21, 2011, by and among the Registrant and Bobby W.
Sandage, Jr., Ph.D. (1)

Employment Agreement, dated as of April 1, 2011, by and among the Registrant and
Glenn L. Cooper. M.D. (1)

Employment Agreement, dated as of May 16, 2011, by and between the Registrant and Dale
Ritter.(1)

Separation Agreement, dated June 3, 2011, by and between the Registrant and
Gary G. Gemignani. (1)

Separation Agreement, dated December 2, 2010, by and between the Registrant and
Raymond J. Tesi, M.D. (1)

Consulting Agreement, entered into as of September 21, 2010, by and between the Registrant and
Eric Rowinsky, M.D. (1)

Form of Indemnification Agreement by and between the Registrant and its officers and directors. (1)

Lease Agreement dated May 26, 2011 relating to the Registrant’s premises located at 15 New
England Executive Park, Burlington, Massachusetts 01803. (1)

Master Contract Services Agreement, as of March 12, 2008, by and between the Registrant and
BioReliance Corporation. (1)

Consulting Agreements between the Registrant and each of Mark Lowdell, Ph.D. and UCL
Consultants Limited. (1)

10% Senior Promissory Note, as amended, issued by Asphelia Pharmaceuticals, Inc. to Paramount
Credit Partners, LLC. (1)

Employment Agreement, effective as of September 26, 2011, by and between the Registrant and
Noah D. Beerman. (3)

Consulting Agreement, as of September 27, 2011, by and between the Registrant and Joel
Weinstock, M.D. (4)

Exhibit
Number

10.32

10.33*

10.34

10.35*

10.36†

10.37*

10.38†

10.39

10.40

10.41††

10.42*

10.43*

10.44*

10.45††

14.1

21.1
23.1
24.1
31.1

31.2

32.1

32.2

101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE

Description

Terms of Agreement, effective as of December 22, 2011, by and among the Registrant, OvaMed
GmbH and Dr. Falk Pharma GmbH. (5)
Amendment No. 1 to Employment Agreement, effective as of December 19, 2011, by and between
the Registrant and Bobby W. Sandage, Jr., Ph.D. (5)
Side Agreement, effective as of November 15, 2011, by and between the University of Iowa
Research Foundation, OvaMed GmbH and the Registrant. (4)
Employment Agreement, made and entered into on February 21, 2012, by and between the
Registrant and Lucy Lu, M.D. (6)
Collaboration Agreement, dated as of March 20, 2012, between the Registrant, OvaMed GmbH
and Dr. Falk Pharma GmbH. (7)
Employment Agreement, made and entered into as of April 19, 2012, by and between the
Registrant and Karin Hehenberger, M.D. and Ph.D. (8)
Amendment No. 2 to License Agreement, effective as of May 16, 2012, by and between the
Registrant and UCL Business PLC. (9)
Loan and Security Agreement, dated as of August 28, 2012, by and between the Registrant and
Hercules Technology Growth Capital, Inc. (10)
At Market Issuance Sales Agreement, dated as of October 5, 2012, by and between the Registrant
and MLV & Co. LLC. (11)
Second Amendment and Agreement, dated as of December 21, 2012, by and between the
Registrant and Ovamed GmbH.
Separation and Release Agreement and Consulting Agreement, dated as of December 28, 2012, by
and between the Registrant and Glenn L. Cooper, M.D.
Second Amendment to Employment Agreement, dated as of December 28, 2012, by and between
the Registrant and Bobby W. Sandage, Jr.
Employment Agreement, dated as of January 7, 2013 and effective as of December 28, 2012, by
and between the Registrant and Harlan F. Weisman, M.D.
Commercial Lease Agreement effective March 1, 2013, by and between the Registrant and TSO
Laboratories, Inc., as assigned to the Registrant on December 21, 2012.
Code of Ethics of Coronado Biosciences, Inc. applicable to Directors, Officers and Employees.
(12)
Subsidiaries of the Registrant. (1)
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
Power of Attorney (included on the signature page of this Form 10-K).
Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of Sarbanes-Oxley act of 2002.
XBRL Instance Document. (13)
XBRL Taxonomy Extension Schema Document. (13)
XBRL Taxonomy Extension Calculation Linkbase Document. (13)
XBRL Taxonomy Extension Definition Linkbase Document. (13)
XBRL Taxonomy Extension Label Linkbase Document. (13)
XBRL Taxonomy Extension Presentation Linkbase Document. (13)

Confidential treatment has been granted with respect to portions of this exhibit.

†
†† Confidential treatment has been requested with respect to portions of this exhibit.
*
(1) Filed as an exhibit with the same number to the Registrant’s Registration Statement on Form 10-12G

Indicates management contract or compensatory plan.

(File No. 000-54463) initially filed on July 15, 2011.

(2) Filed as exhibit 4.10 to the Registrant’s Current Report on Form 8-K filed on August 29, 2012.
(3) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on

September 26, 2011.

(4) Filed as an exhibit with the same number to the Registrant’s Amendment No. 1 to Registration Statement on

Form S-1 (File No. 333-177041) filed on October 7, 2011.

(5) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on

December 22, 2011.

(6) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on

February 23, 2012.

(7) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on March 23,

2012.

(8) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on April 25,

2012.

(9) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on May 25,

2012

(10) Filed as an exhibit with the same number to the Registrant’s Current Report on Form 8-K filed on

August 29, 2012.

(11) Filed as exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on October 5, 2012.
(12) Filed as an exhibit with the same number to the Registrant’s Registration Statement on Form S-1 (File No.

333-177041) filed on September 28, 2011.

(13) Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual

Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934 or otherwise subject to liability of that Section, and shall not be part of any registration statement or
other document filed under the Securities Act of the Exchange Act, except as shall be expressly set forth by
specific reference in such filing.

Coronado Biosciences, Inc. and Subsidiary
(a development stage enterprise)

CONSOLIDATED FINANCIAL STATEMENTS
Index to Financial Statements

TABLE OF CONTENTS

Consolidated Financial Statements
F-2
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-5
. . . . . . . .
Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9 – F-36

Page(s)

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Coronado Biosciences, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of
operations, of changes in convertible preferred stock and stockholders’ equity (deficit) and of cash flows present
fairly, in all material respects, the financial position of Coronado Biosciences, Inc. and its subsidiary (a
development stage enterprise) at December 31, 2012 and 2011, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2012, and, cumulatively, for the period from
June 28, 2006 (date of inception) to December 31, 2012 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2012, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in Management’s Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the
Company’s internal control over financial reporting based on our audits (which was an integrated audit in 2012).
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the financial statements included
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s 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 the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely 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 of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
March 18, 2013

F-2

CORONADO BIOSCIENCES, INC. AND SUBSIDIARY
(A development stage enterprise)
Consolidated Balance Sheets
($ in thousands except for share amounts)

December 31,
2012

December 31,
2011

ASSETS
Current Assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 40,199
393

$ 23,160
215

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property & equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,592
51
349

23,375
—
—

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 40,992

$ 23,375

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payable—related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PCP notes payable—related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and Contingencies (Note 6)
Stockholders’ Equity:
Convertible Preferred stock, $.001 par value, 584,390 and 587,376 Series C shares
authorized, 0 shares issued and outstanding as of December 31, 2012 and 2011,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Common stock, $.001 par value, 50,000,000 shares authorized, 24,400,754 and
18,604,245 shares issued and outstanding as of December 31, 2012 and 2011,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deficit accumulated during development stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,029
—
119
2,185
1,799

5,132
—
12,386
1,441

18,959

575
19
—
2,899
—

3,493
750
—
—

4,243

—

24
106,193
(84,184)

19
75,687
(56,574)

19,132

Total Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,033

Total Liabilities and Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 40,992

$ 23,375

The accompanying notes are an integral part of these consolidated financial statements.

F-3

CORONADO BIOSCIENCES, INC. AND SUBSIDIARY
(A development stage enterprise)
Consolidated Statements of Operations
($ in thousands except for share and per share amounts)

Operating expenses:

Research and development
. . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .
In-process research and development

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrant expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock dividend to Series A Convertible

For the year ended December 31,

Period from
June 28, 2006
(Date of
Inception) to
December 31,

2012

2011

2010

2012

17,468
8,665
1,043

(27,176)
236
(670)
—
—

(27,610)

8,583
5,755
20,706

(35,044)
165
(74)
—
(1,407)

(36,360)

8,341
900
—

(9,241)
61
(1,535)
733
—

(9,982)

$ 42,009
16,279
21,749

(80,037)
480
(3,953)
733
(1,407)

(84,184)

Preferred stockholders . . . . . . . . . . . . . . . . . . . . . . . . .

—

(5,861)

—

(5,861)

Net loss attributed to Common stockholders . . . . . . . . . .

Basic and diluted net loss per common share . . . . . . . . .

Weighted average common shares outstanding—basic

(27,610) $ (42,221) $

(9,982)

$(90,045)

(1.27) $

(5.51) $

(2.24)

and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,654,984

7,662,984

4,453,786

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CORONADO BIOSCIENCES, INC. AND SUBSIDIARY
(A development stage enterprise)
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Period from June 28, 2006 (date of inception) through December 31, 2012
($ in thousands except for share amounts)

Balances at June 28, 2006 (Date of Inception) . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— $ —
—
—

— $—
—
—

$ —
—

Preferred Stock

Common stock

Shares Amount

Additional
paid-in
capital

Balances at December 31, 2006 . . . . . . . . . . . . . . . . . . . .
Issuance of Common stock to founders . . . . . . . . . . . . . .
Issuance of restricted Common stock to

non-employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of restricted Common stock to employees . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2007 . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . .
Contribution of services by stockholder . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2008 . . . . . . . . . . . . . . . . . . . .
Issuance of Common stock to non-employees for

services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . .
Contribution of services by stockholder . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances at December 31, 2009 . . . . . . . . . . . . . . . . . . . .
Issuance of Convertible Preferred Stock Series A for

—
—

—
—
—
—

—

—
—
—
—

—

—
—
— 2,125,096

—

— 2,180,000
— 457,170
—
—
—
—

— 4,762,266
—
—
—
—
—
—

— 4,762,266

—
—

—
—
—

2
1

—
—
—
—

5,000 —
—
—
—

—
—
—

— 4,767,266

cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,584,166

21,681

Issuance of Convertible Preferred Stock Series A upon

conversion of debt and accrued interest . . . . . . . . . . . . 1,773,719

10,508

Costs related to issuance of Convertible Preferred Stock
Series A, including Common stock warrants . . . . . . . .
Reclassification of fair value of warrant liability . . . . . . .
Change in fair value of embedded conversion feature

related to convertible debt

. . . . . . . . . . . . . . . . . . . . . .

Issuance of Common stock to non-employees for

services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issuance of Common stock warrants to non-employees

for services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . .
Contribution of services by stockholder . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— (2,912)
—

—

—
—
—
—

—

—
—
—
—

—

—
—

—

—
—

—

23,836 —

—
—
—
—

(Deficit)
accumulated
during
development
stage

Total
stockholders’
Equity

$ —

(123)

(123)
—

—
—
—
(2,644)

(2,767)
—
—
(3,799)

(6,566)

—
—
—
(3,666)

(123)

(123)
2

2
1
13
(2,644)

(2,749)
25
20
(3,799)

(6,503)

—

39
40
(3,666)

(10,232)

(10,090)

—

—
—

—

621
234

831

—
—

—
—
13
—

13
25
20
—

—
39
40
—

137

—

621
234

831

38
2,329
40
—

—
—
—
(9,982)

38
2,329
40
(9,982)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Preferred Stock

Common stock

Amount

Additional
paid-in
capital

(Deficit)
accumulated
during
development
stage

Total
stockholders’
Equity

Balances at December 31, 2010 . . . . . . . . . . . . . . . . . . 4,357,885
Issuance of Convertible Preferred Stock Series B for

29,277

4,791,102

4,312

(20,214)

(15,897)

purchase of Asphelia assets . . . . . . . . . . . . . . . . . . . 2,525,677

16,114

Issuance of Convertible Preferred Stock Series C for

cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,612,624

25,785

—

Costs related to issuance of Convertible Preferred

Stock Series C, including the fair value of Preferred
Stock Series C warrants . . . . . . . . . . . . . . . . . . . . . .

Issuance of Common stock for conversion of

—

(4,171)

—

Convertible Preferred Stock Series A . . . . . . . . . . . (4,357,885)

(29,277) 4,357,885

Issuance of Common stock for conversion of

Convertible Preferred Stock Series B . . . . . . . . . . . (2,525,677)

(16,114) 2,525,677

Issuance of Common stock for conversion of

Convertible Preferred Stock Series C . . . . . . . . . . . (4,612,624)

(21,614) 4,612,624

Issuance of Common stock dividend to Preferred

Stock Series A stockholders . . . . . . . . . . . . . . . . . .
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . .
Warrant liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . .
Contribution of services by stockholder . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—
—
—
—

— 2,178,917
138,040
—
—
—
—
—
—
—
—
—

2
1

—
—
—
—

—

29,273

16,111

21,609

(2)
192
2,693
1,469
30

—

—
—
—
—
—
(36,360)

—

29,277

16,113

21,614

—
193
2,693
1,469
30
(36,360)

Balances at December 31, 2011 . . . . . . . . . . . . . . . . . .

— $ — 18,604,245

$ 19

$ 75,687

$(56,574)

$ 19,132

Balances at December 31, 2011 . . . . . . . . . . . . . . . . . .
Issuance of Common stock for cash . . . . . . . . . . . . . .
Costs related to issuance of Common stock . . . . . . . .
Exercise of warrants . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of Common stock under ESPP . . . . . . . . . . .
Issuance of Common stock for At the Market

Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— $ — 18,604,245
— 5,750,000
—
—
—
—
—
—
—
—

—
21,504 —
21,644 —

$ 19
5

$ 75,687
28,745
(2,305)
—
87

$(56,574)

—
—
—
—

—
—

3,361 —
—
—

—
—

18
3,961
—

—
—
(27,610)

$ 19,132
28,750
(2,305)
—
87

18
3,961
(27,610)

Balances at December 31, 2012 . . . . . . . . . . . . . . . . . .

— $ — 24,400,754

$ 24

$106,193

$(84,184)

$ 22,033

The accompanying notes are an integral part of these consolidated financial statements.

F-6

CORONADO BIOSCIENCES, INC. AND SUBSIDIARY
(A development stage enterprise)
Consolidated Statements of Cash Flows
($ in thousands)

Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(27,610) $(36,360) $ (9,982)
Adjustments to reconcile net loss to net cash used in operating activities:

For the Year Ended
December 31,

2012

2011

2010

Period from
June 28, 2006
(Date of
Inception) to
December 31,
2012

$(84,184)

Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired in-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash interest expense—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contribution of services by stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of Common stock to non-employee for services . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of common stock warrant liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of embedded conversion feature . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of preferred stock warrant liability . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:

3,638
1,043
130
—
—
—
—
—
—

1,469
20,706
—
—
30
—
—
—
1,407
22

2,329
—
393
34
40
121
234
831
—

Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payable—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(238)
(19)
119
(260)

(160)
19
—
1,915

(51)
(38)
—
407

7,512
21,749
1,898
286
130
121
234
831
1,407
44

(453)
—
119
3,214

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(23,194)

(10,952)

(5,677)

(47,092)

Cash flows from investing activities:

Purchase of office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposit for leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of in-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(54)
(225)
—

—
—
(3,843)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(279)

(3,843)

(13)
—
—

(13)

Cash flows from financing activities:

Proceeds from PCP notes payable—related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of PCP notes payable—related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of PCP notes payable—Asphelia asset purchase . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from notes payable—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of Series A Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . .
Payment of costs related to the issuance of Series C Convertible Preferred Stock . . . . . . .
Proceeds from issuance of Convertible Preferred Stock Series C . . . . . . . . . . . . . . . . . . . .
Payment of costs related to the issuance of Convertible Preferred Stock Series C . . . . . . .
Proceeds from borrowings under line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Senior Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of notes payable—related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of costs related to the issuance of Common stock . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of Hercules Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issue costs associated with Hercules Note . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
(750)
—
—
—

—
—
—
—
—
28,855
(2,305)
15,000
(288)

—
—
—
(570)
—
—
302
—
— 21,681
— (2,291)

25,784
(2,884)
—
—
—
—
—
193
—
—
—

—
—
—
(80)
—
—
—
—
—
—
—

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,512

23,093

19,042

Increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents—beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,039
23,160

8,298
14,862

13,352
1,510

(95)
(225)
(3,843)

(4,163)

570
(570)
(750)
2,221
21,681
(2,291)
25,784
(2,884)
80
(80)
7,570
(737)
(600)
29,053
(2,305)
15,000
(288)

91,454

40,199
—

Cash and cash equivalents—end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,199 $ 23,160 $14,862

$ 40,199

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Coronado Biosciences, Inc. and Subsidiary
(A development stage enterprise)
Consolidated Statements of Cash Flows
($ in thousands)

For the Year Ended
December 31,

2012

2011

2010

Period from
June 28, 2006
(Date of
Inception) to
December 31,
2012

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $421 $

Supplemental disclosure of cash flow information:
Cash paid for interest
Supplemental disclosure of non-cash financing and investing activities:
Issuance of Convertible Preferred Stock Series B for purchase of assets . . . . . . . . . . . . . . . . . . . . . . . $— $16,114 $ —
750 $ —
Assumption of PCP Note related to Asphelia Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $
Issuance of Convertible Preferred Stock Series C warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $ 1,286 $ —
Issuance of Common stock warrants related to the Convertible Preferred Stock Series A financing . . $— $ — $ 621
Conversion of Senior Convertible Notes into Convertible Preferred Stock Series A . . . . . . . . . . . . . . $— $ — $8,601
Conversion of notes payable—related parties into Convertible Preferred Stock Series A . . . . . . . . . . $— $ — $1,907
Issuance of Common stock for Convertible Preferred Stock Series A, B and C . . . . . . . . . . . . . . . . . . $— $67,004 $ —
Issuance of Warrant related to Hercules Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $323 $ — $ —

53 $

562

$16,114
750
$
$ 1,286
$
621
$ 8,601
$ 1,907
$67,004
323
$

The accompanying notes are an integral part of these consolidated financial statements.

F-8

Coronado Biosciences, Inc. and Subsidiary

(A development stage enterprise)
Notes to the Consolidated Financial Statements

1. Organization and Description of Business

Coronado Biosciences, Inc. (the “Company”), incorporated in Delaware on June 28, 2006 (date of
inception), is a biopharmaceutical company focused on the development of novel immunotherapy biologic
agents for the treatment of autoimmune diseases and cancer.

Development-Stage Risks and Liquidity

The Company is a development-stage enterprise. Activities to date include development of key compounds,
establishing pre-commercial relationships, hiring qualified personnel and raising capital to fund operations.
The Company continues to report as a development stage enterprise since planned principal operations have
not yet commenced. Since inception, no revenue has been recognized.

The Company has incurred losses and experienced negative operating cash flows since inception and has an
accumulated deficit of $84.2 million as of December 31, 2012. The Company anticipates incurring
additional losses until such time, if ever, that it can generate significant sales from its product candidates. To
date, the Company’s operations have been funded primarily by issuing equity and debt securities. During
2010, the Company issued 4,357,885 shares of Series A Convertible Preferred Stock (“Series A Shares”)
resulting in net proceeds to the Company of $19.4 million (see Note 11). All existing debt securities were
either repaid or converted into Series A Shares as of December 31, 2010. During 2011, the Company
completed an offering of 4,612,624 shares of Series C Convertible Preferred Stock (“Series C Shares”)
resulting in net proceeds to the Company of approximately $22.9 million (see Note 11). On November 15,
2011, the Company’s Resale Registration Statement on Form S-1 was declared effective resulting in the
conversion of 4,357,885 Series A Shares, 2,525,677 shares of Series B Convertible Preferred Stock (“Series
B Shares”) and 4,612,624 Series C Shares to Common stock. In June 2012, the Company completed a
public offering of 5,750,000 shares of Common stock resulting in net proceeds of $26.4 million (see Note
12) and in August 2012, the Company received net proceeds of $14.7 million from a $15 million term loan
with Hercules Technology Growth Capital (see Note 10). In October 2012, the Company entered into an At
Market Issuance Sales Agreement (the “ATM”) with MLV & Co. LLC (“MLV”) pursuant to which the
Company may issue and sell shares of Common stock having an aggregate offering price of up to $30.0
million. In 2012, the Company issued 3,361 shares of Common stock resulting in net proceeds of $19,000.
From January 1, 2013 through March 8, 2013, we issued 1,426,250 shares of common stock pursuant to the
Sales Agreement and received net proceeds of $10.5 million.

The Company expects to incur substantial expenditures in the foreseeable future for the research,
development and potential commercialization of its product candidates. Management believes that cash and
cash equivalents on hand, including cash raised from the public offering in June 2012 (see Note 11) and the
term loan with Hercules Technology Growth Capital Inc. (“Hercules”) (see Note 10) and the ATM through
March 2013 (see Note 17) are sufficient to sustain operations through the first quarter of 2014 based on its
existing business plan and given the ability to control the timing of significant expense commitments. The
Company will require additional financing to fund operations beyond the first quarter of 2014 and will
require additional financing to develop and obtain regulatory approvals for its product candidates, fund
operating losses, and, if deemed appropriate, establish manufacturing, sales and marketing capabilities. The
Company will seek funds through public or private equity or debt financings, collaborative or other
arrangements with corporate sources, or through other sources of financing. Adequate additional funding
may not be available to the Company on acceptable terms or at all. The Company’s failure to raise capital as
and when needed would have a negative impact on its financial condition and its ability to pursue its

F-9

business strategies. If adequate funds are not available to the Company, the Company will be required to
delay, reduce or eliminate research and development programs, and pursue merger or acquisition strategies.

Operations of the Company are subject to other certain risks and uncertainties, including, but not limited to,
uncertainty of product candidate development; technological uncertainty; dependence on collaborative
partners; uncertainty regarding patents and proprietary rights; regulatory approvals and other comprehensive
government regulations; having no commercial manufacturing, marketing or sales capability or experience;
and dependence on key personnel. Any significant delays in the development or marketing of products
could have a material adverse effect on the Company’s business and financial results.

The Company sources certain critical components from single source suppliers. If the Company is required
to purchase these components from an alternative source, it could adversely affect development of the
Company’s product candidates.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated
financial statements include the accounts of the Company and its 100% owned subsidiary, Innmune
Limited. All intercompany balances and transactions have been eliminated.

Use of Estimates

The Company’s consolidated financial statements include certain amounts that are based on management’s
best estimates and judgments. The Company’s significant estimates include, but are not limited to, useful
lives assigned to long-lived assets, the valuation of its common stock (“Common stock”) and Common
stock and Preferred stock warrants, stock options, accrued expenses, provisions for income taxes and
contingencies. Due to the uncertainty inherent in such estimates, actual results may differ from our
estimates.

Segment Reporting

The Company operates as one segment, in which management uses one measure of profitability, and all of
the Company’s assets are located in the United States of America. The Company is managed and operated
as one business. The Company does not operate separate lines of business or separate business entities with
respect to any of its product candidates. Accordingly, the Company does not have separately reportable
segments.

Concentration of Risk

The Company is currently completely dependent on third party manufacturers for product supply. In
particular, the Company currently relies exclusively on Ovamed GmbH (“Ovamed”) to supply it with its
requirements of Trichuris suis ova (“TSO”). Ovamed is the sole supplier of this product, which it is
currently producing at only one facility in Germany, where it is also producing product for third parties,
including Dr. Falk Pharma GmbH (“Falk”). Ovamed also relies on certain other suppliers for materials and
services. Similarly, the Company currently relies on BioReliance Corporation, Progenitor Cell Therapy LLC
and other third parties for its CNDO–109 product requirements. The Company’s clinical development
programs would be adversely affected by a significant interruption in obtaining clinical trial supplies.

F-10

Cash and Cash Equivalents and Concentration of Credit Risk

Cash and cash equivalents consist of cash. The Company currently maintains all cash in one institution in
the United States. Balances at this institution may exceed Federal Deposit Insurance Corporation insured
limits.

Property and Equipment

Office equipment is recorded at cost and depreciated using the straight-line method over their estimated
useful life of each asset. Leasehold improvements are amortized over the shorter of their estimated useful
lives or the term of the respective leases.

Deferred Financing Costs

Financing costs incurred in connection with the Hercules Technology Growth Capital, Inc. (“Hercules”)
note payable were deferred and are being amortized over the appropriate expected life based on the term of
the note using the effective interest rate method. As of December 31, 2012 the Company recorded deferred
financing costs of $63,000 in other assets in the accompanying balance sheet.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property and equipment, for impairment whenever
events or changes in business circumstances indicate that the carrying amount of the assets may not be fully
recoverable. Factors that the Company considers in deciding when to perform an impairment review include
significant underperformance of the business in relation to expectations, significant negative industry or
economic trends, and significant changes or planned changes in the use of the assets. If an impairment
review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of
undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to
its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows
expected to result from the use of an asset are less than its carrying amount. The impairment loss would be
based on the excess of the carrying value of the impaired asset over its fair value, determined based on
discounted cash flows. To date, the Company has not recorded any impairment losses on long-lived assets.

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that
will be used in future research and development activities are expensed when the activity has been
performed or when the goods have been received rather than when the payment is made. Upfront and
milestone payments due to third parties that perform research and development services on the Company’s
behalf will be expensed as services are rendered or when the milestone is achieved. Costs incurred in
obtaining technology licenses are charged to research and development expense if the technology licensed
has not reached technological feasibility and has no alternative future use.

Research and development costs primarily consist of personnel related expenses, including salaries,
benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for
license and milestone costs related to in-licensed products and technology, payments made to third party
contract research organizations for preclinical and clinical studies, investigative sites for clinical trials,
consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory
filings and patents, laboratory costs and other supplies.

Government Grant

The Company received a grant under the Therapeutic Discovery Project in 2010 for a total of $733,000. The
Company accounted for this government grant as other income in the consolidated statement of operations.

F-11

Contingencies

The Company records accruals for contingencies and legal proceedings expected to be incurred in
connection with a loss contingency when it is probable that a liability has been incurred and the amount can
be reasonably estimated.

If a loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the
nature of the contingent liability, together with an estimate of the range of possible loss if determinable and
material, would be disclosed.

Stock-Based Compensation

The Company expenses stock-based compensation to employees over the requisite service period based on
the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards
to non-employees, the Company remeasures the fair value of the non-employee awards at each reporting
period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of
these non-employee awards are recognized as compensation expense in the period of change.

The assumptions used in calculating the fair value of stock-based awards represent management’s best
estimates and involve inherent uncertainties and the application of management’s judgment.

Income Taxes

The Company records income taxes using the asset and liability method. Deferred income tax assets and
liabilities are recognized for the future tax effects attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their respective income tax bases, and
operating loss and tax credit carryforwards. The Company establishes a valuation allowance if it is more
likely than not that the deferred tax assets will not be recovered based on an evaluation of objective
verifiable evidence. For tax positions that are more likely than not of being sustained upon audit, the
Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. For
tax positions that are not more likely than not of being sustained upon audit, the Company does not
recognize any portion of the benefit.

Comprehensive Loss

The Company’s comprehensive loss is equal to its net loss for all periods presented.

Recently Issued Accounting Standards

In July 2012, the Financial Accounting Standards Board (FASB) issued ASU No. 2012-02, Intangibles –
Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02).
This newly issued accounting standard allows an entity the option to first assess qualitative factors to
determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangibles
other than goodwill. Under that option, an entity would no longer be required to calculate the fair value of
an indefinite-lived intangible asset unless the entity determines, based on that qualitative assessment, that it
is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying
amount. This ASU is effective for annual and interim indefinite-lived intangible asset impairment tests
performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. Adoption of this
standard did not have a material impact on the Company’s financial position or results of operations.

In December 2011, the FASB issued Accounting Standard Update No. 2011-11, Disclosures about
Offsetting Assets and Liabilities. The amendments in this update require an entity to disclose information
about offsetting and related arrangements to enable users of its financial statements to understand the effect

F-12

of those arrangements on its financial position. An entity is required to apply the amendments for annual
reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An
entity should provide the disclosures required by those amendments retrospectively for all comparative
periods presented. Although the Company is still evaluating the impact of this standard, the Company does
not expect this adoption to have a material impact on its financial position or results of operations.

3. Net Loss Per Common Share

The Company calculates loss per share using the two-class method, which is an earnings allocation formula
that determines earnings per share for Common stock and participating securities according to dividends
declared and non-forfeitable participation rights in undistributed earnings. Under this method, all earnings
(distributed and undistributed) are allocated to Common stock and participating securities based on their
respective rights to receive dividends. Holders of restricted Common stock were entitled to all cash
dividends, when and if declared, and such dividends are non-forfeitable. The participating securities do not
have a contractual obligation to share in any losses of the Company. As a result, net losses are not allocated
to the participating securities for any periods presented.

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the
weighted-average number of shares of Common stock outstanding during the period, without consideration
for Common stock equivalents. Diluted net loss per share is computed by dividing the net loss attributable to
common stockholders by the weighted-average number of Common stock and Common stock equivalents
outstanding for the period. For purposes of this calculation, Common stock equivalents are not included in
the calculation of diluted net loss per share.

A calculation of basic and diluted net loss per share follows:

($ in thousands except share and per share amounts)

2012

2011

2010

For the year ended December 31,

Historical net loss per share:
Numerator
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock dividend to Series A Preferred

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . .

(27,610)

$ (36,360)

(9,982)

—

(5,861)

—

Net loss attributed to Common stockholders . .

(27,610)

$ (42,221)

(9,982)

Denominator
Weighted-average common shares

outstanding—Denominator for basic and
diluted net loss per share . . . . . . . . . . . . . . . .

Basic and diluted net loss per share attributed

21,654,984

7,662,984

4,453,786

to common stockholders . . . . . . . . . . . . . . . .

(1.27)

(5.51)

(2.24)

The Company’s potential dilutive securities which include convertible preferred stock, unvested restricted
stock, stock options, and warrants have been excluded from the computation of diluted net loss per share as
the effect would be to reduce the net loss per share. Therefore, the weighted-average Common stock
outstanding used to calculate both basic and diluted net loss per share are the same.

F-13

The following shares of potentially dilutive securities have been excluded from the computations of diluted
weighted average shares outstanding as the effect of including such securities would be antidilutive:

For the year ended December 31,

2012

2011

2010

Series A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested restricted Common stock . . . . . . . . . . . .
Warrants to purchase Common stock . . . . . . . . . . .
Options to purchase Common stock . . . . . . . . . . . .

—
—
—
—
1,091,558
2,279,603

3,796,733
2,158,935
1,966,635
—

804,949
1,479,291

2,617,242
—
—
322,900
261,860
296,112

3,371,161

10,206,543

3,498,114

4. Property and Equipment

Property and equipment consisted of the following:

($ in thousands)
Computer equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture & fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total property and equipment

. . . . . . . . . . . . . . . . . . . . . . . . .

Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . .

Useful Life
(Years)

3
5
5

As of December 31,

2012

$10
38
6

(3)

2011

$ 41
—
—

(41)

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . .

$51

$—

Depreciation expense for the years ended December 31, 2012, 2011, and 2010 and the period from inception
to December 31, 2012 was $3,000, $22,000, $5,000 and $44,000, respectively, and was recorded in both
research and development expense and general and administrative expense in the consolidated statements of
operations.

5. Accrued Liabilities and other Long-Term Liabilities

Accrued expenses and other long-term liabilities consisted of the following:

($ in thousands)
Accrued expenses:
Salaries, bonuses and related benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance (see Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued milestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of December 31,

2012

2011

$1,064
354
320
403
—
44

$ 493
—
215
653
1,500
38

Total accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,185

$2,899

Other long-term liabilities:
Hercules Note end of term charge (Note 10)
Ovamed manufacturing rights (Note 14)

. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .

398
1,043

—
—

Total other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,441

$ —

F-14

6. Commitments and Contingencies

Operating Lease Obligations

Pursuant to the Second Amendment and Agreement, (“the Manufacturing Agreement”) (see Note 14), in
December 2012, the Company entered into an Assignment and Assumption of Lease (“Assignment”) with
TSO Laboratories, Inc., a wholly-owned subsidiary of Ovamed GmbH, (“Ovamed”), for approximately
8,700 square feet in Woburn, MA for the purpose of establishing a manufacturing facility. Total rent
expense for the five-year lease term will approximate $590,000 at an average annual rate of $118,000. Our
contractual leasehold improvement costs associated with this lease approximate $752,000. An initial deposit
of $225,000 for these costs was made in December 2012 and is included in other assets in the December 31,
2012 consolidated balance sheet. Minimum lease payments over the term of this lease are $98,000 in 2013,
$118,000 in 2014, $118,000 2015, $118,000 in 2016, $118,000 in 2017 and $20,000 in 2018, respectively

In July 2012, the Company entered into a five-year lease for approximately 3,200 square feet of office space
in Burlington, Massachusetts at an average annual rent of approximately $94,000. Total rent expense for the
term of this lease will approximate $470,000. The Company took occupancy of this space in October 2012.
Minimum lease payments over the term of this lease are $20,000 in 2012, $81,000 in 2013, $84,000 in 2014,
$90,000 in 2015 and $23,000 in 2016, respectively.

In July 2011, the Company entered into a twelve-month lease for office space under an operating lease
which expired on October 31, 2012. In October 2010, the Company entered into a three-month renewable
agreement for office facilities under an operating lease. This operating lease terminated in September 2012.

The Company recognizes rent expense on a straight-line basis over the non-cancellable lease term. Rent
expense for the years ended December 31, 2012, 2011 and 2010 and the period from inception to
December 31, 2012 was $93,000, $165,000, $97,000, and $357,000, respectively.

Indemnification

In accordance with its Certificate of Incorporation, bylaws and indemnification agreements, the Company
has indemnification obligations to its officers and directors for certain events or occurrences, subject to
certain limits, while they are serving at the Company’s request in such capacity. There have been no claims
to date, and the Company has director and officer insurance to address such claims. Pursuant to agreements
with clinical trial sites, the Company provides indemnification to such sites in certain conditions.

Legal Proceedings

In the ordinary course of business, the Company and its subsidiary may be subject to both insured and
uninsured litigation. Suits and claims may be brought against the Company by customers, suppliers, partners
and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s
product candidates and property damage) alleging deficiencies in performance, breach of contract, etc., and
seeking resulting alleged damages. No claims have been brought against the Company and its subsidiary.

7. Employee Benefit Plans

On January 1, 2008, the Company adopted a defined contribution 401(k) plan which allows employees to
contribute up to a percentage of their compensation, subject to IRS limitations and provides for a
discretionary Company match up to a maximum of 4% of employee compensation. For the years ended
December 31, 2012 and 2011, the Company paid a matching contribution of $85,000 and $77,000,
respectively. No match was paid in prior years.

F-15

8. Fair Value Measurement

The Company follows accounting guidance on fair value measurements for financial assets and liabilities
measured on a recurring basis. Under the accounting guidance, fair value is defined as an exit price,
representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a market-based measurement that should be
determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance requires fair value measurements be classified and disclosed in one of the
following three categories:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or
indirectly observable in the marketplace.

Level 3: Unobservable inputs which are supported by little or no market activity and that are financial
instruments whose values are determined using pricing models, discounted cash flow methodologies, or
similar techniques, as well as instruments for which the determination of fair value requires significant
judgment or estimation.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are
classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The Company’s assessment of the significance of a particular input to the fair value measurement in its
entirety requires management to make judgments and consider factors specific to the asset or liability.

Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are
recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash
and cash equivalents, accounts payable, accrued expenses and other current liabilities. The carrying value of
the accrued Ovamed Manufacturing rights license included in long-term liabilities has been recorded at its
net present value, which approximates its fair value.

The estimated fair value of the Hercules note payable at December 31, 2012, computed using the effective
interest rate method, is $14.8 million. The effective interest rate considers the fair value of the warrant
issued in connection with the loan, loan issuance costs and the deferred charge. The fair value measurement
utilizes inputs that are categorized as Level 3.

9. Related Party Transactions

Placement Agent

Paramount BioCapital, Inc. (“PBC”), an affiliate of the Principal Stockholder/Director of the Company,
acted as placement agent for the private placement of the Company’s Senior Convertible Notes, PCP Notes,
and Series A Shares (see Note 10). For the services rendered, PBC received cash payments for commissions
and reimbursement of expenses as well as warrants to purchase common stock (see Notes 10 and 12).

Other Related Parties

The Principal Stockholder/Director, individually and through certain trusts owned in excess of 10% of the
Company’s issued and outstanding common stock as of December 31, 2012. In addition, certain trusts
established for the benefit of family members of the Principal Stockholder/Director beneficially owned an
aggregate of approximately 6.0% of the Company’s outstanding capital stock as of December 31, 2012.

F-16

National Securities Corporation, placement agent for our Series C Share financing (see Note 11), is a related
party to the Principal Stockholder/Director. National Securities Corporation, or National, acted as an
underwriter of our June 2012 public offering of common stock. National received related commissions of
$187,000 in connection with the offering.

10. Debt

Hercules Debt Agreement

In August 2012, the Company entered into a Loan and Security (the “Loan Agreement”) with Hercules
Technology Growth Capital, Inc. (“Hercules”) pursuant to which the Company issued a $15 million note and
received net proceeds of $14.7 million. The loan bears interest at a rate per annum equal to the greater of
(i) 9.25% or (ii) 9.25% plus the sum of the prevailing prime rate minus 3.25%. The loan matures on March 1,
2016. The loan requires interest-only payments for the initial 12 months and thereafter requires repayment of
the principal balance with interest in 30 monthly installments. The Company may extend the interest-only
period for an additional six months, contingent upon the Company’s achievement of certain clinical
development milestones. In connection with the Loan Agreement, the Company granted first priority liens and
the loan is collateralized by substantially all of the Company’s assets (exclusive of intellectual property). The
Loan Agreement also contains representations and warranties by the Company and Hercules and
indemnification provisions in favor of Hercules and customary covenants (including limitations on other
indebtedness, liens, acquisitions, investments and dividends, but no financial covenants), and events of default
(including payment defaults, breaches of covenants following any applicable cure period, a material
impairment in the perfection or priority of Hercules’ security interest or in the collateral, and events relating to
bankruptcy or insolvency). Pursuant to the Loan Agreement, Hercules has the right to participate, in an amount
of up to $2,000,000, in subsequent private placements of our equity securities at the same terms and
conditions, including price, as purchases by other investors. In connection with the Loan Agreement, the
Company issued to Hercules a fully-vested, seven-year warrant (the “Warrant”) to purchase 73,009 shares of
our common stock at an exercise price of $5.65 per share and granted to Hercules certain “piggyback”
registration rights with respect to the shares of common stock underlying the Warrant.

The fair value of the warrant was calculated using the Black-Scholes option-pricing model with the
following assumptions: volatility of 87.2%, an expected term equal to the contractual seven-year life of the
Warrant, a risk-free interest rate of 1.1% and no dividend yield. The Company recorded the fair value of the
Warrant of approximately $323,000 as equity and as a discount to the carrying value of the loan. Also, upon
full repayment or maturity of the loan, Hercules is due a payment of 2.65% of the loan, or $398,000, which
is recorded as a discount to the loan and as a long-term liability. Additionally, the Company incurred fees
related to the loan agreement and reimbursed Hercules for costs incurred by them related to the loan
aggregating $218,000 and which is reflected as a discount to the carrying value of the loan. The Company
will amortize these loan discounts totaling $939,000 to interest expense over the term of the loan using the
effective interest rate method, which approximates 12.3%. For the year ended December 31, 2012, interest
expense related to the Hercules loan was $609,000, including $123,000 related to accretion of the debt
discount. At December 31, 2012, the current portion of the Hercules Note of $1,799,000 and noncurrent
portion of $12,386,000 net of the debt discount of $815,000 was recorded on the Consolidated Balance
Sheet. Principal payments for the note are $1,800,000 in 2013, $5,750,000 in 2014, $6,300,000 in 2015 and
$1,140,000 in 2016, respectively.

Related Party Notes

The Company issued a series of 8% promissory notes to related parties for expenses paid on behalf of the
Company as well as advances made directly to the Company (collectively, the “Related Party Notes”). On
June 28, 2006, the Company issued a four-year promissory note payable to PBS (the “PBS Note”). PBS is a
related party given common ownership by the Company’s Principal Stockholder/Director. On July 30, 2007
and January 17, 2008, the Company issued three-year promissory notes which were payable to trusts
established for the benefit of the family of the sole member of PBS and the Principal Stockholder/Director.

F-17

The Related Party Notes mature and were payable on or upon the occurrence of certain events defined in the
agreement on September 4, 2008, the Company amended the Related Party Notes to provide that all unpaid
principal and accrued interest shall be automatically converted into the Company’s common stock upon the
initial closing of a private placement of the Company’s common stock at a conversion price equal to 100%
of the lowest price paid by investors of the offering. On July 7, 2009, the Company amended the Related
Party Notes to change the maturity date to February 20, 2010 and to provide that all unpaid principal and
accrued interest shall be automatically converted upon the occurrence of certain events including a qualified
financing, a reverse merger or a sale of the Company, as defined.

On February 5, 2010, the Company amended the Related Party Notes to extend the maturity date to
September 30, 2010 and these amendments were accounted for as a modification and the change in the fair
value of the conversion feature, in the amount of $0.1 million, was recorded as a debt discount. The debt
discount was amortized to interest expense in the consolidated statement of operations over the remaining
term of the Related Party Notes.

In 2010, the Company completed a qualified financing defined as an equity financing or series of related
financings greater than $10 million at a conversion price equal to 75% of the lowest price per unit paid for
such securities in cash by investors. This qualified equity financing resulted in the Related Party Notes,
principal and accrued interest totaling $1.6 million to automatically convert into 273,046 shares of Series A
Shares at a per share price of $5.87. In addition, under the PBS Note, all principal borrowed and interest
accrued subsequent to January 20, 2010 totaling $0.3 million was converted into 36,194 Series A Shares at a
per share price of $8.39.

PCP Promissory Notes (the “PCP Notes”)

In 2009, the Company issued 10% promissory notes to Paramount Capital Partners (“PCP”) for aggregate
gross proceeds of $570,000. PCP is a related party due to common ownership by the Principal Stockholder/
Director. All unpaid principal and accrued interest outstanding under the PCP Notes were payable on
December 31, 2013 or earlier in the event of certain conditions. The outstanding principal and accrued
interest totaling $0.6 million was repaid in cash in 2010.

In conjunction with entering into the PCP Notes, the Company issued warrants to purchase 27,175 shares of
common stock (see Note 12). These warrants were increased to 40,787 shares pursuant to an anti-dilution
provision. A portion of the proceeds was allocated to the fair value of the warrants and recorded as a debt
discount and was amortized to interest expense in the consolidated statement of operations over the term of
the PCP Notes. PBC received cash commissions equal to 2% of the gross proceeds of the PCP Notes and
expense reimbursements as compensation for its services as the placement agent. These costs were
capitalized as deferred financing fees and are amortized to interest expense in the consolidated statement of
operations over the term of the PCP Notes.

On January 7, 2011, as part of the Asphelia Asset Purchase (see Note 14), the Company assumed a $750,000
10% promissory note issued to PCP by Asphelia. All unpaid principal and accrued interest outstanding
under this note was payable on the earlier of (i) December 31, 2013, or (ii) the consummation certain
corporate transactions. The PCP Note was classified as a long-term liability at December 31, 2011 and was
paid in full in 2012.

Senior Convertible Notes

In 2008, the Company issued 8% convertible promissory notes for cash proceeds of $4.1 million (the “2008
Senior Convertible Notes”) that were secured by a first priority security interest in all of the Company’s
assets. The 2008 Senior Convertible Notes were due on February 20, 2009. The 2008 Senior Convertible
Notes included an option to extend maturity for one year until February 20, 2010 during which time the
interest rate would increase to 10%. In February 2009, the Company exercised its option to extend the term

F-18

of the 2008 Senior Convertible Notes. As a result of the term extension and increased interest rate provision
related to the 2008 Senior Convertible Notes, the Company recorded interest expense using the effective
interest method based on the estimated life of two years.

In 2009 the Company issued 8% convertible promissory notes for cash proceeds of $3.5 million (the “2009
Senior Convertible Notes”) that were secured by a first priority security interest in all of the Company’s
assets. The 2009 Senior Convertible Notes were due on February 20, 2010.

The 2008 Senior Convertible Notes and the 2009 Senior Convertible Notes (collectively, “Senior
Convertible Notes”) provided that all unpaid principal and accrued interest were convertible into the
Company’s equity securities upon the occurrence of certain events including a qualified financing, a reverse
merger or a sale, as defined.

In 2010, the Company amended the Senior Convertible Notes to extend the maturity date to September 30,
2010 and modify the conversion price factor for certain events. The amendment was accounted for as a
modification and the change in the fair value of the conversion feature, in the amount of $0.7 million, was
recorded as a debt discount. The debt discount was amortized to interest expense in the consolidated
statement of operations over the remaining term of the Senior Convertible Notes.

The Company also provided the Senior Convertible Noteholders a repayment premium of 42.9% of the
aggregate principal plus accrued interest in the event the Senior Convertible Notes did not automatically
convert prior to September 30, 2010. This premium was bifurcated from the debt and is reflected as a
separate liability. The initial fair value and subsequent changes in fair value were recognized as interest
expense in the consolidated statement of operations.

In 2010, the Company completed a qualifying financing and Senior Convertible Notes principal and accrued
interest totaling $8.6 million automatically converted into 1,464,479 Series A Shares with a per share price
of $5.87. In addition, the liability of $0.6 million related to the repayment premium was reflected as interest
expense upon the conversion of the Senior Convertible Notes to Series A Shares.

PBC was entitled to receive commissions equal to 7% of the gross proceeds of the Senior Convertible
Notes, expense reimbursements, and warrants to purchase common stock (as defined in Note 13) as
compensation for its services as the placement agent for the Senior Convertible Notes. These issuance costs
of $0.8 million were capitalized as deferred financing costs and were amortized to interest expense in the
consolidated statements of operations over the estimated life of the Senior Convertible Notes.

Interest expense for all debt is as follows:

For the Year Ended December 31,

($ in thousands)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$609
55
Interest expense—related parties . . . . . . . . . . . . . . . . .
Amortization of embedded conversion feature . . . . . . —
Change in fair value of common stock warrant

2012

liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Amortization of deferred financing fees . . . . . . . . . . .

2011

$—
74
—

—
—

2010

$ 237
76
831

234
157

Period from June 28,
2006 (Date of
Inception) to
December 31, 2012

$1,641
503
831

234
744

Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .

$670

$ 74

$1,535

$3,953

F-19

11. Equity

Convertible Preferred Stock

Series A Shares

The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue 15,000,000
shares of $0.001 par value Preferred Stock. As of December 31, 2012 and 2011, there were no Series A
Shares outstanding. See “Conversion of Series A, B and C Shares” below.

The terms, rights, preference and privileges of the Series A Shares were as follows:

Voting Rights

Holder of Series A Shares voted together with the common stock on all matters, on an as-converted to
common stock basis, and not as a separate class or series (except as otherwise may be required by applicable
law). There was no cumulative voting.

Liquidation

In the case of a liquidation event, including a sale, merger or winding up of the Company, the holders of
Series A Shares were entitled to receive $12.59 per share (representing 150% of the original issuance price),
out of the proceeds of such liquidation, in preference to the holders of common stock.

Conversion

Each share of Series A Shares could voluntarily convert into one share of common stock at the election of
the holder. Additionally, each Series A Share would automatically convert into one share of common stock
upon the earlier of the following:

(1) April 26, 2012, or

(2)

In the event the Company’s capital stock becomes publicly traded and reached certain price levels.

In May 2011, the conversion feature was amended such that the Series A Shares would automatically
convert to common stock on the effective date of a registration statement covering the resale of the
underlying common stock. This conversion occurred on November 15, 2011 upon the effectiveness of the
Company’s Form S-1.

Dividends

Dividends are payable when and if declared by the Board of Directors. There are no cumulative accruing
dividend rights.

The Series A Shares were to automatically convert into common stock on April 26, 2012 and the holders of
Series A Shares would have immediately prior to such automatic conversion received a special dividend per
share (the “Special Dividend”) payable in cash and/or shares of common stock, as determined at the election
of, and in the sole discretion of, the Company’s board of directors, and only to the extent that such Special
Dividend is legally payable by the Company. The value of any shares of common stock issued in payment
of the Special Dividend would be determined in the reasonable, good-faith discretion by the Company’s
board of directors at the time of payment.

The Special Dividend per share of Series A Shares could be paid in cash or in shares of common stock equal
to 50% of the offering price, or $4.20. (See Special Dividend Declaration below)

F-20

Fully Paid and Nonassessable

All of our outstanding Series A Shares were fully paid and nonassessable.

In addition, under the Company’s Certificate of Incorporation, the Board of Directors had the authority,
without further action by the stockholders, to issue up to an additional 5,000,000 shares of Preferred Stock
in one or more series, to establish from time to time the number of shares to be included in each such series,
to fix the rights, preferences and privileges of the shares of each unissued series and any qualifications,
limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but
not below the number of shares of such series then outstanding. The Company’s board of directors could
authorize the issuance of additional Preferred Stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of the common stock or Series A Shares.

Special Dividend Declaration

The Company’s Board of Directors declared a dividend for an aggregate of 2,178,917 shares of common
stock to the holders of Series A Shares in satisfaction of the Special Dividend that would have been due to
the Series A Shares on April 26, 2012. In connection with such issuance, the Company (i) eliminated the
provision for the Special Dividend due on April 26, 2012 and (ii) amended the event that triggered an
automatic conversion of Series A Shares into shares of common stock to be the effective date of a
registration statement covering the resale of the underlying common stock. The Special Dividend was
declared and paid in May 2011. The estimated fair value of the common stock was $5.9 million, or $2.69
per share.

Series B Shares

On January 7, 2011, the Company issued 2,525,677 Series B Shares related to the Asphelia Asset Purchase.
The terms, rights, preference and privileges of the Company’s Series B Shares were as follows:

Voting Rights

Holders of Series B Shares voted together with the common stock on all matters, on an as-converted to
common stock basis, and not as a separate class or series (except as otherwise may be required by applicable
law). There was no cumulative voting.

Liquidation

In the case of a liquidation event, including a sale, merger or winding up of the Company, the holders of
Series B Shares would be entitled to receive $8.39 per share (representing 150% of the original issuance
price), out of the proceeds of such liquidation, in preference to the holders of common stock.

Conversion

Each Series B Shares would be voluntarily convertible into one share of common stock at the election of the
holder. Additionally, each Series B Shares would automatically convert into one share of common stock
upon the effective date of a registration statement covering the resale of the underlying common stock. This
conversion occurred on November 15, 2011 upon the effectiveness of the Company’s Form S-1.

Dividends

Dividends are payable when and if declared by the Board of Directors. There are no cumulative accruing
dividend rights.

F-21

Fully Paid and Nonassessable

All of the Company’s outstanding Series B Shares were fully paid and nonassessable.

Series C Shares

On June 30, 2011, the Company completed an offering of 4,612,624 Series C Shares at $5.59 per share
resulting in net proceeds to the Company of approximately $22.9 million. The terms, rights, preference and
privileges of the Company’s Series C Shares were as follows:

Voting Rights

Holder of Series C Shares voted together with the common stock on all matters, on an as-converted to
common stock basis, and not as a separate class or series (except as otherwise may be required by applicable
law). There was no cumulative voting.

Liquidation

In the case of a liquidation event, including a sale, merger or winding up of the Company, the holders of
Series C Shares would be entitled to receive $8.39 per share (representing 150% of the original issuance
price), out of the proceeds of such liquidation, in preference to the holders of common stock.

Conversion

Each Series C Share would be voluntarily convertible into one share of common stock at the election of the
holder. Additionally, each Series C Share would automatically convert into one share of common stock
upon the effective date of a registration statement covering the resale of the underlying common stock. This
conversion occurred on November 15, 2011 upon the effectiveness of the Company’s Form S-1. At
December 31, 2012 and 2011, there were 584,390 and 587,376 Series C Shares authorized and reserved for
issuance of common stock, respectively, including 458,277 and 461,263 shares, respectively, upon exercise
of the warrants for Series C Shares originally issued to National Securities Corporation (“NSC”), which
Series C Shares will automatically convert to common stock immediately upon exercise of such warrants.

Dividends

Dividends are payable when and if declared by the Board of Directors. There are no cumulative accruing
dividend rights.

Fully Paid and Nonassessable

All of the Company’s outstanding Series C Shares are fully-paid and nonassessable.

Conversion of Series A, B and C Shares

On November 15, 2011, the Company’s Form S-1 was declared effective resulting in the conversion of
4,357,885 Series A Shares, 2,525,677 Series B Shares and 4,612,624 Series C Shares into 11,496,186 shares
of common stock. Accordingly, at December 31, 2012 and 2011, the Company had no outstanding Preferred
Stock.

Common Stock

The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue 50,000,000
shares of $0.001 par value common stock.

F-22

The terms, rights, preference and privileges of the Company’s common stock are as follows:

Voting Rights

Each holder of common stock is entitled to one vote for each share of common stock held on all matters
submitted to a vote of the stockholders, including the election of directors. The Company’s Certificate of
Incorporation and Bylaws do not provide for cumulative voting rights.

Dividends

Subject to preferences that may be applicable to any then outstanding Preferred Stock, the holders of the
Company’s outstanding shares of common stock are entitled to receive dividends, if any, as may be declared
from time to time by the Company’s board of directors out of legally available funds.

Liquidation

In the event of the Company’s liquidation, dissolution or winding up, holders of common stock will be
entitled to share ratably in the net assets legally available for distribution to stockholders after the payment
of all of the Company’s debts and other liabilities, subject to the satisfaction of any liquidation preference
granted to the holders of any outstanding shares of Preferred Stock.

Rights and Preference

Holders of the Company’s common stock have no preemptive, conversion or subscription rights, and there
are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and
privileges of the holders of Common stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of the Company’s Preferred Stock that are or may be issued.

Fully Paid and Nonassessable

All of the Company’s outstanding shares of common stock are fully paid and nonassessable.

On June 1, 2007, the Company issued the following shares of common stock:

•

2,125,096 shares of fully vested common stock to its founders at par value of $0.001.

457,170 shares of restricted common stock were granted to certain employees of the Company under the
Company’s 2007 Stock Incentive Plan, for payment of par value (see Note 13). The shares vest annually
in equal amounts over three years and the fair value of the awards was determined and fixed on the grant
date. Compensation expense is recorded on a straight-line basis over the vesting period.

2,180,000 shares of restricted common stock were issued to certain employees of PBS at par value of
$0.001 that vest annually in equal amounts over three years (see Note 13). PBS provided various
services to the Company. The fair value of the awards was determined on the grant date and the
unvested awards were remeasured each reporting period. Compensation expense is recorded on a
straight-line basis over the vesting period.

Compensation expense related to the restricted common stock for the years ended December 2010 and for
the period from inception to December 31, 2012 was $2.0 million and $2.1 million, respectively, and was
recorded as research and development expense in the consolidated statements of operations. All shares were
fully vested as of December 31, 2010.

In 2009, the Company issued 5,000 shares of fully vested common stock for compensation of past services
performed by a non-employee. The fair value of the shares, which was not material, was recorded as
research and development expense in the consolidated statements of operations on the grant date.

F-23

In 2010, the Company issued 23,836 shares of fully vested common stock for compensation of past services
performed by a non-employee. The fair value of the shares of $82,000 on the grant date was recorded as
research and development expense in the consolidated statements of operations on the grant date.

In 2011, pursuant to the exercise of options, the Company issued 138,080 shares of common stock with
proceeds of $193,000, which were recorded in additional paid in capital.

In May 2011, the Special Dividend was declared resulting in the issuance of 2,178,917 shares of common
stock.

In November 2011, upon the effectiveness of the Company’s Form S-1, an aggregate of 11,496,186 shares
of Preferred Stock converted into common stock (see Convertible Preferred Stock above).

In June 2012, the Company completed an underwritten public offering of 5,750,000 shares of our common
stock, including 750,000 shares subject to an over-allotment option exercised by the underwriters, at a price
of $5.00 per share for proceeds, net of underwriting commissions and other offering expenses, of
approximately $26.4 million.

On October 5, 2012 the Company entered into an At Market Issuance Sales Agreement (the “ATM”) with
MLV & Co. LLC (“MLV”) pursuant to which the Company may issue and sell shares of common stock
having an aggregate offering price of up to $30.0 million. In October 2012, the Company issued 3,361
shares of common stock resulting in net proceeds of $19,000.

12. Warrants to Purchase Common Stock

Debt Placement Agent Warrants

In connection with the issuance of the Senior Convertible Notes (see Note 10), the Company issued seven-
year warrants to purchase the Company’s common stock to PBC as partial consideration for its services as
the placement agent. The number of warrants and the exercise price were dependent upon i) the lowest price
paid in a qualified financing, ii) consideration received in a sale of the company, or iii) consideration
received in a reverse merger. If none of these events occurred before the second anniversary of the issuance
date, the Debt Placement Warrants would be exercisable for a number of shares of common stock equal to
10% of the principal amount of the Senior Convertible Notes divided by $1.00, at a per share exercise price
of $1.00.

In connection with the Series A Shares offering on April 26, 2010, a qualified financing, both the number of
warrants and the exercise price became known. The placement agent received warrants for shares of the
Company’s common stock equal to 10% of the principal amount of the Senior Convertible Notes divided by
the lowest price paid for securities in the Series A Shares offering, at an exercise price of 110% of the
lowest price paid for securities in a qualified financing. Pursuant to the Series A Shares offering, PBC was
issued warrants for an aggregate of 48,510 shares of common stock at an exercise price of $9.23 per share
with a fair value of $0.1 million related to the 2008 Senior Convertible Notes and warrants for an aggregate
of 41,716 shares of common stock at an exercise price of $9.23 per share with a fair value of $0.1 million
related to the 2009 Senior Convertible Notes. In April 2010, the total fair value $0.2 million of the warrants
was reclassified from a liability to additional paid-in capital.

PCP Warrants

In connection with the issuance of the PCP Notes in 2009 (see Note 10), the Company also issued to PCP
warrants to purchase shares of the Company’s common stock. The number of warrants and the exercise five-
year price were dependent upon i) the lowest price paid in a qualified financing or ii) consideration received
in a reverse merger. If none of these events occurred before the second anniversary of the issuance date, the
number of warrants would equal 40% of the principal amount of the PCP Notes divided by $1.00, at a per
share exercise price of $1.00.

F-24

The fair value of the warrants was measured on the date of issuance using a Black-Scholes option pricing
model and was not material to the consolidated financial statements.

In connection with the Series A Shares offering, a qualified financing, both the number of PCP warrants and
the exercise price became known. The placement agent received warrants for the number of shares of the
Company’s common stock equal to 40% of the principal amount of the PCP Notes divided by the lowest
price paid for securities in the Series A Shares offering, at an exercise price of 110% of the lowest price paid
for securities in the offering. The Company issued warrants to purchase an aggregate of 27,175 shares of
common stock at an exercise price of $9.23 per share for a fair value of $47,000 which was reclassified as
additional paid-in capital. In 2011, due to a lowest price paid provision, the original warrants converted to
warrants for 40,787 shares exercisable at $6.15.

Preferred Stock Placement Warrants

In connection with the issuance of the Company’s Series A Shares (see Note 11), the Company issued
seven-year warrants to purchase an aggregate of 258,421 shares of the Company’s common stock at an
exercise price of $8.39 per share to PBC as partial consideration for its services as the placement agent.

The fair value of the warrants was $0.6 million measured on the respective date of issuance and were
recorded as a reduction in the carrying value of the Preferred Stock and an increase to additional paid in
capital. The fair values were determined using an option pricing model assuming 92.0% — 94.4% volatility,
a 2.0% — 3.3% risk-free rate of interest, a term of seven years and an estimated fair value of the Company’s
common stock of $3.45 per share. The warrants were accounted for as stock issuance costs; and the fair
value was recorded as a reduction to the carrying amount of the Series A Shares (see Note 11) with a
corresponding increase to additional paid-in capital.

Non-Employee Warrants

On November 22, 2010, the Company issued five-year warrants to purchase 41,716 shares of the
Company’s common stock at an exercise price of $9.23 per share to a non-employee for consulting services.
The fair value of the warrants on the date of issuance was $38,000 and was determined using an option
pricing model assuming 93.7% volatility, a 1.4% risk-free rate of interest, a contractual life of five years and
an estimated fair value of the Company’s common stock of $1.96 per share. The fair value of the warrants
was recorded as research and development expense, with a corresponding increase to additional paid in
capital, in the consolidated statements of operations on the grant date as the warrant was fully vested and no
future service was required.

In February 2011, the Company issued fully-vested five-year warrants to purchase 50,000 shares of the
Company’s common stock at an exercise price of $1.37 per share to a non-employee for consulting services.
The initial fair value of the warrants was calculated using a Black-Scholes option-pricing model with the
following assumptions: five-year contractual term; 93.2% volatility; 0% dividend rate; and a risk-free rate of
2.65%. The fair value of the warrants was determined to be $69,000 and was recorded as additional paid-in
capital in the consolidated balance sheets and as a component of research and development expense in the
consolidated statements of operations.

In March 2011, the Company issued 10-year warrants to purchase 60,000 shares of the Company’s common
stock at an exercise price of $1.37 per share for consulting services provided by a non-employee. The
warrants vest over six months. The initial fair value of the warrants was calculated using a Black-Scholes
option-pricing model with the following assumptions: ten-year contractual term; 95.4% volatility; 0%
dividend rate; and a risk-free rate of 3.58%. The fair value of the warrants was determined to be $98,000
and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of
research and development expense in the consolidated statements of operations. This warrant was marked to
market at each reporting date until it was fully vested in September 2011.

F-25

In September 2011, the Company issued warrants to purchase 75,000 shares of the Company’s common
stock at an exercise price of $2.95 per share as compensation for services provided by consultants. The
warrants expire on the third or fifth anniversaries of their issuance dates and vest at various times over two
years. The initial fair value of the warrants was calculated using a Black-Scholes option-pricing model with
the following assumptions: three to five years; 90.8% — 96.3% volatility; 0% dividend rate; and a risk-free
rate of 0.4% to 0.9%. The initial fair value of the warrants was determined to be $144,000 and was recorded
as additional paid-in capital in the consolidated balance sheets and as a component of research and
development expense in the consolidated statements of operations. The fair value of these awards will be
mark-to-marketed on each valuation date using the Black Scholes pricing model until such time that these
awards are fully vested.

In December 2011, the Company issued warrants to purchase 5,000 shares of the Company’s common stock
at an exercise price of $6.00 per share for consulting services provided by a non-employee. The warrants
expire on the third anniversary of its issuance date and vest over two years. The initial fair value of the
warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: three-
year term; 91.1% volatility; 0% dividend rate; and a risk-free rate of 0.4%. The initial fair value of the
warrants was determined to be approximately $19,100 and was recorded as additional paid-in capital in the
consolidated balance sheets and as a component of research and development expense in the consolidated
statements of operations. The fair value of this award will be mark-to-marketed on each valuation date using
the Black Scholes pricing model until such time that the award is fully vested.

On April 2, 2012, pursuant to a cashless exercise of 25,000 warrants the Company issued 20,970 shares of
common. The warrants were granted at $1.37 per share and the fair value on the date of exercise was $8.50.

On August 16, 2012, the Company issued a fully vested warrant to purchase 25,000 shares of common stock
at a purchase price of $5.72 as compensation for consulting services provided by a non-employee. The
warrant expires on the fifth anniversary of its issuance date. The fair value of the warrant was calculated
using a Black-Scholes option-pricing model with the following assumptions: five-year contractual term;
110.3% volatility; 0% dividend rate; and a risk-free interest rate of 0.83%. The fair value of the warrants
was determined to be $113,000 and was recorded as additional paid-in capital in the consolidated balance
sheets and as a component of general and administrative expense in the consolidated statements of
operations. On August 16, 2012, the Company issued a fully vested warrant to purchase 20,000 shares of
common stock at an exercise price of $5.72 as compensation for consulting services provided by a non-
employee. The warrant expires on the sixth anniversary of its issuance date. The fair value of the warrants
was calculated using a Black-Scholes option-pricing model with the following assumptions: six-year
contractual term; 104.51% volatility; 0% dividend rate; and a risk-free interest rate of 1.06%. The fair value
of the warrant was determined to be $92,000 and was recorded as additional paid-in capital in the
consolidated balance sheets and as a component of general and administrative expense in the consolidated
statements of operations.

On August 28, 2012, the Company issued a fully vested warrant to purchase 73,009 shares of common stock
at an exercise price of $5.65 per share to Hercules in connection with the Loan Agreement. (See Note 10.)

On December 18, 2012 the Company issued two fully vested warrants to purchase 35,000 shares of common
stock at an exercise price of $4.88 as compensation for consulting services provided by two non-employee.
The warrant expires on the third anniversary of its issuance date. The fair value of the warrants was
calculated using a Black-Scholes option-pricing model with the following assumptions: three-year
contractual term; 97.45% volatility; 0% dividend rate; and a risk-free interest rate of 0.28%. The fair value
of the warrants was determined to be $103,000 and was recorded as additional paid-in capital in the
consolidated balance sheets and as a component of general and administrative expense in the consolidated
statements of operations.

F-26

Warrants to Purchase Series C Shares

In connection with the Company’s Series C Share offering, the Company (i) paid to NSC, a related party, as
consideration for its services as the placement agent, a fee equal to 10% of the gross proceeds of the
issuance, or $2.6 million, and (ii) issued five-year warrants to NSC to purchase an aggregate of 461,263
Series C Shares at an exercise price of $5.59 per share. The fair value of these warrants was $1.3 million as
measured on the date of issuance and was recorded as a reduction in the carrying value of the Series C
Shares and a warrant liability. The warrants were marked-to-market each reporting period until
November 15, 2011.

Upon the effectiveness of the Company’s Form S-1 on November 15, 2011, these warrants became
exercisable for common stock and a final mark-to-market valuation was performed resulting in a charge of
$1.4 million as of this date. The final fair value of $2.7 million was then reclassed to additional paid in
capital. The fair value was determined using an option pricing model assuming a 92.4% volatility, 0.93%
risk-free rate of interest, a term of five years and a fair value of the Company’s common stock of $8.00 per
share, based upon the price of the first trade of the Company’s stock in the public market.

On April 2, 2012 pursuant to the cashless exercise provision the Company issued 534 shares of common
stock in exchange for the exercise of 2,986 shares of common stock. The fair market value of common stock
on the date of exercise was $6.81 and the exercise price of the warrants was $5.59.

13. Stock Plans and Stock-Based Compensation

In 2007, the Company’s board of directors adopted and stockholders approved the Coronado Biosciences,
Inc. 2007 Stock Incentive Plan (the “Plan”) authorizing the Company to grant up to 6,000,000 shares of
common stock to eligible employees, directors, and consultants in the form of restricted stock, stock options
and other types of grants. The amount, terms, and exercisability provisions of grants are determined by the
Board of Directors.

The purpose of the Plan is to provide the Company with the flexibility to use shares, options or other awards
based on the Company’s common stock as part of an overall compensation package to provide performance-
based rewards to attract and retain qualified personnel. Such awards include, without limitation, options,
stock appreciation rights, sales or bonuses of restricted stock, restricted stock units or dividend equivalent
rights, and an award may consist of one such security or benefit, or two or more of them in any combination
or alternative. Vesting of awards may be based upon the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other conditions. There are 6,000,000 shares of
common stock reserved for issuance under the Plan, of which 4,175,070 were granted, net of cancellations,
and 1,824,930 shares were available for issuance as of December 31, 2012.

Incentive and nonstatutory stock options are granted pursuant to option agreements adopted by the plan
administrator. Options generally have 10-year contractual terms and vest in three equal annual installments
commencing on the grant date.

The Company estimates the fair value of stock option grants using a Black-Scholes option pricing model. In
applying this model, the Company uses the following assumptions:

• Risk-Free Interest Rate: The Company determined the risk-free interest rate by using a weighted

average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate.

• Expected Volatility: The Company determined its future stock price volatility based on the average

historical stock price volatility of comparable peer companies.

• Expected Term: Due to the limited exercise history of the Company’s stock options, the Company

determined the expected term based on the stratification of employee groups and the expected effect of

F-27

events that have indications on future exercise activity. Expected life for options granted to employees
uses the Simplified Method, while option granted to non-employees uses an expected term equal to the
life of the contract.

• Expected Dividend Rate: The Company has not paid and does not anticipate paying any cash dividends

in the near future.

The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing
model and expensed under the straight line method. The following assumptions were used:

Stock option plans

2012

2011

Exercise price . . . . . . . . . . . . . . . . . . . . . .
Expected stock price volatility . . . . . . . . .
. . . . . . . . . . . . . .
Risk free rate of interest
Expected life of options . . . . . . . . . . . . . . .

$4.75–$7.84
87.3%–114.3%
0.16%–2.23%
2 years–10 years

$1.37–$6.00
87.5%–92.8%
1.17%–2.56%
6 years–10 years

The fair value for non-employee stock based awards are mark-to-marketed on each valuation date until

vested using the Black Scholes pricing model.

The following table summarizes the stock-based compensation expense from stock option, employee

stock purchase programs and restricted common stock awards and warrants for the years ended
December 31, 2012, 2011 and 2010, and from the period June 28, 2006 (Date of Inception) to date:

($ in thousands)

2012

2011

2010

Period from
June 28, 2006
(Date of Inception) to
December 31, 2012

Employee awards . . . . . . . . . . . . . . . . . . . . . . . . .
Non-employee awards . . . . . . . . . . . . . . . . . . . . .
Non-employee warrants . . . . . . . . . . . . . . . . . . . .

$2,408
664
566

$ 520
662
287

$ 215
2,114
—

Total compensation expense . . . . . . . . . . . . . . . .

$3,638

$1,469

$2,329

$3,206
3,413
893

$7,512

The following table summarizes stock option activity:

Outstanding Options

($ in thousands except per share amounts)

Outstanding at December 31, 2011 . . . . . . . . . . . . . .
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares

1,814,070
730,000
—
—
25,000

Outstanding at December 31, 2012 . . . . . . . . . . . . . .

2,519,070

Options vested and expected to vest . . . . . . . . . . . . .

2,519,070

Options vested and exercisable . . . . . . . . . . . . . . . . .

856,047

Weighted
Average
Exercise
Price

$2.17
$6.52

$7.84

$3.37

$1.95

Total
Weighted
Average
Intrinsic
Value

$7,852

Weighted
Average
Remaining
Contractual
Life
(in years)

9.2

$2,860

$2,193

8.54

8.09

As of December 31, 2012, the Company had unrecognized stock-based compensation expense related to all
unvested stock options of $4.4 million, which is expected to be recognized over the remaining weighted-
average vesting period of 1.4 years.

F-28

Employee Stock Purchase Plan

On December 19, 2011, the Board Of Directors approved the 2012 Coronado Employee Stock Purchase
Plan the (“ESPP”) for the issuance of up to 200,000 shares of Common stock to eligible employees. Eligible
employees can purchase the Company’s common stock at the end of a predetermined offering period at 85%
of the lower of the fair market value at the beginning or end of the offering period. The first period
commenced February 1, 2012 and ended on November 30, 2012. Thereafter offerings will be six months in
duration and will commence on each December 1 and June 1. Employee contributions will be made through
payroll deductions over the offering period and subject to certain limitations will be used to purchase shares
at the end of each offering period. The ESPP is compensatory and will result in stock-based compensation
expense. The ESPP was approved by stockholders at the Company’s Annual Meeting on August 16, 2012.
Eligible employees began to participate in the ESPP effective February 1, 2012. As of December 31, 2012,
21,644 have been purchased and 178,356 are available for future sale under the ESPP. The Company
recognized share-based compensation expense of $95,000 for the year ended December 31, 2012. No prior
expense was recognized.

On November 30, 2012, the Company issued 21,644 shares of common stock in connection with the first
ESPP offering period. Common shares were issued at $4.02, which represents 85% of the closing price of
common stock on November 30, 2012.

14. License Agreements

TSO

Asphelia Asset Purchase

On January 7, 2011, the Company entered into an asset purchase agreement (the “Asphelia Asset Purchase”
or the “Asphelia Agreement”) with Asphelia Pharmaceuticals, Inc. (“Asphelia”). Pursuant to the terms of
the Asphelia Agreement, the Company paid $20.7 million, including assumption of certain Asphelia
liabilities, for the purchase of Asphelia’s assets relating to TSO, an early-stage developmental compound.

In exchange, the Company issued 2,525,677 Series B Shares with a fair value of $6.38 per share, assumed
the PCP Note in the principal amount of $750,000 and paid cash of approximately $3.8 million, including a
$3.4 million payment to Ovamed, and $0.4 million for repayment of Asphelia’s debt, $61,000 of which was
paid to a related party. The total consideration paid in connection with the Asphelia Asset Purchase is as
follows:

($ in thousands)
Fair value of 2,525,677 Series B Shares . . . . . . . . . . . . . . . . .
Cash payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of PCP Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,114
3,809
750
33

Total asset acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,706

The transaction was treated as an asset acquisition as it was determined that the assets acquired did not meet
the definition of a business. In accordance with accounting guidance, costs incurred in obtaining technology
licenses are charged to research and development expense if the technology licensed has not reached
technological feasibility and has no alternative future use. The assets purchased from Asphelia require
substantial completion of research and development, regulatory and marketing approval efforts in order to
reach technological feasibility. Accordingly, the purchase price of $20.7 million was reflected as acquired
in-process research and development in the consolidated statement of operations for year ended
December 31, 2011.

In connection with the Asphelia Asset Purchase, Asphelia assigned the Exclusive Sublicense Agreement,
dated December 2005, between Asphelia and Ovamed (as amended, the “Ovamed License”) and

F-29

Manufacturing and Supply Agreement dated March 2006, between Asphelia and Ovamed (as amended, the
“Ovamed Supply Agreement”) to the Company and the Company assumed Asphelia’s obligations under
these agreements. Under the Ovamed License, the Company has exclusive rights (which were licensed by
Ovamed from the University of Iowa Research Foundation), including sublicense rights, in North America,
South America and Japan, and know-how to make, use and sell products covered by these patents and
know-how.

Under the Ovamed License, the Company is required to make milestone payments to Ovamed totaling up to
approximately $5.45 million, contingent upon the achievement of various regulatory milestones for the first
product that incorporates TSO, and additional milestone payments upon the achievement of regulatory
milestones relating to subsequent indications. In 2011, the IND filed by the Company with the United States
Federal Food and Drug Administration (“FDA”) became effective resulting in the recognition of a $1.5
million obligation due to Ovamed, which was paid in November 2012. In the event that TSO is
commercialized, the Company is obligated to pay to Ovamed royalties based on net sales and, if
sublicensed, a varying percentage of certain consideration received from the sublicensee.

In addition to the Ovamed Agreements acquired pursuant to the Asphelia Asset Purchase, the Company also
entered into the following agreements relating to TSO:

Collaboration Agreement with Ovamed and Falk

Manufacturing Agreement

In December 2012, the Company and Ovamed entered into the Second Amendment and Agreement also
known as the Manufacturing Agreement, amending certain provisions of the Company’s exclusive
sublicense agreement and manufacturing and supply agreement. Pursuant to the Manufacturing Agreement,
Ovamed granted the Company with the an exclusive license to make TSO for the Coronado Territory,
terminating Ovamed’s exclusive supply rights in Coronado Territories once the Company manufacturing
facility in the United States is operational.

In exchange for manufacturing rights, the Company agreed to pay Ovamed a total of $1,500,000 in three
equal installments of $500,000 commencing in December 2014 and ending in December 2016. The
Company recorded the $1.0 million net present value of these payments as in-process research and
development on the accompanying consolidated statement of operations and on its accompanying
consolidated balance sheet as a long-term liability. Additionally, in lieu of product supply payments that
would have been payable to Ovamed as the exclusive supplier, the Company will pay Ovamed a
manufacturing fee” for product manufactured and sold by the Company. The manufacturing fee will consist
of the greater of (i) a royalty on net sales of product manufactured by us or (ii) a specified amount per unit,
or the Transfer Fee Component. The Manufacturing Fee is subject to certain adjustments and credits and the
Company has a right to reduce the Transfer Fee Component by paying Ovamed an agreed amount within ten
business days following the U.S. Food and Drug Administration “FDA” approval of a Biologics License
Application approving the manufacturing, marketing and commercial sale of Product in the United States
and an additional amount within ninety days after the end of the first calendar year in which net sales in the
Territory exceed an agreed amount.

Simultaneously with the execution of the Second Amendment, TSO Laboratories Inc., a wholly owned
subsidiary of Ovamed assigned to the Company a five-year property lease in Woburn, MA for space to
establish a TSO manufacturing facility. Build out and of the manufacturing facility will commence in the
first half of 2013 (see Note 6) and continue throughout the year. The Company expects to produce its Phase
3 supplies of TSO from this facility. Ovamed agreed to assist the Company in establishing this facility and
the Second Amendment contemplates that the Company and Ovamed act as second source suppliers to each
other at agreed transfer prices pursuant to a Second Source Agreement to be negotiated between the parties.

F-30

This facility will be required to meet applicable FDA manufacturing requirements contained in the FDA’s
current good manufacturing practice standards, or cGMP Good Manufacturing Practice or GMP standards
and will be subject to FDA inspections.

In March 2012, the Company entered into a collaboration agreement relating to the development of TSO for
Crohn’s disease with Dr. Falk Pharma GmbH (“Falk”) and Ovamed (the “Collaboration Agreement”).
Pursuant to the Collaboration Agreement, Falk granted the Company exclusive rights and licenses under
certain Falk patent rights, pre-clinical data, and clinical data from Falk’s clinical trials of TSO in Crohn’s
disease, including the ongoing Falk Phase 2 clinical trial, for use in North America, South America and
Japan. In exchange, the Company granted Falk exclusive rights and licenses to its pre-clinical data and data
from planned clinical trials of TSO in Crohn’s disease for use in Europe.

The Company agreed to pay Falk a total of €5 million (approximately $6.5 million) after receipt of certain
preclinical and clinical data, and a royalty equal to 1% of net sales of TSO in North America, South
America and Japan. In March 2012, the Company paid Falk €1 million (approximately $1.4 million) upon
receipt of Falk’s pre-clinical data package and recorded this payment as a TSO milestone expense. In April
2012, the Company paid and expensed an additional €1.5 million (approximately $2.0 million) upon receipt
from Falk of the recommendation from the independent data monitoring committee that conducted an
interim analysis of the Falk Phase 2 trial. The Company currently expects to expense and pay the remaining
€2.5 million (approximately $3.4 million) in the first half of 2014 upon achievement of the related
milestones.

Under the Collaboration Agreement, a steering committee comprised of our representatives and
representatives of Falk and Ovamed is overseeing the TSO development program in Crohn’s disease, under
which the Company and Falk will each be responsible for clinical testing on approximately 50% of the total
number of patients required for regulatory approval of TSO for Crohn’s disease in the United States and
Europe and will share in certain preclinical development costs.

The Collaboration Agreement may be terminated by either Falk or the Company if the other party fails to
cure a material breach under the agreement, subject to prior notice and the opportunity to cure, if the other
party is subject to bankruptcy proceedings or if the terminating party terminates all development of TSO.

CNDO–109

In November 2007, the Company entered into a license agreement with UCL Business PCL (“UCLB”)
under which the Company received an exclusive, worldwide license to develop and commercialize CNDO–
109 for the treatment of cancer-related and other conditions. In consideration for the license, the Company
made upfront payments totaling $0.1 million and may be required to make future milestone payments
totaling up to approximately $22 million upon the achievement of various milestones related to regulatory
or commercial events. In March 2012, the Company recognized a milestone payment of $250,000 to UCLB
related to its February 2012 IND filing for CNDO 109 and in April 2012 the Company paid UCLB this
milestone. In the event that CNDO–109 is commercialized, the Company is obligated to pay to UCLB
annual royalties ranging from 3% to 5% based upon various levels of net sales of the product. Under the
terms of the agreement, the Company must use diligent and reasonable efforts to develop and commercialize
CNDO–109 worldwide. In June 2012, the FDA granted orphan drug designation to CNDO-109 activated
NK cells for the treatment of AML. The Company has exclusive worldwide rights to develop and market
CNDO-109 under a license agreement with the University College London Business PLC, or UCLB.

Under the terms of the license agreement, the Company is allowed to grant sublicenses to third parties
without the prior approval of UCLB. In the event that the Company sublicenses CNDO–109 to a third party,
the Company is obligated to pay to UCLB all or a portion of the royalties the Company receives from the
sublicensee.

Unless earlier terminated, the agreement terminates upon the expiration of the last licensed patent right.
Either party may terminate the agreement in the event of material breach by the other party, subject to prior

F-31

notice and the opportunity to cure, or in the event the other party enters into bankruptcy or is dissolved for
any reasons other than in connection with a merger or acquisition. UCLB may terminate the license
agreement if the Company, or its affiliates, commence or assist in legal proceedings to challenge the validity
or ownership of the patents licensed to the Company under the agreement, or if the Company markets or
sells a competing product without UCLB’s prior written consent. In addition, the Company may terminate
the agreement upon 30 days written notice to UCLB.

CNDO—101

In June 2007, the Company entered into a license agreement with GEM Pharmaceuticals, LLC under which
the Company received an exclusive, worldwide license to develop and commercialize a family of
anthracycline compounds, including the compound CNDO-101, for the treatment of cancer-related
conditions. This agreement was terminated by the Company in November 2010.

BcL—2

In November 2006, the Company entered into a license agreement with the Burnham Institute for Medical
Research (“Burnham”) and amended this license agreement in November 2007 for the exclusive, worldwide
rights to several BcL-2 inhibitor compounds, including BcL-2, for the treatment of cancer and other diseases
driven by increases in BcL-2 pro-survival proteins. In 2010, in consideration for the initial license, the
Company paid the Burnham an up-front fee of $50,000 and, in connection with the amendment of the
license agreement to add additional compounds discovered under the terms of our sponsored research
arrangement with the Burnham, the Company made an additional payment of $25,000 to the Burnham. In
February 2011, the Company provided Burnham with written notice which terminated the licenses on
May 10, 2011.

15. Executive Officer Agreements

On December 28, 2012, the Company’s Board of Directors appointed current director Dr. Harlan F.
Weisman, as the Company’s new Chairman and Chief Executive Officer. On January 7, 2013, the Company
entered into an employment agreement with Dr. Weisman, pursuant to which the Company granted
Dr. Weisman an option to purchase 1,686,590 shares of common stock at an exercise price of $5.57 per
share. One-third of the shares underlying the option will vest on December 28, 2013 and each annual
anniversary thereafter, subject to Dr. Weisman’s continued employment with the Company.

On December 28, 2012, the Company’s Executive Chairman, Dr. Glenn L. Cooper, resigned his position as
Executive Chairman and as a director of the Company, effective immediately and the Company entered into
a separation and release agreement and a one-year consulting agreement with Dr. Cooper, pursuant to which
Dr. Cooper will be paid $25,000 per month for 12 months as well as his COBRA premiums for 12 months.
The Company also will pay him $30,000 in severance. Dr. Cooper’s current options will continue to vest
during the term of his consulting agreement and, in addition, all options that have not vested as of
December 31, 2013 will automatically vest on that day if he remains in his consulting capacity through that
date. On December 28, 2012, the Company also granted Dr. Cooper an option to purchase 25,000 shares of
common stock at an exercise price of $4.75 per share. The options will vest on December 28, 2013 if he
remains a consultant through that date. Upon the execution of the separation and release and consulting
agreements, the employment agreement between the Company and Dr. Cooper dated April 1, 2011 was
terminated.

The Company assessed under Accounting Standards Codification 718 the substance of Dr. Cooper’s
consulting agreement and concluded that the agreement would be accounted for as a severance arrangement
as the agreement does not provide any specific deliverables, projects or contain a minimum work
requirement. As a result, all related compensation cost has been recognized immediately on December 28,
2012. The modification of Dr. Cooper’s existing stock options to allow for continued vesting through

F-32

December 31, 2013, resulted in incremental cost and charge to operations of approximately $470,000 and
the grant-date fair value of Dr. Cooper’s option to purchase 25,000 shares of common stock resulted in a
charge to operations of $63,000. In addition, the Company recognized of a liability and related charge to
operations of $354,000 related to Dr. Cooper’s cash severance, consulting agreement cash compensation
and COBRA premiums.

In addition, on December 28, 2012, Dr. Bobby W. Sandage, Jr. became President of the Company and he
remains a member of the Board of Directors. Dr. Sandage’s change in status from Chief Executive Officer
and President to President entitles him to terminate his employment agreement for good reason, in which
case the Company would be obligated to pay Dr. Sandage his salary for 12 months. In addition, under the
terms of his employment agreement, any options that will vest on the next anniversary date of their
respective grant date would automatically vest. Effective December 28, 2012, the Company entered into an
amendment to Dr. Sandage’s employment agreement pursuant to which he will retain until June 28, 2013,
the right to terminate his employment for good reason, be paid his severance allowance equal to his salary
for 12 months and have any unvested options vest in full. Also, the amended employment agreement
provides that in the event Dr. Sandage terminates his employment for good reason, he will have two years
from such termination to exercise his options. In addition, if Dr. Sandage terminates his employment, the
Company will be required to pay his COBRA premiums for 12 months after his termination. Also on
December 28, 2012 the Board of Directors approved the payment to Dr. Sandage of his 2012 performance
bonus of $200,000 as well as a retention bonus of $100,000 payable on December 31, 2013, if he remains
employed through that date.

The change to Dr. Sandage’s existing stock options that provides for full vesting of all unvested options in
the event he terminates employment prior to June 28, 2013 as well as the extension of time to exercise his
options after termination of employment constitutes a modification for accounting purposes. The Company
assessed the probability that Dr. Sandage’s existing unvested options would vest under their original terms
and concluded that it was probable that his unvested options would vest under their original terms. Since
Dr. Sandage can choose to terminate his employment as of December 28, 2012 and have all options vest as a
result, the Company determined that Dr. Sandage has no future service requirement or requisite service
period for the stock options. As a result, all stock-based compensation cost was recognized immediately on
December 28, 2012 and the Company recorded a charge to operations of approximately $135,000
representing the remaining unrecognized expense of the original fair value of the options. Further, since the
Company determined it was not probable that Dr. Sandage would terminate his employment for “good
reason”, the Company did not recognize any liability as of December 31, 2012 related to Dr. Sandage’s cash
severance and COBRA premiums. If Dr. Sandage terminates his employment prior to June 28, 2013, the
Company will recognize at that time a liability for his cash severance and COBRA premiums estimated at
approximately $435,000. At December 31, 2012, the Company recognized a liability and charge to
operations of $200,000 for Dr. Sandage’s 2012 performance bonus. Finally, during 2013 the Company will
ratably accrue Dr. Sandage’s 2013 retention bonus, provided he remains employed with the Company. The
Company can provide no assurance that Dr. Sandage will not exercise his right to terminate his employment
agreement for good reason prior to June 28, 2013.

16. Income Taxes

The Company has incurred net operating losses since inception. The Company has not reflected any benefit
of such net operating loss carryforwards (“NOL”) in the accompanying consolidated financial statements
and has established a full valuation allowance of $26.2 million against its deferred tax assets.

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and
(b) operating losses and tax credit carryforwards.

F-33

The significant components of the Company’s deferred tax assets consisted of the following:

($ in thousands)

Deferred tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . .
Amortization of up-front fees . . . . . . . . . . . . . . . . . . . . . . .
Amortization of in-process R&D . . . . . . . . . . . . . . . . . . . .
Stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of December 31,

2012

2011

$ 19,572
3,087
407
1,522
622
991

$ 13,716
1,214
—
531
846
700

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26,201
(26,201)

17,007
(17,007)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ —

A reconciliation of the statutory tax rates and the effective tax rates is as follows:

Percentage of pre-tax income:
U.S. federal statutory income tax rate . . . . . . . . . . . . . . .
State taxes, net of federal benefit
. . . . . . . . . . . . . . . . . .
Acquired NOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt modification costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible items . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . .

Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . .

For the Year Ended December 31,

2012

2011

2010

35 %
4 %
—
—
1 %
(2)%
(5)%
(33)%

0 %

35 %
5 %
9 %
—
2 %
(21)%
(2)%
(28)%

0 %

35 %
—
—
(3)%
—
—
(1)%
(31)%

0 %

(1) – Other consists of: in 2012 state rate change (2%) and state NOL true up (3%) and in 2011, prior year NOL

true-up (3%) and state rate change 1%.

Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable
income within the carryforward period. The Company has concluded, based on the weight of available
evidence, that its net deferred tax assets are not more likely than not to be realized in the future.
Management has considered the Company’s history of cumulative net losses incurred since inception and
concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax
assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of
December 31, 2012 and 2011. Management reevaluates the positive and negative evidence at each reporting
period.

In 2012, the Company identified an error related to the taxation of the 2011 Asphelia Asset Purchase. The
Company accounted for the transaction as a taxable asset purchase in 2011 but during 2012 determined that
the transaction should have been accounted for as a non-taxable reorganization under IRC 368 (a)(1)(c). The
net impact of the error was to overstate gross deferred tax assets by $3.6 million and overstate the valuation
allowance by $3.6 million with no impact to net deferred tax assets or the provision for income taxes. The
error was determined to be immaterial and had no effect on the Company’s consolidated balance sheets
statements of operations, changes in stockholders’ deficit or cash flows for any period presented. As a
result, the 2011 amounts presented herein have been revised to correct for this misstatement.

F-34

As of December 31, 2012, the Company has federal net operating loss carryforwards and research and
development tax credit carryforwards of approximately $53.5 million and $1.0 million, including an orphan
drug tax credit of $0.3 million, respectively, which expire beginning in 2026 and 2028, respectively. As of
December 31, 2012, the Company has state net operating loss carryforwards of approximately $16.8
million, which expires beginning in 2030. Utilization of the net operating loss carryforwards and credits
may be subject to a substantial annual limitation due to the ownership change limitations provided by the
Internal Revenue Code of 1986, as amended, or the IRC, and similar state provisions. The Company has not
performed a detailed analysis to determine whether an ownership change under Section 382 of the IRC has
occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of
net operating loss carryforwards attributable to periods before the change. Any limitation may result in
expiration of a portion of the NOL or research and development credit carryforwards before utilization.

As of December 31, 2012, the Company had no unrecognized tax benefits and does not anticipate any
significant change to the unrecognized tax benefit balance. The Company would classify interest and
penalties related to uncertain tax positions in income tax expense, if applicable. There was no interest
expense or penalties related to unrecognized tax benefits recorded through December 31, 2012. The tax
years 2006 through 2012 remain open to examination by one or more major taxing jurisdictions to which the
Company is subject.

On January 2, 2013, the President signed into law The American Taxpayer Relief Act of 2012. Under prior
law, a taxpayer was entitled to a research credit for qualifying amounts paid or incurred on or before
December 31, 2011. The Taxpayer Relief Act extends the research credit for two years to December 31,
2013. The extension of the research credit is retroactive and includes amounts paid or incurred after
December 31, 2011. As a result of the retroactive extension, a benefit for qualifying amounts incurred in
2012 will be recognized in the period of enactment, which is the first quarter of 2013.

17. Subsequent Events

Research Agreement

On February 22, 2013, the Company and Freie Universität Berlin (“FU Berlin”) entered into a Research
Agreement (the “Research Agreement”) to, among other things, identify and evaluate secretory proteins
from Trichuris suis (the “Project”). The duration of the Project is expected to be four years, during which
the Company will pay FU Berlin a total maximum amount of approximately €648,000, or approximately
$843,000 in research fees and FU Berlin will periodically produce written progress reports on the Project.
The Research Agreement terminates on the later of the date that the last payment or report is due, subject to
early termination by either party upon three months written notice for cause or without cause. If the
Company terminates the Research Agreement, the Company must pay FU Berlin a termination fee
comprised primarily of unpaid research fees due on the first payment date after which termination occurred
(subject to adjustment), except where termination is due to a breach by FU Berlin which it fails to cure
within 60 days notice or due to FU Berlin’s bankruptcy.

On February 22, 2013, the Company and FU Berlin also entered into a Joint Ownership and Exclusive
License Agreement (the “JOELA”), pursuant to which the Company agreed to jointly own all intellectual
property arising from the Project (the “Joint Intellectual Property”). FU Berlin also granted the Company
(a) an exclusive worldwide license (including the right to sublicense) to its interest in the Joint Intellectual
Property and its know-how related to the Project (the “Licensed IP”), and (b) the right to commercialize
products that, without the licenses granted under the JOELA, would infringe the Licensed IP (the “Licensed
Products”). FU Berlin retains the non-exclusive and non-transferable right to use the Licensed IP for its own
internal, academic purposes. Pursuant to the JOELA, the Company would will pay FU Berlin a total
maximum amount of approximately €3,830,000, or approximately $4,982,000 in potential milestone
payments, based primarily on the achievement of clinical development and regulatory milestones, and

F-35

royalties on potential net sales of products ranging from 1% to 2.5%. The JOELA continues until the last-to-
expire patent in any country, subject to early termination by either party without penalty if the other party
breaches the JOELA and the breach is not cured within 60 days after receiving notice of the breach or if a
party is in bankruptcy. The Company also has the right to terminate the JOELA after giving FU Berlin 60
days written notice of a regulatory action that affects the safety, efficacy or marketability of the Licensed
Products or if the Company cannot obtain sufficient materials to conduct trials, or upon 180 days written
notice for any reason.

In connection with the Research Agreement and JOELA, the Company entered into a License and
Sublicense Agreement (the “LSA”) with Ovamed GmbH (“Ovamed”) on February 22, 2013, pursuant to
which the Company licensed is rights to the Joint Intellectual Property and sublicensed its rights to the
Licensed IP to Ovamed in all countries outside North America, South America and Japan (the “Ovamed
Territory”). Pursuant to the LSA, Ovamed would pay the Company a total maximum amount of
approximately €1,025,000, or approximately $1,333,000, based primarily on the achievement of regulatory
milestones, and royalties on potential net sales of products ranging from 1% to 2.5%, subject to adjustment,
in each case equal to the comparable payments due under the JOELA. The LSA continues until the last-to-
expire patent in any country in the Ovamed Territory, subject to early termination by either party upon the
same terms as in the JOELA.

On February 22, 2013, Coronado, Ovamed and FU Berlin entered into a Letter Agreement (the “Letter
Agreement”) to amend a Material Transfer Agreement dated May 14, 2012 by and between Ovamed and FU
Berlin. The Letter Agreement provides that Ovamed will retain a 10% interest in FU Berlin’s rights to the
Joint Intellectual Property in the Ovamed Territory. It also grants Ovamed certain rights if FU Berlin
terminates the JOELA due to the Company’s breach, including the right to have the JOELA survive and the
Company’s rights and obligations thereunder assigned to Ovamed.

Proceeds from Stock Issuance under ATM

From January 1, 2013 through March 8 2013, the Company issued 1,426,250 shares of common stock
pursuant to the ATM and received net proceeds of $10.5 million.

18. Selected Quarterly Financial Data (Unaudited)

The following table contains quarterly financial information for fiscal years 2012 and 2011. The Company
believes that the following information reflects all normal recurring adjustments necessary for a fair
statement of the information for the periods presented.

(in thousands, except per share data)

2012
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic and diluted net loss per common share . . . . . . . . .

2011
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic and diluted net loss per common share . . . . . . . . .

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

$ (6,581)
$
25
$ (6,556)
(0.35)
$

$(6,465)
$
10
$(6,455)
$ (0.34)

$(5,831)
$ (104)
$(5,935)
$ (0.24)

$(8,299)
$ (365)
$(8,664)
$ (0.36)

$(22,545)
2
$
$(22,543)
(4.71)
$

$(3,736)
3
$
$(3,733)
$ (0.64)

$(3,531)
166
$
$(3,365)
$ (0.48)

$(5,232)
$(1,487)
$(6,719)
$ (0.52)

F-36

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Coronado Biosciences, Inc.

By:

/s/ Harlan F. Weisman
Name: Harlan F. Weisman, M.D.
Title: Chief Executive Officer

March 18, 2013

POWER OF ATTORNEY

We, the undersigned directors and/or executive officers of Coronado Biosciences, Inc., hereby severally
constitute and appoint Harlan W. Weisman, M.D., acting singly, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and
all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or
appropriate to be done in connection therewith, as fully for all intents and purposes as he or she might or could
do in person, hereby approving, ratifying and confirming all that said attorney-in-fact and agent, or his substitute,
may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Harlan F. Weisman

Harlan F. Weisman, M.D.

Chairman of the Board of Directors and Chief

Executive Officer (principal executive officer)

March 18, 2013

/s/ Lucy Lu

Lucy Lu, M.D.

/s/ Dale Ritter

Dale Ritter

/s/ Bobby Sandage

Bobby W. Sandage, Jr., Ph.D.

/s/ Eric Rowinsky

Eric K. Rowinsky, M.D.

/s/ David Barrett

David J. Barrett

/s/ Jimmie Harvey, Jr.

Jimmie Harvey, Jr., M.D.

/s/ J. Jay Lobell

J. Jay Lobell

/s/ Michael Rogers

Michael W. Rogers

/s/ Lindsay A. Rosenwald

Lindsay A. Rosenwald, M.D.

Executive Vice President and Chief Financial

Officer (principal financial officer)

March 18, 2013

Senior Vice President, Finance and Chief

Accounting Officer (principal accounting officer)

March 18, 2013

President and Director

Vice Chairman of the Board of Directors

Director

March 18, 2013

Exhibit 31.1

CORONADO BIOSCIENCES, INC.
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Harlan F. Weisman, certify that:

(1) I have reviewed this annual report on Form 10-K for the year ended December 31, 2012 of Coronado

Biosciences, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to

state a material fact necessary to make the statements 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 financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure

controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and

procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) disclosed in the report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of 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 likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Dated: March 18, 2013

By: /s/ Harlan F. Weisman
Harlan F. Weisman
Chief Executive Officer

Exhibit 31.2

CORONADO BIOSCIENCES, INC.
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lucy Lu, certify that:

(1) I have reviewed this annual report on Form 10-K for the year ended December 31, 2012 of Coronado

Biosciences, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to

state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure

(a) designed such disclosure controls and procedures, or caused such disclosure controls 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 the registrant’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 likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Dated: March 18, 2013

By: /s/ Lucy Lu
Lucy Lu
Chief Financial Officer

CORONADO BIOSCIENCES, INC.
CERTIFICATION PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

In connection with the annual report on Form 10-K of Coronado Biosciences, Inc. (the “Company”) for the
period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Harlan F. Weisman, Chief Executive Officer, hereby certify, pursuant to 18 U.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; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company as of, and for, the periods presented in the Report.

Dated: March 18, 2013

By: /s/ Harlan F. Weisman
Harlan F. Weisman
Chief Executive Officer

CORONADO BIOSCIENCES, INC.
CERTIFICATION PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

In connection with the annual report on Form 10-K of Coronado Biosciences, Inc. (the “Company”) for the
period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Lucy Lu, Chief Financial Officer, hereby certify, pursuant to 18 U.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; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company, as of, and for, the periods presented in the Report.

Dated: March 18, 2013

By: /s/ Lucy Lu
Lucy Lu
Chief Financial Officer

24 New England Executive Park, Suite 105
Burlington, Massachusetts 01803

Phone: 781-652-4500
Fax: 781-652-4545
www.coronadobiosciences.com