Galectin Therapeutics Inc.
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ☒Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended December 31, 2017 ☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from to Commission File No. 001-31791 GALECTIN THERAPEUTICS INC. Nevada 04-3562325(State or other jurisdictionof incorporation) (I.R.S. EmployerIdentification No.)4960 Peachtree Industrial Blvd., Suite 240, Norcross, GA 30071(Address of Principal Executive Offices) (Zip Code)(678) 620-3186(Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, $0.001 Par Value Per Share The NASDAQ Capital MarketUnits, each consisting of two shares of Common Stock and one Warrant topurchase one share of Common Stock The NASDAQ Capital MarketCommon Stock Purchase Warrants The NASDAQ Capital MarketSecurities 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 ☒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 ☒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 thepreceding 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 90days. Yes ☒ 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 besubmitted 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 wasrequired to submit and post such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐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 definitionsof “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity wassold, or the average bid and asked price of such common equity, as of June 30, 2017 was $67 million.The number of shares outstanding of the registrant’s common stock as of March 16, 2018 was 37,569,866.DOCUMENTS INCORPORATED BY REFERENCEPortions of the definitive Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report. Table of ContentsINDEX TO FORM 10-KFOR THE YEAR ENDED DECEMBER 31, 2016 PAGE PART 1 ITEM 1. Business 1 ITEM 1A. Risk Factors 15 ITEM 1B. Unresolved Staff Comments 29 ITEM 2. Properties 29 ITEM 3. Legal Proceedings 30 ITEM 4. Mine Safety Disclosure 31 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 ITEM 6. Selected Financial Data 32 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 ITEM 7A. Quantitative and Qualitative Discussions About Market Risk 38 ITEM 8. Financial Statements and Supplementary Data 38 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 38 ITEM 9A. Controls and Procedures 38 ITEM 9B. Other Information 39 PART III ITEM 10. Directors, Executive Officers and Corporate Governance 40 ITEM 11. Executive Compensation 40 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 40 ITEM 13. Certain Relationships, Related Transactions and Director Independence 40 ITEM 14. Principal Accountant Fees and Services 40 PART IV ITEM 15. Exhibits and Financial Statement Schedules 41 SIGNATURES 47 Table of ContentsPART I Item 1.BusinessOverviewWe are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease, severeskin disease, and cancer. Our drug candidates are based on our method of targeting galectin proteins, which are key mediators of biologic andpathologic functions. We use naturally occurring, readily-available plant products as starting material in manufacturing processes to create proprietarycomplex carbohydrates with specific molecular weights and other pharmaceutical properties. These complex carbohydrate molecules are appropriatelyformulated into acceptable pharmaceutical formulations. Using these unique carbohydrate-based candidate compounds that largely bind and inhibitgalectin proteins, particularly galectin-3, we are undertaking the focused pursuit of therapies for indications where galectins have a demonstrated rolein the pathogenesis of a given disease. We focus on diseases with serious, life-threatening consequences to patients and those where current treatmentoptions are limited. Our strategy is to establish and implement clinical development programs that add value to our business in the shortest period oftime possible and to seek strategic partners when a program becomes advanced and requires significant additional resources.Our lead galectin-3 inhibitor is GR-MD-02, which has been demonstrated in preclinical models to reverse liver fibrosis and cirrhosis. GR-MD-02has the potential to treat many diseases due to galectin-3’s involvement in multiple key biological pathways such as immune cell function andimmunity, cell differentiation, cell growth, and apoptosis (cell death). Galectin Therapeutics Inc. is using this inhibitor to treat advanced liver fibrosisand liver cirrhosis in NASH (non-alcoholic steatohepatitis) patients. We have completed two Phase 1 clinical studies, a Phase 2 clinical study in NASHpatients with advanced fibrosis (NASH-FX) and a second Phase 2B clinical trial in NASH patients with well compensated cirrhosis. We announced, inDecember 2017 top line results from our Phase 2b study in NASH patients with cirrhosis (NASH-CX). NASH cirrhosis is a progressive disease, currentlynot treatable and ultimately may result in liver failure that has poor prognosis and no effective, approved medical therapies other than liver transplant.Galectin-3 expression is highly increased in the liver of patients with liver fibrosis and liver cirrhosis. We believe that our galectin-3 inhibitor, byreducing galectin-3 at the cellular level, ultimately showing a strong anti-fibrotic potential may provide a novel treatment for various forms of liverfibrosis.We endeavor to leverage our scientific and product development expertise as well as established relationships with outside sources to achievecost-effective and efficient drug development. These outside sources, amongst others, provide us with expertise in preclinical models, pharmaceuticaldevelopment, toxicology, clinical trial operations, pharmaceutical manufacturing, sophisticated physical and chemical characterization, andcommercial development. We also have established several collaborative scientific discovery programs with leading experts in carbohydrate chemistryand characterization. These discovery programs are generally aimed at the targeted development of new carbohydrate molecules that bind galectinproteins and offer alternative options to larger market segments in our primary disease indications. We also have established through Galectin SciencesLLC, a discovery program aimed at the targeted development of small molecules (generally, non-carbohydrate) that bind galectin proteins and mayafford options for alternative means of drug delivery (e.g., oral) and as a result expand the potential uses of our galectin-3 inhibitor compounds. We arealso pursuing a development pathway to clinical enhancement and commercialization for our lead compounds in immuno-oncology for cancer therapyand severe skin disease including moderate to severe plaque psoriasis and severe atopic dermatitis. However, our clinical development efforts arefocused on both liver fibrosis and fatty liver disease as represented by a Phase 2 clinical trial in NASH-cirrhosis which reported top line data inDecember 2017. All of our proposed products are presently in development, including pre-clinical and clinical trials.We were founded in July 2000 as Pro-Pharmaceuticals, Inc., a Massachusetts corporation. On April 25, 2001, DTR-Med Pharma Corp. (“DTR”),which was incorporated in Nevada on January 26, 2001, entered into a stock exchange agreement with Pro-Pharmaceuticals, Inc., whereby DTRacquired all of the outstanding shares 1Table of Contentsof common stock of Pro-Pharmaceuticals, Inc. On May 10, 2001, DTR changed its name to “Pro-Pharmaceuticals, Inc.” and on June 7, 2001, theMassachusetts corporation was merged into the Nevada corporation. On May 26, 2011, Pro-Pharmaceuticals, Inc. changed its name to “GalectinTherapeutics Inc.” In October, 2012, we moved our headquarters to a suburb of Atlanta, GA to be closer to a center of discovery collaboration whilemaintaining a laboratory operation in the Boston area.Our Drug Development ProgramsGalectins are a class of proteins that are made by many cells in the body, but predominantly in cells of the immune system. As a group, theseproteins are able to bind to sugar molecules that are part of other proteins, glycoproteins, in and on the cells of our body. Galectin proteins act as a kindof molecular glue, bringing together molecules that have sugars on them. Galectin proteins, in particular galectin-3, are known to be markedlyincreased in a number of important diseases including inflammatory diseases, scarring of organs (e.g. liver, lung, kidney, and heart) and cancers ofmany kinds. The increase in galectin protein promotes the disease and is detrimental to the patient. Published data substantiating the importance ofgalectin-3 in the fibrotic process arises from gene knockout experiments in animal studies. Mice genetically altered to eliminate the galectin-3 gene,and thus unable to produce galectin-3, are incapable of developing liver fibrosis in response to toxic insult to the liver and in fatty liver disease as wellas development of fibrosis in other tissues.We have one new proprietary chemical entity (NCE) in development, GR-MD-02, which has shown promise in preclinical and early clinicalstudies in treatment of fibrosis, severe skin disease, and in cancer therapy. Currently we are focusing on development of GR-MD-02 intended to be usedin the treatment of liver fibrosis associated with fatty liver disease (NASH) and more specifically in NASH cirrhosis. We have also leveraged ourrelationships with well-known investigators to demonstrate clinical effects of GR-MD-02 in treating moderate to severe plaque psoriasis, severe atopicdermatitis, and in cancer therapy in combination with immune-system modifying agent(s). GR-MD-02 is a proprietary, patented compound derivedfrom natural, readily available, plant-based starting materials, which, following chemical processing, exhibits the properties of binding to andinhibiting galectin-3 proteins. A second NCE, GM-CT-01 is a proprietary, patented compound that is made from a completely different starting sourceplant material and also binds and inhibits galectin proteins. Previously in clinical development for cancer indications, GM-CT-01 compound has beenexplored in limited other preclinical studies.Our product pipeline is shown below: Indication Drug StatusFibrosis NASH with Advanced Fibrosis:NASH-CX trial andNASH-FX trial GR-MD-02 IND submitted January 2013. Results from the Phase 1 clinical trial werereported in 2014, with final results reported in January 2015. End ofPhase 1 meeting held with FDA in 2014. Two Phase 2 clinical trials weredesigned. The NASH FX trial was designed for patients with advanced fibrosis butnot cirrhosis. The NASH FX trial top line data was reported in September2016 The NASH CX trial, was designed for patients with well compensatedcirrhosis. The NASH CX trial top line data was reported in December2017.Lung Fibrosis GR-MD-02 In pre-clinical developmentKidney Fibrosis GR-MD-02 In pre-clinical developmentCardiac and Vascular Fibrosis GR-MD-02 andGM-CT-01 In pre-clinical development 2Table of ContentsIndication Drug StatusCancer Immunotherapy Melanoma, Head,Neck Squamous CellCarcinoma (HNSCC) GR-MD-02 Investigator IND submitted in December 2013. Phase 1B study inprocess. A second Phase 1B study began in Q-1 2016. Investigator INDfor that study submitted in September 2015. Early data was reported inFebruary 2017 and studies with the 3rd cohort are ongoing.Psoriasis Moderate to Severe Plaque PsoriasisSevere Atopic Dermatitis GR-MD-02 IND submitted March 2015. A phase 2a trial in moderate to severeplaque psoriasis patients began in January 2016. Interim data on the firstfour patients were positive and were reported in May 2016. Furtherpositive data was reported in September 2016. Investigator initiated INDsubmitted for treatment of three patients with severe atopic dermatitis,with positive preliminary data presented in February 2017.Fibrosis. GR-MD-02 is our lead product candidate for treatment of fibrotic disease. Our preclinical data show that GR-MD-02 has a significanttherapeutic effect on liver fibrosis as shown in several relevant animal models. In addition, in NASH animal models, GR-MD-02 has been shown toreduce liver fat, inflammation, and ballooning degeneration or death of liver cells. Therefore, we chose GR-MD-02 as the lead candidate in adevelopment program targeted initially at fibrotic liver disease associated with non-alcoholic steatohepatitis (NASH, or fatty liver disease). In January2013, an Investigational New Drug (“IND”) was submitted to the FDA with the goal of initiating a Phase 1 study in patients with NASH and advancedliver fibrosis to evaluate the human safety of GR-MD-02 and pharmacodynamics biomarkers of disease. On March 1, 2013, the FDA indicated we couldproceed with a US Phase 1 clinical trial for GR-MD-02 with a development program aimed at obtaining support for a proposed indication of GR-MD-02 for treatment of NASH with advanced fibrosis. The Phase 1 trial was completed and demonstrated that GR-MD-02 up to 8 mg/kg, i.v. was safe andwell tolerated. The human pharmacokinetic data defined a drug dose for use in the planned Phase 2 trials based on extrapolation from efficacy data inNASH animal models of liver fibrosis and/or cirrhosis. Additionally, there was evidence of a pharmacodynamic effect of GR-MD-02 at the 8 mg/kgdose with a decrease in alpha 2 macroglobulin, a serum marker of fibrotic activity, and a reduction in liver stiffness as determined by FibroScan®. An“End of Phase 1 Meeting” was held with FDA which, amongst other items, provided guidance on the primary endpoint for the Phase 2 clinical trial, theNASH-CX trial.Additionally, an open label drug-drug interaction study was completed in healthy volunteers during the second quarter of 2015 with GR-MD-02and it showed that with 8 mg/kg dose of GR-MD-02 and 2 mg/kg dose of midazolam there was no drug-drug interaction and no serious adverse eventsor drug-related adverse events were observed. This study was required by the U.S. Food and Drug Administration (FDA) and the primary objective wasto determine if single or multiple intravenous (IV) doses of GR-MD-02 affect the pharmacokinetics (PK) of midazolam. The secondary objective was toassess the safety and tolerability of GR-MD-02 when administered concomitantly with midazolam. The lack of a drug interaction in this study enabledthe Company to expand the number of patients eligible for its Phase 2 clinical trial. In addition, should GR-MD-02 be approved for marketing, thesuccess of this study supports a broader patient population for the drug label.Our Phase 2 program in fibrotic disease consists of two separate human clinical trials. The primaryclinical trial is the Phase 2b NASH-CX studyfor one year for patients with NASH with well compensated cirrhosis, which began enrolling in June, 2015. This study is the primary focus of ourprogram and is a randomized, placebo-controlled, double-blind, parallel-group Phase 2b trial to evaluate the safety and efficacy of GR-MD-02 3Table of Contentsfor treatment of liver fibrosis and resultant portal hypertension in NASH patients with well compensated cirrhosis. A smaller, exploratory NASH-FXtrial was conducted to explore potential use of various non-invasive imaging techniques in NASH patients with advanced fibrosis but not cirrhosis.NASH-FX Trial: The NASH-FX trial, a Phase 2a pilot trial NASH-FX for patients with NASH advanced fibrosis that explored use of three non-invasive imaging technologies, is now complete. It was a short, single site, four-month trial in 30 NASH patients with advanced fibrosis, but notcirrhosis, randomized 1:1 to either 9 bi-weekly doses of 8 mg/kg of GR-MD-02 or placebo. The trial did not meet its primary biomarker endpoint asmeasured using multi-parametric magnetic resonance imaging (LiverMultiScan(R), Perspectum Diagnostics). The trial also did not meet secondaryendpoints that measure liver stiffness as a surrogate for fibrosis using, magnetic resonance-elastography and FibroScan® score. We, and many experts inthe field, now believe that a four-month treatment period may not be sufficient to show efficacy results in established liver fibrosis. This small studywas not powered for the secondary endpoints and thus, not surprisingly did not meet the secondary endpoints. In the trial, GR-MD-02 was found to besafe and well tolerated among the patient population with no serious adverse events. Although there was no apparent improvement in the three non-invasive tests for assessment of liver fibrosis in the four-month NASH-FX trial, the principal investigator of the NASH-FX trial has stated that theinhibition of galectin-3 with GR-MD-02 remains promising for the treatment of NASH fibrosis. Of note is that GR-MD-02 has demonstrated animproved clinical effect in moderate-to-severe psoriasis, suggesting the compound has activity in humans in an immune-mediated inflammatoryhuman disease that can occur in association with NASH. We believe our drug candidate provides a promising new approach for the therapy of fibroticdiseases, and liver fibrosis in particular. Fibrosis is the formation of excess connective tissue (collagen and other proteins plus cellular elements such asmyofibroblasts) in response to damage, inflammation or repair. When the fibrotic tissue becomes confluent, it obliterates the cellular architecture,leading to scarring and dysfunction of the underlying organ. Given galectin-3’s broad biological functionality, it has been demonstrated to beinvolved in cancer, inflammation and fibrosis, heart disease, and renal disease. We have further demonstrated the broad applicability of the actions ofour galectin-3 inhibitor’s biological effect in ameliorating fibrosis involving lung, kidney, blood vessels, and cardiac tissues in a wide variety ofanimal models.NASH-CX Trial: The NASH-CX trial was a larger well-designed multi-center clinical trial which explored use of GR-MD-02 for the treatment ofliver fibrosis and resultant portal hypertension in patients with well-compensated NASH cirrhosis. Enrollment in this trial was completed in September,2016, and a total of 162 patients at 36 sites in the United States were randomized to receive either 2 mg/kg of GR-MD-02, 8 mg/kg of GR-MD-02 orplacebo, with approximately 54 patients in each group. The primary endpoint is a reduction in change in hepatic venous pressure gradient (HVPG).Patients received an infusion every other week for one year, total of 26 infusions, and were evaluated to determine the change in HVPG as comparedwith placebo. HVPG was also correlated with secondary endpoints of fibrosis on liver biopsy as well as with measurement of liver stiffness(FibroScan(R)) and assessment of liver metabolism (13C-methacetin breath test, Exalenz), which are non-invasive measures of the liver that may be usedin future studies. Top line data readout was reported in December 2017 demonstrating positive efficacy data and safety and clinically meaningfulresults in the NASH patients with well compensated cirrhosis without esophageal varices (stage 1 cirrhosis).In the total patient population, the primary endpoint HVPG showed a trend toward benefit with GR-MD-02 treatment, but the difference fromplacebo was not statistically significant. The mean change in HVPG of placebo from baseline to week 54 was 0.3 mm Hg. The mean change in HVPGfrom baseline was -0.37 and -0.42 for the 2 mg/kg dose and 8 mg/kg dose of GR-MD-02, respectively.Further analysis showed that the drug effect was significantly dependent on dose “varices” in the total group of patients (p<0.02). In those NASHcirrhosis patients without varices at baseline (about 50% of the total population), there was a statistically significant effect of the 2 mg/kg dose of GR-MD-02 on the absolute change in HVPG (-1.08 mm Hg, p<0.01). The effect of the 8 mg/Kg dose of GR-MD-02 on absolute or percent change in HVPGfrom baseline to week 54 was not significant. The population of patients without varices at baseline were further subdivided into those with mild portalhypertension (HVPG greater or equal to 6 mm Hg and less than 10 mm Hg). In patients with mild portal hypertension (MPH), both doses of GR-MD-02demonstrated a 4Table of Contentsstatistically significant effect on change in HVPG. The mean change in HVPG in the MPH group were +1.8 mm Hg for placebo and -0.3 and -0.4 mm Hgin the 2 mg/kg and 8 mg/kg dose groups, respectively. In patients with clinically significant portal hypertension (HVPG greater than 10 Mm Hg) withno varices at baseline, there was a statistically significant effect of 2 mg/kg of GR-MD-02 on the change in HVPG.A responder analysis was performed on those patients without varices at baseline. Analysis was performed looking at two groups: those with anequal to or greater than 2 mm Hg decrease in HVPG from baseline or those with an equal to or greater than 2 mm Hg and greater than or equal to 20%decrease in HVPG from baseline. In both cases, the change observed in the GR-MD-02 2 mg/kg group was statistically significant (p<0.01) while thatof the 8 mg/kg group was not.In terms of cirrhosis complications over the 54-week treatment period, in patients without varices there were statistically significantly fewer newvarices that developed in the treatment groups vs placebo. We believe this may represent a useful measure of clinical outcome.The major conclusions, to date from the NASH-CX trial results are that: i) GR-MD-02 had a statistically significant and clinically meaningfuleffect in improving HVPG vs placebo in patients with NASH cirrhosis who did not have esophageal varices at baseline. This effect was seen regardlessof the patient’s baseline portal hypertension. Furthermore, we believe that patients with esophageal varices may have masked benefits in the totalpatient population. ii) There was an important drug effect of GR-MD-02 in the total patient population on liver biopsy with a statistically significantimprovement in hepatocyte ballooning (ie cell death), (iii) There was a statistically significant reduction (p=0.02) in the development of newesophageal varices in drug-treated patients compared to placebo. We believe that this is a clinically relevant endpoint related to patient outcomes,(iv) While there was a drug effect in both the 2 mg/kg and 8 mg/kg dosage groups on liver biopsy and in the mild portal hypertension group, there wasa consistently greater and statistically significant effect of the 2 mg/kg dose of GR-MD-02, (v) GR-MD-02 appears to be safe and well tolerated in thisone year clinical trial and (vi) We believe this is the first large, randomized clinical trial of any drug to demonstrate a clinically meaningfulimprovement in portal hypertension or liver biopsy in patients with compensated NASH cirrhosis without esophageal varices.We are planning to meet with the FDA in the second quarter of 2018 to discuss the results of the NASH-CX trial and plans for a phase 3 program.Further information and details on the NASH-CX results summarized above is available in public presentations posted to our website and filed with theSEC.The focus and goal of the therapeutic program is to stop the progression of and reverse the fibrosis in the liver and, thereby improve liverfunction and prevent the development of complications of fibrosis/cirrhosis and liver-related mortality in patients. The results of the NASH-CX trialsubstantiate that, subject to confirmation in later stage clinical trials, this goal is achievable in a significant portion of the NASH cirrhosis patientpopulation i.e. those NASH cirrhosis patients without esophageal varices.Cancer Immunotherapy. We believe there is potential for galectin inhibition to play a key role in the burgeoning area of cancer immunotherapy.For example, there have been several recent approvals of drugs that enhance a patient’s immune system to fight cancer. It is our goal to use a galectininhibitor to enhance the immune system function to fight cancer in a way that complements other approaches to this type of therapy. This hypothesis issupported by the fact that galectin-3 is expressed at high levels in multiple types of tumors, adds to the malignant nature of the tumors, and protects thetumors from immune system attack. Our drug candidates provide a promising new therapeutic approach to enhance the activity of the immune systemagainst cancer cells. Preclinical studies have indicated that GR-MD-02 enhances the immune response to cancer cells, increased tumor shrinkage andenhanced survival in immune competent mice with prostate, breast, melanoma and sarcoma cancers when combined with one of the immunecheckpoint inhibitors, anti-CTLA-4 or anti-PD-1, and with the immune cell activator anti-OX40. These preclinical data led to the filing of twoInvestigator-sponsored INDs and the initiation of studies of GR-MD-02 in combination with Yervoy® (ipilimumab) and KEYTRUDA (pembrolizumab)in Phase 1B studies of patients with metastatic melanoma. The KEYTRUDA trial has also been 5Table of Contentsexpanded to include patients with non-small cell lung cancer and head and neck squamous cell carcinoma. These studies are being conducted underthe sponsorship of Providence Portland Medical Center’s Earle A. Chiles Research Institute (EACRI).Data on this combination immunotherapy program was presented on February 7, 2017 at the 9th GTCBio Immunotherapeutics &Immunomonitoring Conference in San Diego, CA by Dr. William L. Redmond, Providence Cancer Center. Preclinical results in mouse models ofmultiple types of cancers showed important anti-tumor and increased survival effects of combining GR-MD-02 with different types of immunemodulators, providing a case for progressing studies into human patients with cancer. Seven patients were treated in the GR-MD-02 in combinationwith Yervoy trial, with no safety concerns in these low dose cohorts. Due to changes in the standard of care for metastatic melanoma (i.e., approval ofanti-PD-1), recruitment has been slowed significantly in this trial. Promising results were reported in the Phase 1b trial combining GR-MD-02 withpembrolizumab (KEYTRUDA). Cohort 1 was completed (n=6, 5 with melanoma, one head and neck) with one partial response and one mixed responsein 5 melanoma patients. There was a rapid and marked tumor response after 3 doses of combined GR-MD-02 and pembrolizumab in the one partialresponse patient who had failed high-dose IL-2 and oncolytic virus + ipilimumab. The study is ongoing and progression to further development will bebased on response rate as compared to historical response rates to pembrolizumab alone.Severe skin diseases. During our Phase 1 NASH fibrosis trial with GR-MD-02, a clinical effect on plaque psoriasis was observed in a NASHpatient who also had this disease. This patient had marked improvement in her psoriasis, with improvement beginning after the third infusion. Shereported that her psoriasis was “completely gone” and her skin was “normal” after the fourth infusion. Her skin remained normal for 17 months after thefinal infusion of study drug. The patient is convinced that the improvement in her psoriasis is related to the study drug.This serendipitous finding, combined with galectin-3 protein being markedly upregulated in the capillary epithelia (small blood vessels) of thepsoriatic dermis (plaque lesions), led to a phase 2a trial in patients with moderate to severe plaque psoriasis. GR-MD-02 inhibition of galectin-3 mayattenuate capillary changes in the psoriatic dermis and inflammatory recruitment, perhaps explaining the improvements observed in the NASH fibrosistrial patient. In this open-label, unblinded trial (no placebo, all patients knowingly receive active drug), 5 patients with moderate to severe plaquepsoriasis were administered GR-MD-02 every two weeks for 24 weeks. In May 2016, we reported positive results on the first four patients after12 weeks of therapy. Based on these results, we modified the trial to include 24 weeks of therapy. In August 2016, we reported on four patients after24 weeks of therapy and one patient after 12 weeks of therapy. The four patients who received 24 weeks of therapy experienced an average of 48%improvement in their plaque psoriasis. At this time, the average response in all five patients remains at 50% with one patient having an 82%improvement. However, there are existing drugs on the market in this disease that produce 75% and higher improvements in 60-90% of patients. Whilewe are encouraged that this study has demonstrated clinically meaningful results in a human disease with GR-MD-02, the next steps would entail acontrolled, does-ranging clinical trial which we do not expect to conduct absent a strategic partnership.We believe the mechanism of action for GR-MD-02 is based upon interaction with, and inhibition of, galectin proteins, particularly galectin-3,which are expressed at high levels in certain pathological states including inflammation, fibrosis and cancer. While GR-MD-02 is capable of binding tomultiple galectin proteins, we believe that it has the greatest affinity for galectin-3, the most prominent galectin implicated in pathological processes.Blocking galectin in cancer and liver fibrosis has specific salutary effects on the disease process, as discussed below.Liver Fibrosis: New Approach for a Significant Unmet Medical NeedWhen an internal organ is exposed to chronic disease one of the responses is that scar tissue is laid down in the organ (this process is calledfibrosis). The longer the disease affects the organ, the more fibrous tissue is 6Table of Contentsdeposited and this ultimately results in the failure of the organ. This chronic fibrosis of organs may occur in the liver, lung, kidney, and heart, as well asothers and, as a result, fibrosis of organs has been estimated to account for as much as 45% of all mortality in the United States. Scientific findingsduring the last few years indicate that the galectin-3 protein is critically important in this fibrotic process in multiple organs.In the liver, fibrosis is the end result of multiple inflammatory conditions and infections. Progressive liver fibrosis leads to cirrhosis, which resultsin reduction of liver function, multiple medical complications and ultimately death. It is estimated that one to two million patients have cirrhosis in theUnited States with close to 50,000 losing their lives yearly. Only a fraction of patients’ lives, approximately 6,200 per year, are saved by livertransplantation at a cost of at least $350,000 per transplantation with significant additional costs of care and medications after the transplant. Onecondition in particular that frequently leads to cirrhosis is non-alcoholic steatohepatitis, or NASH, a liver disease characterized by the accumulation offat in the liver with associated inflammation and fibrosis, which can lead to end-stage cirrhosis requiring liver transplantation. The National Institute ofHealth estimates that 9 to 15 million Americans are affected by NASH, and other sources suggest it may be as many as 30 million people have NASH,and forecasts that the number of Americans affected by this disease is growing due to obesity and diabetes, with the potential to become the leadingcause of liver cirrhosis and liver transplantation in the future. Liver transplantation is currently the only therapeutic approach to NASH or other formsof liver fibrosis as, to the best of our knowledge, there are no drug therapies on the market. Organ transplantation is a difficult, risky and costlyprocedure as organ availability is scarce. There is also the risk of developing cirrhosis in the transplanted liver from the same disease that damaged thepatient’s original liver and therefore, there is a great need for other therapeutic options. All diseases that affect the liver (viral hepatitis, alcoholic liverdisease, and fatty liver as examples) lead to the development of scarring of the liver.The primary focus of the Company is to use galectin inhibitors to block galectin-3 and treat organ scarring or fibrosis in the liver. There are noapproved therapies for treatment of liver fibrosis. We believe that our drug candidates have the potential to treat NASH and other forms of liver fibrosis.Scientific evidence suggests that galectin-3 is essential for the development of liver fibrosis in animals. Published data show that mice lacking thegalectin-3 gene, and thus unable to produce galectin-3, are essentially incapable of developing liver fibrosis in response to toxic insult to the liver andin fatty liver disease. Moreover, mice that do not have the galectin-3 gene are resistant to lung and kidney fibrosis. These published data show thatgalectin-3 is a critical protein for the development of organ fibrosis. Our drugs, based on experiments in well characterized animal models, are alsopotentially useful in scarring or fibrosis of other organs such as lung and kidney which expands the possibilities for future therapeutic indications.We have evaluated the ability of GR-MD-02 to block galectin-3 in animal models of liver fibrosis, the conclusions of which yielded positiveresults. Our pre-clinical data show that GR-MD-02 may have a therapeutic effect on liver fibrosis as shown in several relevant animal models.Therefore, we chose GR-MD-02 as the lead candidate in a development program targeted initially at fibrotic liver disease associated with NASH.We evaluated GR-MD-02 in pre-clinical toxicology and pharmacology studies during 2013 and filed an IND with the FDA in January 2013 forinitiating human studies in patients with NASH. In February 2013 we entered into an agreement with CTI Clinical Trial Services to assist with thedesign, development and conduct of one or more clinical research studies, specifically for services with respect to our Phase 1 clinical trials to evaluatesafety of GR-MD-02 in patients with NASH. The FDA notified us in March 2013 that we may proceed with a Phase 1 clinical trial for patients withNASH and we began enrolling patients in the Phase 1 clinical trial in the third quarter of 2013. In August 2013, GR-MD-02 was granted Fast Trackdesignation by the FDA for NASH with hepatic fibrosis, commonly known as fatty liver disease with advanced fibrosis. In January 2014, we completedthe enrollment of the first cohort of patients in the Phase 1 trial with no serious adverse events being reported. We reported initial safety andtolerability results from the first cohort of patients on June 30, 2014. The second cohort of this Phase 1 trial began and enrollment was completed inApril 2014. In July 2014, we reported the results from the second cohort of patients. Enrollment of the third cohort of Phase 1 began in July 2014 withinterim results presented in November 2014 with the final report on cohort 3 presented in January 2015. The 7Table of Contentsresults of the Phase 1 study demonstrate that (i) GR-MD-02 was safe and well tolerated by patients with advanced NASH liver fibrosis after IVadministration of four doses of 2 mg/kg, 4 mg/kg and 8mg/kg lean body weight, (ii) Pharmacokinetics revealed drug exposure in humans at the 8mg/kg dose that was equivalent to the upper range of the targeted therapeutic dose determined from effective doses in NASH animal models,(iii) Disease Serum Marker Effect showed there was a statistically significant, dose-dependent reduction in FibroTest® scores due to a statisticallysignificant reduction in alpha-2 macroglobulin (A2M) serum levels, and (iv) Liver Stiffness Effect, as measured by FibroScan® showed that there was asignal of reduced liver stiffness in patients receiving GR-MD-02. The reduction seen in A2M does not necessarily mean fibrosis got better in this shortstudy, but does suggest changes in the fibrogenic process that might lead to an improvement in fibrosis with longer-term therapy. These Phase 1 resultsin NASH patients with advanced fibrosis, in addition to completion of further toxicology and drug-drug interaction studies provided a firm foundationfor entry into a Phase 2 development program (described above). Top line results of our Phase 2b in compensated NASH cirrhosis patients was reportedin December 2017 and is more fully described above as well in our SEC filings.GR-MD-02 is a proprietary, patented galactoarabino-rhamnogalacturonan polysaccharide polymer that is comprised predominantly ofgalacturonic acid, galactose, arabinose, rhamnose, and smaller amounts of other sugars. Structural studies have shown that GR-MD-02 binds togalectin-1 and to galectin-3 with binding affinity to galectin-3 being significantly greater than binding to galectin-1. With respect to GR-MD-02, wecurrently have a number of issued US patents including one composition of matter patent, one method of manufacture patent, one method of usepatient in patients with NASH, one method of use patent in patients with liver fibrosis, and one method of use patent in patients with diabetic kidneydisease. Additional patent applications are pending with respect to, amongst other uses, cancer immunotherapy, lung fibrotic disease, andinflammatory disease associated with increase in inducible nitric oxide synthase. Patents have also been granted with respect to liver fibrosis, NASH,and liver fibrosis in combination with other therapeutic agents. Compounds for subcutaneous administration and oral delivery are currently under pre-clinical development.Galectin Inhibition in Cancer TherapyWe believe the potential exists for galectin inhibition to play an important role in cancer therapy. Galectin proteins, particularly galectin-1 andgalectin-3, have been shown to be highly expressed in the majority of cancers and have multiple roles in promoting cancer progression, includingtumor cell invasion, metastasis, angiogenesis, and tumor evasion of the immune system.The role of galectins in cancer immunotherapy can be understood through the “Galectin Effect”, a recent discovery of how tumors avoid thebody’s own immune system, i.e., the tumors secrete galectin proteins that block the body’s efforts to fight tumors. Our current program to block the“Galectin Effect” is based on the research of Dr. Pierre van der Bruggen (of the Ludwig Institute of Cancer Research in Brussels, Belgium),demonstrating that galectin-3, which is produced by the vast majority of human cancers, binds to and blocks the actions of tumor-infiltrating T-lymphocytes, the major immune cell in the body’s defense against cancers. In addition, Dr. William L. Redmond of Providence Portland MedicalCenter’s Earl A. Chiles Research Institute (EACRI) has shown that our galectin inhibitors can enhance the anti-tumor immunogenic effect of otherimmunotherapies based on targeting lymphocyte checkpoints such as CTLA4. Based on these results, we believe that the body’s immune cells may beunable to attack and kill tumor cells in the presence of galectins. Using this approach, the mechanism of action for our drugs seeks to block galectinsand, in turn, restore the ability of the T-lymphocytes to kill tumor cells.The preclinical study found that GR-MD-02 increased tumor shrinkage and enhanced survival in immune competent mice with prostate andbreast cancers when combined with one of the immune checkpoint inhibitors, anti-CTLA-4 or anti-PD-1. These findings suggest a role for GR-MD-02in cancer immunotherapy. These preclinical observations by Dr Redmond provided scientific rationale for proceeding and lead to the filing byProvidence Portland Medical Center of an Investigator-sponsored IND to conduct a Phase 1B study to determine if GR-MD-02 enhances theprobability of melanoma response with ipilimumab by inducing proliferation, 8Table of Contentsactivation and memory function of CD8+ T cells in human patients. The company has licensed the underlying invention from Providence PortlandMedical Center. This study represents a novel approach for patients with metastatic melanoma. The IND was approved by FDA in February 2014. Thisstudy is being conducted under the sponsorship of Providence Portland Medical Center’s Earle A. Chiles Research Institute (EACRI) and is beingsupported by the Company.The study employs a dose escalation of GR-MD-02 in conjunction with the standard therapeutic dose of ipilimumab in patients with advancedmelanoma for whom ipilimumab would be considered standard of care. In addition to monitoring for toxicity and clinical response by irRECISTcriteria on imaging tests, blood samples will be obtained to assess immunologic measures relevant to galectin biology and ipilimumab T-cell check-point inhibition. Galectin Therapeutics is providing its proprietary compound GR-MD-02 to EACRI researchers, as well as supply researchers withsupporting analysis of the pharmacokinetics of GR-MD-02 and the right to reference the Company’s open IND on GR-MD-02. To date the first twodosing groups have been completed without serious adverse events that were determined to be related to GR-MD-02. The third dosing group is nowenrolling.Similar to the agreement set forth for the ipilimumab (Yervoy®) Phase 1B study, Providence Portland Medical Center submitted an IND inSeptember 2015 to conduct a Phase 1B study of GR-MD-02 and pembrolizumab (Keytruda®) in patients with metastatic melanoma. The combinationof GR-MD-02 and an anti-PD1 (pembrolizumab) has been shown to enhance T-cell activation, memory, and effector function, and promote betterantitumor responses in multiple mouse studies. The study will test the hypothesis that galectin-3 antagonism using GR-MD-02 with enhance theprobability of melanoma response using penbrolizumab in patients by inducing proliferation, activation and memory function of CD8+ T cells thatrecognize melanoma antigens. Similar to the ipilimumab study, the study employs a dose escalation of GR-MD-02 in conjunction with the standardtherapeutic dose of pembrolizumab in patients with metastatic melanoma who have had progression of their melanoma after ipilimumab and/or BRAFtargeted therapy when a BRAF mutation is present. In addition to monitoring for toxicity and clinical response, blood and tumor samples will beobtained to assess immunologic measures relevant to galectin biology and pembrolizumab T-cell checkpoint inhibition.Patents and Proprietary RightsOur development and commercial viability, and ultimately our competitiveness, depend on our ability to develop and maintain the proprietaryaspects of our technology and operate without infringing on the proprietary rights of others. We rely on a combination of patent, trademark, trade secretand copyright law and contract restrictions to protect the proprietary aspects of our technologies. We seek to limit disclosure of our intellectualproperty by requiring employees, consultants, and any third parties with access to our proprietary information to execute confidentiality agreementsand by restricting access to that information.In August 2015, we received a notice of allowance from the U.S. Patent and Trademark Office for patent application number 13/726,900, titled“Galactose-pronged polysaccharides in a formulation for antifibrotic therapies.” This patent extends coverage of the Company’s pectin-derivedcompounds (including broad molecular weight ranges and other sources of pectin) to include treatment of chronic kidney disease associated with thedevelopment of fibrosis, established kidney fibrosis, chronic lung disease associated with the development of fibrosis and established lung fibrosis.Claims in this patent include administering pectin-derived compound parenterally to a patient having at least one of the four aforementioned diseaseswhere the established fibrosis or progression of the fibrosis or cirrhosis is inhibited or slowed down. Additional specific claims encompass deriving thecompound from citrus pectin, apple pectin, soybean hull pectin or sugar beet pectin with a molecular weight between 2 kDa and 400kDa. Also coveredis the step of administering the modified galacto-rhamnogalacturonan compound in an admixture with a therapeutic agent, where the agent is anantifibrotic compoundIn August 2014, we received a notice of allowance from the U.S. Patent and Trademark Office for patent application number 13/573,442 titled“Composition of Novel Carbohydrate Drug for Treatment of Human 9Table of ContentsDiseases.” The patent covers composition and chemical structural claims for compounds that includes the Company’s lead galectin inhibitorcompound GR-MD-02 and will expire in December 2031. Claims include multiple routes of administration, including intravenous, subcutaneous andoral. The application also covers therapeutic formulations for use in the treatment of NASH (fatty liver disease), cancer and fibrotic, inflammatory andautoimmune disorders in which galectin proteins are involved, at least in part, in the pathogenesis. Additional specific claims encompass liver fibrosis,kidney fibrosis, lung fibrosis or heart fibrosis. The patent, assigned U.S. Patent No. 8,871,925, was issued October 28, 2014.In May 2014, we received notice of allowance from the U.S. Patent and Trademark Office for patent application number 13/998,197 titled“Galactose-Pronged Carbohydrate Compounds for the Treatment of Diabetic Nephropathy and Associated Disorders.” The patent covers bothcomposition claim for and uses of the Company’s carbohydrate-based galectin inhibitor compound GR-MD-02 in patients with diabetic nephropathy,a type of progressive kidney disease that occurs in individuals with diabetes. Diabetic nephropathy is the major cause for chronic renal failure in theUnited States. The patent, assigned U.S. Patent No. 8,828,971, was issued September 9, 2014.In February 2014, we received notice of issuance that the U.S. Patent and Trademark Office issued patent number 8,658,787 to the Company forits application titled “Galacto-rhamnogalacturonate compositions for the treatment of non-alcoholic steatohepatitis and non-alcoholic fatty liverdisease.” The patent covers the Company’s carbohydrate-based galectin inhibitor compound GR-MD-02 for use in patients with fatty liver disease withor without fibrosis or cirrhosis, providing patent protection through 2031. The major claims are for methods of obtaining galectin inhibitorcompounds, obtaining a composition for parenteral or enteral administration in an acceptable pharmaceutical carrier and administering to a subjecthaving at least one of the following: fatty liver, non-alcoholic fatty liver disease, non-alcoholic steatohepatitis, non-alcoholic hepatitis with liverfibrosis, non-alcoholic steatohepatitis with cirrhosis, or non-alcoholic steatohepatitis with cirrhosis and hepatocellular carcinoma. The use coversreversing or slowing the progression of disease activity or medical consequences of the disease. Applications are pending in multiple countries toextend patent protection globally.In January 2014, we received a notice of allowance from the U.S. Patent and Trademark Office for Patent Application Number 13/550,962 titled“Galactose-Pronged Polysaccharides in a Formulation for Anti-fibrotic Therapies.” The patent covers both composition claim for and uses of theCompany’s carbohydrate-based galectin inhibitor compound GR-MD-02 for use in patients with liver fibrosis in combination with other potentialtherapeutic agents. The patent covers use of GR-MD-02 with agents directed at multiple targets, some of which are currently in clinical developmentfor fibrotic disorders including monoclonal antibodies to connective tissue growth factor, integrins, and TGF-ß1. The patent, assigned U.S. PatentNo. 8,722,645, was issued May 13, 2014.In July 2012, we received a notice of issuance from the U.S. Patent and Trademark Office for the U.S. Patent number 8,236,780 issued onAugust 7, 2013 titled “Galactose-prolonged polysaccharides in a formulation for antifibrotic therapies”. This methods patent covers key methods ofderivation and use for our carbohydrate-based galectin inhibitor compound for use in patients with chronic liver disease associated with thedevelopment of fibrosis, established liver fibrosis or end-stage scarring, or cirrhosis. The major claim is for a method of obtaining a galacto-rhamnogalacturan compound from an apple pectin, obtaining a composition for parenteral administration the galacto-rhamnogalacturonan compoundin an acceptable pharmaceutical carrier and administering to a subject having at least one of the following: chronic liver disease associated with thedevelopment of fibrosis, established liver fibrosis or cirrhosis. The use covers inhibiting or slowing the progression of fibrosis. GR-MD-02 is coveredby this patent and it provides opportunities for development of additional compounds in the class.As of December 31, 2017, we held 17 granted U.S. patents, 29 foreign granted patents (Japan, E.U., New Zealand, and Australia), 46 internationalpatent applications, and 4 U.S. patent applications. Many of our patents and patent applications cover composition of matter for complex carbohydratedrugs and methods of use for reducing toxicity and enhancing chemotherapeutic drugs by co-administering a polysaccharide with a 10Table of Contentschemotherapeutic agent or for use in treatment of fibrosis. The scheduled expiration dates of our United States patents span from 2020 to 2033 beforeconsidering any potential extensions. We have corresponding patent applications pending in Europe, Israel, Australia and Brazil. Additionally, wehave patent applications in other areas to utilize our carbohydrate-based compounds to treat disease other than cancer. See “Risk Factors — RisksRelated to Our Intellectual Property”. Our competitive position, in part, is contingent upon protection of our intellectual property.ResearchOur primary focus is on the design and testing of agents that target galectins in various in vitro and in vivo systems and that demonstrate efficacyin treatment of experimentally induced fibrosis or enhance immune system responsiveness in various tissues and in live animal models. We contractwith independent laboratories and other facilities to conduct our research, which is designed, evaluated and managed by our scientists. While weconduct in house research related to our compounds at SBH laboratories in Massachusetts, we do not anticipate building additional in-house researchor development facilities or hiring staff other than for purposes of designing and managing our out-sourced research.As we develop products eligible for clinical trials, we contract with independent parties to assist in the design of the clinical trial protocols,arrange for and monitor the clinical trials, collect data and analyze data. In addition, certain clinical trials for our products may be conducted bygovernment-sponsored agencies and will be dependent on governmental participation and funding. Our dependence on independent parties andclinical sites involves risks including reduced control over the timing and other aspects of our clinical trials.In February 2013, the Company established a collaborative drug discovery program with Dr. Geert-Jan Boons’ (“Dr. Boons”) laboratory locatedin the Complex Carbohydrate Research Center at the University of Georgia. This on-going program is focused on the discovery of new carbohydratemolecules that can be used in the therapy of diseases where galectin proteins play a major role, including cancer, and inflammatory and fibroticdisorders. The aim of this program is to develop a pipeline of drugs that can target galectins. This is an important goal as follow-on compounds for ourdrugs currently in development and to extend the potential indications and routes of administration. The Complex Carbohydrate Research Center is aworld-class program and Dr. Boons is a world renowned and pre-eminent carbohydrate chemist.In September 2014, the Company established a collaborative research program with Dr. William Redmond’s laboratory located at the ProvidencePortland Medical Center, Portland, Oregon. This program focuses on combination immunotherapy plus galectin inhibition to augment tumorimmunogenicity.During the years ended December 31, 2017 and 2016, our expenditures for research and development were $11.7 million and $15.3 million,respectively. We expense all research and development costs as they are incurred.In January 2014 we created, with SBH Sciences, Inc. (Natick, Ma), Galectin Sciences, LLC, a collaborative joint venture to research and developsmall organic molecule inhibitors of galectin-3 for oral administration.Using computer molecular modeling techniques coupled with in vitro screening of a variety of compound libraries, SBH Sciences had identifiedseveral small organic molecules with promising galectin-3 inhibitory activity in vitro. Galectin Sciences LLC will further develop these uniqueorganic molecule inhibitors of galectin-3 as drug candidates as well as develop additional candidates. Subject to availability of funding, GalectinSciences LLC will build on the scientific body of knowledge amassed by SBH Sciences, coupled with Galectin Therapeutics’ knowledge and expertiseof galectins’ pathological role and mechanism of action in inflammation, fibrosis and many cancers. The long-term goal of this effort is to identify anddevelop drug candidates that are highly specific galectin inhibitors which may be formulated for oral administration. The intermediate term goal is thedevelopment of small molecule inhibitors of galectin-3 which exhibit activity in in vivo preclinical disease models of fibrosis and cancer in whichgalectins play a key role. 11Table of ContentsBecause, increased levels of galectin proteins have been implicated in a very large number of inflammatory, fibrotic and neoplastic diseases; thediscovery and development of orally active galectin inhibitors would be a major step towards expanded treatment approaches for these disorders. Thisearly drug discovery effort may lead to drugs that would expand our pipeline as follow on compounds to our first in class galectin inhibitors, GR-MD-02 and GM-CT-01. These efforts have identified several potential compounds which are continuing to be explored to identify lead molecules whichmay be identified for clinical development.Manufacturing and MarketingWe are a development stage Company at this time and do not intend to establish internal facilities for the manufacture of our products for clinicalor commercial production. To have our products manufactured, we have developed and will continue to develop relationships with third-parties thathave established pharmaceutical manufacturing capabilities and expertise. We are not a party to any long-term agreement with any of our suppliersand, accordingly, we have our products manufactured on a purchase-order basis from one of two primary well-known and established pharmaceuticalsuppliers that meeting FDA requirements.Because our products are in the development stage, we have not created a sales and marketing staff to commercialize pharmaceutical products. Ifwe develop products eligible for commercial sale, we will need to develop a sales and marketing capability or rely on third parties such as licensees,collaborators, joint venture partners or independent distributors to market and sell those products. Our dependence on third-party manufacturers andmarketers will involve risks relating to our reduced control, and other risks including those discussed in “Risk Factors — Risks Related to ourCompany — There are risks associated with reliance on third parties for manufacturing, marketing, sales, managed care and distribution infrastructurechannels.”CompetitionMany biotechnology and pharmaceutical companies are developing new technologies for the treatment of cancer and other diseases.Technologies such as monoclonal antibodies could be competitive with our galectin therapeutic platforms. Other companies are trying to improve thetherapeutic profile of widely used protein-based drugs. While these companies may broaden the market for our products they may also providecompetitive alternatives to our products. We expect increased competition in the area of galectins will be fueled by a nearly exponential increase in thepublication rate of research papers on galectins.See “Risk Factors — Risks Related to Our Company — We face intense competition in the biotechnology and pharmaceutical industries” foradditional discussion related to our current and potential competition.Government RegulationThe research, development, testing, manufacture, labeling, promotion, advertising, distribution, and marketing, among other things, of ourproducts are extensively regulated by governmental authorities in the United States and other countries. The FDA regulates drugs under the federalFood, Drug, and Cosmetic Act and its implementing regulations. Failure to comply with the applicable U.S. requirements may subject us toadministrative or judicial sanctions, such as FDA refusal to approve pending New Drug Applications (“NDAs”), warning letters, product recalls,product seizures, total or partial suspension of production or distribution, injunctions, and/or criminal prosecution.Drug Approval ProcessDrugs may not be marketed in the U.S. until the FDA has approved them. The steps required before a drug may be marketed in the U.S. include: 1.Pre-clinical laboratory tests, animal studies, and formulation studies, 2.Submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin, 12Table of Contents 3.Adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication, 4.Submission to the FDA of a NDA, 5.Satisfactory completion of an FDA inspection of the manufacturing facility or facilities, at which the drug is produced to assess compliancewith current good manufacturing procedures (“cGMP”) established by the FDA, 6.FDA review and approval of the NDA, and 7.FDA review and approval of a trademark used in connection with a pharmaceutical.Pre-clinical tests include laboratory evaluation of product chemistry, toxicity, and formulation, as well as numerous in vitro and in vivo animalstudies. The results of the pre-clinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND,which must become effective before human clinical trials may begin and the Company must resolve any outstanding FDA concerns or questions beforeclinical trials can proceed. There is no certainty that submission of an IND will result in the FDA allowing clinical trials to begin.Clinical trials involve the administration of the investigational drug to human subjects under the supervision of qualified investigators andconstant oversight by the FDA or foreign regulatory authorities. Clinical trials are conducted under protocols detailing the objectives of the study, theparameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of theIND.Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Each trial must be reviewed andapproved by an independent Institutional Review Board (“IRB”), before it can begin. Study subjects must sign an informed consent form beforeparticipating in a clinical trial. Phase 1 usually involves the initial introduction of the investigational drug into patients to evaluate its safety, dosagetolerance, pharmacodynamics, and, if possible, to gain an early indication of its effectiveness. Phase 2 usually involves trials in a limited patientpopulation to (i) evaluate dosage tolerance and appropriate dosage; (ii) identify possible adverse effects and safety risks; and (iii) evaluatepreliminarily the efficacy of the drug for specific indications. Phase 3 trials usually further evaluate clinical efficacy and test further for safety by usingthe drug in its final form in an expanded patient population. There is no assurance that these trials will be completed within a specified period of time,if at all.Assuming successful completion of the required clinical testing, the results of the pre-clinical studies and of the clinical studies, together withother detailed information, including information on the manufacture and composition of the drug, are submitted to the FDA in an NDA requestingapproval to market the product for one or more indications. Before approving an NDA, the FDA usually will inspect the facilities at which the drug ismanufactured, and will not approve the product unless compliance with cGMP is satisfactory. If the FDA evaluates the NDA and the manufacturingfacilities as acceptable, the FDA will generally issue an approval letter. If the FDA evaluates the NDA submission or the manufacturing facilities as notacceptable, the FDA will generally outline the deficiencies in the submission and often will request additional testing or information. Even if anapplicant submits the requested additional information, the FDA ultimately may decide that the NDA does not satisfy the regulatory criteria forapproval. The testing and approval process requires substantial time, effort, and financial resources, and there is no assurance that any approval will begranted on a timely basis, if at all. After approval, certain changes to the approved product, such as adding new indications, manufacturing changes, oradditional labeling claims are subject to further FDA review and approval.See “Risk Factors — Risks Related to the Regulation of Our Products — We will need regulatory approvals to commercialize our products” foradditional discussion of regulatory risks related to our drug development program. 13Table of ContentsFDA Priority ReviewFDA procedures provide for priority review of an NDA submitted for drugs that, compared to currently marketed products, offer a significantimprovement in the treatment, diagnosis, or prevention of a disease. NDAs that are granted priority review are acted upon more quickly than NDAsgiven standard review. If we were to seek priority review, there can be no guarantee that the FDA will grant priority review status, that priority reviewstatus will affect the time of review, or that the FDA will approve the NDA submitted for any of our product candidates, whether or not priority reviewstatus is granted.Post-Approval RequirementsIf FDA approval of one or more of our products is obtained, we will be required to comply with a number of post-approval requirements. Forexample, holders of an approved NDA are required to report certain adverse reactions to the FDA and to comply with certain requirements concerningadvertising and promotional labeling for their products. Also, quality control and manufacturing procedures must continue to conform to current GoodManufacturing Practices (“cGMP”) after approval, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMP.Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMPcompliance. In addition, discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of anapproved NDA, including withdrawal of the product from the market. Also, new government requirements may be established that could delay orprevent regulatory approval of our products under development.Regulation Outside the United StatesBefore our products can be marketed outside of the United States, they are subject to regulatory approval similar to that required in the UnitedStates, although the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary widely from country tocountry. No action can be taken to market any product in a country until an appropriate application has been approved by the regulatory authorities inthat country. The current approval process varies from country to country, and the time spent in gaining approval varies from that required for FDAapproval. In certain countries, the sales price of a product must also be approved. The pricing review period often begins after market approval isgranted. No assurance can be given that even if a product is approved by a regulatory authority, satisfactory prices will be approved for such product.Environmental RegulationPharmaceutical research and development involves the controlled use of hazardous materials. Biotechnology and pharmaceutical companiesmust comply with laws and regulations governing the use, generation, manufacture, storage, air emission, effluent discharge, handling and disposal ofcertain materials, biological specimens and wastes. We do not anticipate building in-house research, development or manufacturing facilities, and,accordingly, do not expect to have to comply directly with environmental regulation. However, our contractors and others conducting research,development or manufacturing activities for us may be required to incur significant compliance cost, and this could in turn could increase our expenseor delay our completion of research or manufacturing programs.EmployeesWe currently have seven full-time employees, four of whom are involved primarily in management of our pre-clinical research and developmentand clinical trials and three who were involved primarily in management and administration of our Company. We also utilize contractors who provideproduct development, manufacture, analytical testing and clinical trial support. 14Table of ContentsItem 1A.Risk FactorsAn investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other informationbefore deciding to invest in our common stock. The risks described below are not the only ones facing our Company. Additional risks not presentlyknown to us or that we currently consider immaterial may also adversely affect our business. We have attempted to identify below the major factors thatcould cause differences between actual and planned or expected results, but we cannot assure you that we have identified all of those factors.If any of the following risks actually happen, our business, financial condition and operating results could be materially adversely affected. In this case,the trading price of our common stock could decline, and you could lose all or part of your investment.Risks Related to Our CompanyWe have incurred net losses to date and must raise additional capital in order to continue to operate after the first quarter of 2019.We have incurred net losses in each year of operation since our inception in July 2000. Our accumulated deficit as of December 31, 2017 was $181.2million. We had $3.1 million of unrestricted cash as of December 31, 2017. In December 2017, the Company announced a new $10 million unsecuredline of credit facility with stockholder and director, Richard E. Uihlein. Additionally, from January 1, 2018 through March 1, 2018, the Companyreceived $4,452,000 in proceeds from the exercise of common stock purchase warrants originally issued in November 2015. The Company believesthere is sufficient cash, including availability of the line of credit, to fund currently planned operations through March 31, 2019. We will require morecash to fund our operations after March 31, 2019 and believe we will be able to obtain additional financing. However, there can be no assurance thatwe will be successful in obtaining such new financing or, if available, that such financing will be on terms favorable to us. If we are unsuccessful inraising additional capital to fund operations before March 31, 2019, we may be required to cease operations.We may raise capital through public or private equity financings, partnerships, debt financings, bank borrowings, or other sources. Additional fundingmay not be available on favorable terms or at all. If adequate funds are not otherwise available, we may need to significantly curtail operations. Toobtain additional funding, we may need to enter into arrangements that require us to relinquish rights to certain technologies, products and/or potentialmarkets. To the extent that additional capital is raised through the sale of equity, or securities convertible into equity, our equity holders mayexperience dilution of their proportionate ownership of the Company.We are a development stage company and have not yet generated any revenue.We are a development stage company and have not generated any revenues to date. There is no assurance that we will obtain FDA approval of GR-MD-02 or any other of our products in development and, even if we do so, that we will generate revenue sufficient to become profitable. Our failure togenerate revenue and profit would likely lead to loss of your investment.Our ability to generate revenue from product sales and achieve profitability will depend upon our ability to successfully commercialize products,including any of our current product candidates, or other product candidates that we may in-license or acquire in the future. Even if we are able tosuccessfully achieve regulatory approval for these product candidates, we do not know when any of these products will generate revenue from productsales for us, if at all. Our ability to generate revenue from product sales from our current or future product candidates also depends on a number ofadditional factors, including our ability to: • successfully complete development activities, including the necessary clinical trials; • complete and submit new drug applications, or NDAs, to the U.S. Food and Drug Administration, or FDA, and obtain regulatory approvalfor indications for which there is a commercial market; 15Table of Contents • complete and submit applications to, and obtain regulatory approval from, foreign regulatory authorities; • successfully complete all required regulatory agency inspections; • set a commercially viable price for our products; • obtain commercial quantities of our products at acceptable cost levels; • find suitable distribution partners to help us market, sell and distribute our approved products in other markets; and • obtain coverage and adequate reimbursement from third parties, including government and private payers.In addition, because of the numerous risks and uncertainties associated with product development, including that our product candidates may notadvance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of increasedexpenses, or when or if we will be able to achieve or maintain profitability. Even if we are able to complete the development and regulatory process forany product candidates, we anticipate incurring significant costs associated with commercializing these products.If we are unable to generate revenues from the sale of our products, we may not become profitable and may need to obtain additional funding tocontinue operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue ouroperations at planned levels and be forced to reduce our operations.We are dependent on the success of our lead product candidate, GR-MD-02 and we cannot be certain that these product candidates will receiveregulatory approval or be successfully commercialized.We currently have no products for sale, and we cannot guarantee that we will ever have any drug products approved for sale. We and our productcandidates are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries governing, among other things,research, testing, clinical trials, manufacturing, labeling, promotion, selling, adverse event reporting and recordkeeping. We are not permitted to marketany of our product candidates in or outside the United States until we receive approval of a new drug application for a product candidate from the FDAor the equivalent approval from a foreign regulatory authority. Obtaining FDA approval is a lengthy, expensive and uncertain process.Before obtaining regulatory approval for the sale of any drug candidate, we must conduct extensive pre-clinical studies and clinical trials todemonstrate the safety and efficacy of our product candidates in humans.GR-MD-02 our lead product candidate for fibrosis completed its Phase 2 of the human clinical trial phase in 2017. GR-MD-02 is also currently ininvestigator sponsored, human Phase 1B clinical trials being conducted by Providence Portland Medical Center in combination with Yervoy®(ipilimumab) and Keytruda (pembrolizmab) in patients with metastatic melanoma. To obtain FDA approval, we will need to conduct one or more Phase3 clinical trial for GR-MD-02; however, we cannot assure you that we will be able to finance Phase 3 trials. Additionally, we cannot assure you thatfuture our trials will yield successful results, that they will lead to the generation of revenue, or that we will obtain regulatory approval in othercountries.We filed for an IND with the FDA for GR-MD-02 in January 2013 for initiating human clinical trials in patients with NASH, and the FDA notified us inMarch 2013 that we may proceed with a Phase 1 clinical trial. Our Phase 1 clinical trial began in July 2013 and was completed in 2014. Pre-clinicalstudies and clinical trials are expensive, time-consuming and ultimately may not be successful. The results of pre-clinical and initial clinical testing ofthese products may not necessarily indicate the results that will be obtained from later or more extensive testing. Also, it is possible to suffer significantsetbacks in advanced clinical trials, even after obtaining 16Table of Contentspromising results in earlier trials. For example, although there was positive data from our NASH-CX Phase 2 trial for GR-MD-02, which we believe willallow us to conduct a Phase 3 trial, it did not meet its primary endpoint. Similarly, our Phase 2a pilot trial NASH-FX for patients with advanced fibrosis,which explored three non-invasive imaging technologies, did not meet its primary endpoint. We may engage others to conduct our clinical trials,including clinical research organizations and, possibly, government-sponsored agencies. Additional clinical trials may not start or be completed as weforecast and may not achieve the desired results. The time required to obtain FDA and other approvals is unpredictable but often can take yearsfollowing the commencement of clinical trials, depending upon the complexity of the drug candidate.Even if we receive regulatory approval, we may be unable to commercialize our product candidates.Even if GR-MD-02and other future product candidates achieve positive results in clinical trials, we may be unable to commercialize them. Theavailability of government and third-party payer reimbursement, and pricing, especially compared to competitor products, could affect our ability tocommercialize our product candidates. Our general inability to obtain necessary regulatory approvals and, if obtained, to commercialize our productswould substantially impair our viability.There are risks associated with our reliance on third parties to design trial protocols, arrange for and monitor the clinical trials, and collect andanalyze data.As we develop products eligible for clinical trials, we will contract with independent parties to assist us in the design of the trial protocols, arrange forand monitor the clinical trials, collect data and analyze data. For instance, for our NASH-CX trial we engaged the services of PPD Development, L.P.(PPD) for the purpose of assisting us in the design, development and conduct of the trial... In addition, certain clinical trials for our products may beconducted by government-sponsored agencies and will be dependent on governmental participation and funding. Additionally, GR-MD-02 is beingstudied by Providence Portland Medical Center in Investigator-sponsored INDs to conduct a Phase 1B studies to determine if GR-MD-02 enhances theprobability of melanoma response with ipilimumab and pembrolizumab by inducing proliferation, activation and memory function of CD8+ T cells inhuman patients. This study represents a novel approach for patients with metastatic melanoma. As with our Phase 2 trial, to undertake Phase 3 trials forGR-MD-02, we will need to contract with a third party for assistance with the design and conduct of the trial. We cannot be certain that the terms of anysuch agreement will be favorable to the company.Our dependence on independent parties and clinical sites involves risks including reduced control over the timing and other aspects of our clinicaltrials.There are risks associated with our reliance on third parties for manufacturing, marketing, sales, managed care and distribution infrastructure andchannels.We do not have, and do not now intend to develop, facilities for the manufacture of any of our products for clinical or commercial production. At thistime, we are not a party to any long-term agreement with any of our suppliers, and accordingly, we have our products manufactured on a purchase-orderbasis from one of two primary suppliers. We are developing relationships with manufacturers and will enter into collaborative arrangements withlicensees or have others manufacture our products on a contract basis. We expect to depend on such collaborators to supply us with productsmanufactured in compliance with standards imposed by the FDA and foreign regulators.We have limited experience in marketing, sales or distribution, and we do not intend to develop a sales and marketing infrastructure to commercializeour pharmaceutical products. If we develop commercial products, we will need to rely on licensees, collaborators, joint venture partners or independentdistributors to market and sell those products. Thus, we expect that we will be required to enter into agreements with commercial partners to engage insales, marketing and distribution efforts around our products in development. We may be unable to 17Table of Contentsestablish or maintain third-party relationships on a commercially reasonable basis, if at all. In addition, these third parties may have similar or moreestablished relationships with our competitors. If we do not enter into relationships with third parties for the sales and marketing of our proposedproducts, we will need to develop our own sales and marketing capabilities.Even if engaged, these distributors may: • fail to satisfy financial or contractual obligations to us; • fail to adequately market our products; • cease operations with little or no notice to us; or • offer, design, manufacture or promote competing formulations or products.If we fail to develop sales, managed care, marketing and distribution channels, we would experience delays in generating sales and incur increasedcosts, which would harm our financial results.We are exposed to product liability, pre-clinical and clinical liability risks, which could place a financial burden upon us, should we be sued,because we do not currently have product liability insurance beyond our general insurance coverage.Our business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing and marketing ofpharmaceutical formulations and products; accordingly, claims may be asserted against us. In addition, the use in our clinical trials of pharmaceuticalformulations and products that our potential collaborators may develop and the subsequent sale of such formulations or products by us or our potentialcollaborators may cause us to assume a portion of or all of the product liability risks. A successful liability claim or series of claims brought against uscould have a material adverse effect on our business, financial condition and results of operations.Because we do not currently have any FDA-approved products or formulations, we do not currently have any product liability insurance coveringcommercialized products. We may not be able to obtain or maintain adequate product liability insurance on acceptable terms, if at all, or suchinsurance may not provide adequate coverage against our potential liabilities. Furthermore, our current and potential partners with whom we havecollaborative agreements or our future licensees may not be willing to indemnify us against these types of liabilities and may not, themselves, besufficiently insured or have sufficient liquidity to satisfy any product liability claims. Claims or losses in excess of any product liability insurancecoverage that may be obtained by us could have a material adverse effect on our business, financial condition and results of operations.We face intense competition in the biotechnology and pharmaceutical industries.The biotechnology and pharmaceutical industries are intensely competitive. We face direct competition from U.S. and foreign companies focusing onpharmaceutical products, which are rapidly evolving. Our competitors include major multinational pharmaceutical and chemical companies,specialized biotechnology firms and universities and other research institutions. Many of these competitors possess greater financial and otherresources, larger research and development staffs and more effective marketing and manufacturing organizations than we possess. In addition, academicand government institutions are increasingly likely to enter into exclusive licensing agreements with commercial enterprises, including ourcompetitors, to market commercial products based on technology developed at such institutions. Our competitors may succeed in developing orlicensing technologies and products that are more effective, or succeed in obtaining FDA or other regulatory approvals for product candidates beforewe do. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies by large corporations could increase suchcompetitors’ financial, marketing, manufacturing and other resources. 18Table of ContentsThe market for our proposed products is rapidly changing and competitive, and new drugs and new treatments which may be developed by otherscould impair our ability to maintain and grow our business and remain competitive.The pharmaceutical and biotechnology industries are subject to rapid and substantial technological change. Developments by others may render ourproposed products noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors.Technological competition from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into thefield is intense and is expected to increase.As a pre-revenue company engaged in the development of drug technologies, our resources are limited and we may experience technical challengesinherent in such technologies. Competitors have developed or are in the process of developing technologies that are, or in the future may be, the basisfor competition. Some of these technologies may have an entirely different approach or means of accomplishing similar therapeutic effects compared toour proposed products. Our competitors may develop drugs that are safer, more effective and less costly than our proposed products and, therefore,present a serious competitive threat to us.The potential widespread acceptance of therapies that are alternatives to ours may limit market acceptance of our proposed products, even ifcommercialized. Some of our targeted diseases and conditions may also be treated by other medications. These treatments may be widely accepted inmedical communities and have a longer history of use. The established use of these competitive drugs may limit the potential for our technologies,formulations and products to receive widespread acceptance even if commercialized.Our lack of operating experience may cause us difficulty in managing our growth.We have limited experience in manufacturing or procuring products in commercial quantities, conducting other later-stage phases of the regulatoryapproval process, selling pharmaceutical products, or negotiating, establishing and maintaining strategic relationships. Although we have may engageconsultants to assist us, any additional growth may require us to expand our management, operational and financial systems and controls. If we areunable to do so, our business and financial condition would be materially harmed. If rapid growth occurs, it may strain our managerial, operational andfinancial resources.We depend on key individuals to develop our products and core technologies and pursue collaborative relationships.We are highly dependent on Peter G. Traber, M.D. Dr. Traber is our Chief Executive Officer and our Chief Medical Officer who, among other things,designs and leads our pre-clinical and clinical studies, as well as our U.S. and European regulatory processes. The loss of Dr. Traber or failure to attractor retain other key personnel could prevent us from developing our products and core technologies and pursuing collaborative relationships.We may fail to comply with our reporting and other requirements under federal securities laws.As a publicly traded company, we are subject to the reporting requirements of the Exchange Act. The Exchange Act requires that we file annual,quarterly and current reports. Our failure to prepare and disclose this information in a timely manner could subject us to penalties under federalsecurities laws, expose us to lawsuits and restrict our ability to access financing. We may be required to implement additional and expensive financeand accounting systems, procedures and controls as we grow our business and organization to satisfy new reporting requirements, which will increaseour costs and require additional management resources.Our long term success is dependent not only upon the success of our trials but also upon us being able to capitalize upon potential positive results ofour trials, which is not assured.To conduct Phase 3 clinical trials or other clinical trials we will need sufficient cash resources to conduct those undertakings. We will also need toobtain sufficient dosages of GR-MD-02 for such trials. However, we have 19Table of Contentsdeferred the manufacture of additional GR-MD-02 that would be required for follow-on trials, and lead times are needed for this manufacturing. Furtherbecause of limited resources, we have curtailed most of our expenditures in research focused on the development of an oral galectin inhibitor to replaceour current drug candidate that is delivered via infusion. Further, because of financial limits we have not designed follow-on trials for skin disease orcancer and only recently have begun the planning of a follow up Phase 3 trial for liver fibrosis. Despite positive findings from our Phase 2 trial for GR-MD-02, we may be adversely affected by the time needed to restart programs curtailed by financial constraints.We are a defendant in a state court shareholder derivative action and these lawsuits and any future such lawsuits may adversely affect our business,financial condition, results of operations and cash flows.We and certain of our officers and directors are defendants in a state court shareholder derivative action. This lawsuit is described in Part I, Item 3“Legal Proceedings” in this Form 10-K. This lawsuit may divert our attention from our ordinary business operations, and we may incur significantexpenses associated with their defense (including, without limitation, substantial attorneys’ fees and other fees of professional advisors and potentialobligations to indemnify current and former officers and directors who are or may become parties to such actions). Depending on the outcome of thelawsuit, we may be required to pay material damages and fines, consent to injunctions on future conduct and/or suffer other penalties, remedies orsanctions. Accordingly, the ultimate resolution of these matters could have a material adverse effect on our business, results of operations, financialcondition, liquidity and ability to meet our debt obligations and, consequently, could negatively impact the trading price of our common stock. Inaddition, there is the potential for additional shareholder litigation and for governmental investigations and/or enforcement actions. Any existing orfuture shareholder lawsuits and any future governmental investigations and/or enforcement actions could adversely impact our reputation, ourrelationships with our customers and our ability to generate revenue.Risks Related to the Regulation of our ProductsWe will need regulatory approvals to commercialize our products.We are required to obtain approval (i) from the FDA in order to sell our products in the U.S. and (ii) from foreign regulatory authorities in order to sellour products in other countries. The FDA’s review and approval process is lengthy, expensive and uncertain. Extensive pre-clinical and clinical dataand supporting information must be submitted to the FDA for each indication for each product candidate in order to secure FDA approval. Beforereceiving FDA clearance to market our proposed products, we will have to demonstrate that our products are safe on the patient population andeffective for the diseases that are to be treated. Clinical trials, manufacturing and marketing of drugs are subject to the rigorous testing and approvalprocess of the FDA and equivalent foreign regulatory authorities. The Federal Food, Drug and Cosmetic Act and other federal, state and foreign statutesand regulations govern and influence the testing, manufacture, labeling, advertising, distribution and promotion of drugs and medical devices. As aresult, regulatory approvals can take several years to acquire and may further require the expenditure of substantial financial, managerial and otherresources. The FDA could reject an application or, in the alternative, require us to conduct additional clinical or other studies as part of the regulatoryreview process. Delays in obtaining or failure to obtain FDA approvals would delay or prevent the commercialization of our product candidates, whichwould prevent, defer or decrease our receipt of revenues. In addition, should we receive initial regulatory approval, our product candidates will besubject to extensive and rigorous ongoing domestic and foreign government regulation.Even if we obtain regulatory approvals, our marketed drugs will be subject to ongoing regulatory review. If we fail to comply with ongoingregulatory requirements, we could lose our approvals to market drugs, in which case our business would be materially adversely affected.Following regulatory approval in the United States of any drugs we may develop, we will remain subject to continuing regulatory review, includingthe review of adverse drug experiences and clinical results that are 20Table of Contentsreported after our drug products are made available to patients. This would include results from any post marketing tests or vigilance required as acondition of approval. The manufacturer and manufacturing facilities we use to make any of our drug products will also be subject to periodic reviewand inspection by the FDA. The discovery of any new or previously unknown problems with the product, manufacturer or facility may result inrestrictions on the drug or manufacturer or facility, including withdrawal of the drug from the market. We would continue to be subject to the FDArequirements governing the labeling, packaging, storage, advertising, promotion, recordkeeping, and submission of safety and other post-marketinformation for all of our product candidates, even those that the FDA had approved. If we fail to comply with applicable continuing regulatoryrequirements, we may be subject to fines, suspension or withdrawal of regulatory approval, product recalls and seizures, operating restrictions and otheradverse consequences.The drug development process to obtain FDA approval is very costly and time consuming, and if we cannot complete our clinical trials in a cost-effective manner, our results of operations may be adversely affected.Costs and timing of clinical trials may vary significantly over the life of a project owing to the following non-exclusive reasons: • the duration of the clinical trials; • the number of sites included in the trials; • the countries in which the trial are conducted; • the length of time required and ability to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; • per patient trial costs; • third party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner; • our drug product candidates having different chemical and pharmacological properties in humans than in lab testing; • the need to suspend or terminate our clinical trials; • insufficient or inadequate supply or quality of drug product candidates or other necessary materials to conduct our trials; • potential additional safety monitoring, or other conditions required by FDA or comparable foreign regulatory authorities regarding thescope or design of our clinical trials, or other studies requested by regulatory agencies; • problems engaging IRBs to oversee trials or in obtaining and maintaining IRB approval of studies; • the duration of patient follow-up; • the efficacy and safety profile of the product candidate; • the costs and timing of obtaining regulatory approvals; and • the costs involved in enforcing or defending patent claims or other intellectual property rights.Each of the above factors and other unanticipated factors beyond our control could prevent us from gaining approval for our drugs in a cost-effectiveand timely manner, which could have a material adverse impact on our business. 21Table of ContentsIf users of our proposed products are unable to obtain adequate reimbursement from third-party payers, market acceptance of our proposedproducts may be limited, and we may not achieve revenues or profits.The continuing efforts of governments, insurance companies, health maintenance organizations and other payers of healthcare costs to contain orreduce costs of health care may affect our future revenues and profitability as well as the future revenues and profitability of our potential customers,suppliers and collaborative partners in addition to the availability of capital. In other words, our ability to commercialize our proposed products willdepend in large part on the extent to which appropriate reimbursement levels for the cost of our proposed formulations, products and related treatmentsare obtained by the health care providers of these products and treatments. It is possible that the adoption of this legislation or replacement legislationcould harm our business, financial condition and results of operations.Data obtained from clinical trials are not necessarily predictive of future results, may be negative or inconclusive, and are susceptible to varyinginterpretations, which could delay, limit or prevent regulatory clearances.Data already obtained, or in the future obtained, from pre-clinical studies and clinical trials do not necessarily predict the results that will be obtainedfrom later pre-clinical studies and clinical trials. Moreover, pre-clinical and clinical data may be negative or inconclusive. In addition, data issusceptible to varying interpretations. Negative or inconclusive data, or data interpreted in various ways, could delay, limit or prevent regulatoryapproval. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after havingobtained promising results in earlier trials. Despite the results reported in some of our earlier clinical trials for GR-MD-02, our clinical trials may notdemonstrate sufficient levels of safety and efficacy necessary to obtain the requisite regulatory approvals for our drugs, and thus, our proposed drugsmay not be approved for marketing. If later-stage clinical trials do not produce favorable results, our ability to achieve regulatory approval for any ofour product candidates may be adversely impacted. The failure to adequately demonstrate the safety and effectiveness of a proposed formulation orproduct under development could delay or prevent regulatory clearance of the potential drug. The resulting delays in commercialization couldmaterially harm our business.Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit thecommercial profile of an approved label, or result in significant negative consequences following any marketing approval.Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and couldresult in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authority. Althoughwe are not currently aware of any undesirable side effects caused by our product candidates, it is possible that they may be identified in the clinicaltrial process.As a result of undesirable side effects or safety or toxicity issues that we may experience in our clinical trials, we may not receive approval to marketany product candidates, which could prevent us from ever generating revenues or achieving profitability. Results of our trials could reveal anunacceptably high severity and prevalence of side effects. In such an event, our trials could be suspended or terminated, and the FDA or comparableforeign regulatory authorities could order us to cease further development or deny approval of our product candidates for any or all targetedindications. These side effects could affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential productliability claims.Additionally, if any of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by suchproduct, a number of potentially significant negative consequences could result, including: • we may be forced to suspend marketing of such product; • regulatory authorities may withdraw their approvals of such product; 22Table of Contents • regulatory authorities may require additional warnings on the label that could diminish the usage or otherwise limit the commercial successof such products; • we may be required to conduct post-market studies; • we could be sued and held liable for harm caused to subjects or patients; and • our reputation may suffer.Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved.We will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adverselyimpact our business.A pharmaceutical product cannot be marketed in the U.S. or other countries until it has completed rigorous and extensive regulatory review processes,including approval of a brand name. Any brand names we intend to use for our product candidates will require approval from the FDA regardless ofwhether we have secured a formal trademark registration from the U.S. Patent and Trademark Office, or the PTO. The FDA typically conducts a reviewof proposed product brand names, including an evaluation of potential for confusion with other product names. The FDA may also object to a productbrand name if it believes the name inappropriately implies medical claims. If the FDA objects to any of our proposed product brand names, we may berequired to adopt an alternative brand name for our product candidates. If we adopt an alternative brand name, we would lose the benefit of our existingtrademark applications for such product candidate and may be required to expend significant additional resources in an effort to identify a suitableproduct brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our ability to commercializeour product candidates.Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.In order to market and sell our products in the European Union and many other jurisdictions, we must obtain separate marketing approvals and complywith numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The timerequired to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the UnitedStates generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is requiredthat the product be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals fromregulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities inother countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authoritiesin other countries or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals tocommercialize our products in any market. If we are unable to obtain approval of any of our product candidates by regulatory authorities in theEuropean Union or other countries, the commercial prospects of that product candidate may be significantly diminished, and our business prospectscould decline.Risks Related to Our Intellectual PropertyOur competitive position is contingent upon the protection of our intellectual property.Development and protection of our intellectual property are critical to our business. All of our intellectual property, patented or otherwise, has beeninvented and/or developed by employees or former employees of the Company. Our success depends, in part, on our ability to obtain patent protectionfor our products or processes in 23Table of Contentsthe U.S. and other countries, protect trade secrets and prevent others from infringing on our proprietary rights. We will only be able to protect ourproduct candidates from unauthorized making, using, selling, offering to sell or importation by third parties to the extent that we have rights undervalid and enforceable patents or trade secrets that cover these activities. If we do not adequately protect our intellectual property, competitors may beable to practice our technologies.The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions forwhich important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in biotechnology patents hasemerged to date in the United States. The biotechnology patent situation outside the United States is even more uncertain. Changes in either the patentlaws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, wecannot predict the breadth of claims that may be allowed in our pending patent applications or enforced in our issued patents or in third-party patents.The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequatelyprotect our rights or permit us to gain or keep our competitive advantage. For example: • others may be able to make compounds that are competitive with our product candidates but are not covered by the claims of our patents; • we might not have been the first to make the inventions covered by our pending patent applications; • we might not have been the first to file patent applications for these inventions; • it is possible that our pending patent applications will not result in issued patents; • we may not develop additional proprietary technologies that are patentable; or • the patents of others may have an adverse effect on our business.We also may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.However, trade secrets are difficult to protect. Although we require our scientific and technical employees and consultants to enter into broadassignment of inventions agreements, and all of our employees, consultants and corporate partners with access to proprietary information to enter intoconfidentiality agreements, these agreements may not be honored. Enforcing a claim that a third party illegally obtained, and is using, our trade secretsis expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protecttrade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may beunable to protect our rights to, or use of, our technology.Some or all of our patent applications may not issue as patents, or the claims of any issued patents may not afford meaningful protection for ourtechnologies or products. In addition, patents issued to us or our licensors, if any, may be challenged and subsequently narrowed, invalidated orcircumvented. Patent litigation is widespread in the biotechnology industry and could harm our business. Litigation might be necessary to protect ourpatent position or to determine the scope and validity of third-party proprietary rights.If we choose to go to court to stop someone else from using the inventions claimed in our patents, that individual or company would have the right toask the court to rule that such patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and we may nothave the required resources to pursue such litigation or to protect our patent rights. In addition, there is a risk that the court will decide that thesepatents are not valid and that we do not have the right to stop the other party from using the inventions. There is also the risk that, even if the validityof these patents is upheld, the court will refuse to stop the other party on the ground that such other party’s activities do not infringe our rights in thesepatents. 24Table of ContentsFurthermore, a third party may claim that we are using inventions covered by the third party’s patent rights and may go to court to stop us fromengaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are costly and could affect ourresults of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that we are infringing thethird party’s patents and would order us to stop the activities covered by the patents. In addition, there is a risk that a court will order us to pay theother party treble damages for having violated the other party’s patents. The biotechnology industry has produced a proliferation of patents, and it isnot always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents issubject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need todemonstrate that our products or methods of use either do not infringe the claims of the relevant patent and/or that the patent claims are invalid, and wemay not be able to do this. Proving invalidity in the U.S., in particular, is difficult since it requires a showing of clear and convincing evidence toovercome the presumption of validity enjoyed by issued patents.Because some patent applications in the United States may be maintained in secrecy until the patents are issued, patent applications in the UnitedStates and many foreign jurisdictions are typically not published until eighteen months after filing, and publications in the scientific literature oftenlag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or ourpending applications or that we were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applicationscovering technology similar to ours. Any such patent application may have priority over our patent applications and could further require us to obtainrights to issued patents covering such technologies. If another party has filed a United States patent application on inventions similar to ours, we mayhave to participate in an interference or other proceeding in the PTO or a court to determine priority of invention in the United States. The costs ofthese proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our United States patent positionwith respect to such inventions.Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantiallygreater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect onour ability to raise the funds necessary to continue our operations.Obtaining and maintaining our patent protection depends upon compliance with various procedural, document submission, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.The PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and otherprovisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application,resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlierthan would otherwise have been the case.Our failure to secure trademark registration could adversely affect our ability to market our product candidates and our business.Our trademark applications in the United States, when filed, and any other jurisdictions where we may file may not be allowed for registration, and ourregistered trademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections. Although we are givenan opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the PTO and in comparable agencies inmany foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registeredtrademarks. Opposition or cancellation proceedings may be filed against our applications and/or registrations, and our applications and/or registrationsmay not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affectour ability to market our product candidates and our business. 25Table of ContentsConfidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary informationand may not adequately protect our intellectual property, which could impede our ability to compete.Because we operate in the highly technical field of biotechnology and pharmaceutical development, we rely in part on trade secret protection in orderto protect our proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and we cannot be certain that otherswill not develop the same or similar technologies on their own. We have taken steps, including entering into confidentiality agreements with all of ouremployees, consultants and corporate partners to protect our trade secrets and unpatented know-how. These agreements generally require that the otherparty keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us duringthe course of the party’s relationship with us. We also typically obtain agreements from these parties which provide that inventions conceived by theparty in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectivelyassign intellectual property rights to us. Enforcing a claim that a party illegally obtained and is using our trade secrets or know-how is difficult,expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect tradesecrets or know-how. The failure to obtain or maintain trade secret protection could adversely affect our competitive position.We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology orpharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may besubject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of theirformer employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigationcould result in substantial costs and be a distraction to management.Risks Related to Our Common StockThe market price of our common stock may be volatile and adversely affected by several factors. This could subject us to securities class actionlitigation and our stockholders could incur substantial losses.The market price of our common stock could fluctuate significantly in response to various factors and events, including but not limited to: • the results of our pre-clinical studies and clinical trials, including interim results, as well as those of our competitors; • regulatory actions with respect to our products or our competitors’ products; • our ability to integrate operations, technology, products and services; • our ability to execute our business plan; • operating results below expectations; • our issuance of additional securities, including debt or equity or a combination thereof, which may be necessary to fund our operatingexpenses; • announcements of technological innovations or new products by us or our competitors; • the success of competitive products; • loss of any strategic relationship; • industry developments, including, without limitation, changes in healthcare policies or practices or third-party reimbursement policies; 26Table of Contents • regulatory or legal developments in the United States and other countries; • the level of expenses related to any of our product candidates or clinical development programs; • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patentprotection for our technologies; • economic and other external factors; • period-to-period fluctuations in our financial results; • sales of our common stock by us, our insiders or our other stockholders; • whether an active trading market in our common stock develops and is maintained; and • engagement and retention of senior management needed for our clinical trials.In addition, the market price for securities of pharmaceutical and biotechnology companies historically has been highly volatile, and the securitiesmarkets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particularcompanies. These broad market fluctuations may cause the market price of our common stock to decline substantially.In the past, securities class action litigation has often been brought against a company, including us, following a decline in the market price of itssecurities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock pricevolatility in recent years. As described above, we are currently defending a consolidated federal securities class action lawsuit and a consolidatedshareholder derivative actions and we may become involved in additional instances of this type of litigation in the future. Litigation often is expensiveand diverts management’s attention and resources, which could materially and adversely affect our business.Additionally, fluctuations in the trading price or liquidity of our common stock may materially and adversely affect, among other things, the interest ofinvestors to purchase our common stock on the open market and, generally, our ability to raise capital.Our board of directors has the power to designate, without stockholder approval, additional series of preferred capital, the shares of which could besenior to our common stock and be entitled to conversion or voting rights that adversely affect the holders of our common stock.Our articles of incorporation authorize the issuance of capital stock including 20,000,000 authorized undesignated shares (all have been designated asof December 31, 2017), and empowers our board of directors to prescribe, by resolution and without stockholder approval, a class or series ofundesignated shares, including the number of shares in the class or series and the voting powers, designations, rights, preferences, restrictions and therelative rights in each such class or series. Accordingly, we may designate and issue additional shares or series of preferred stock that would rank seniorto the shares of common stock as to dividend rights or rights upon our liquidation, winding-up, or dissolution.Nevada law and our charter documents could make it more difficult for a third party to acquire us and discourage a takeover, which could depressthe trading price of our common stock.Nevada corporate law and our articles of incorporation and bylaws contain provisions that could discourage, delay, or prevent a change in control ofour Company or changes in our management that our stockholders may deem advantageous. For example, holders of our common stock do not havecumulative voting rights in the election of directors, meaning that stockholders owning a majority of our outstanding shares of common stock will beable to elect all of our directors. In addition, because we have more than 200 stockholders of record, we are subject to the “business combinations”provisions of the Nevada Revised Statutes, or NRS. These provisions 27Table of Contentscould prohibit or delay a merger or other takeover or change in control attempt and, accordingly, may discourage attempts to acquire our Companyeven though such a transaction may be in our stockholders’ best interest and offer our stockholders the opportunity to sell their stock at a price abovethe prevailing market price.One investor and certain directors, by virtue of ownership of our securities and related rights, may be able to control the Company.The 10X Fund owns all of our issued and outstanding Series B Preferred Stock, which are convertible into 3,789,346 shares of our common stock. The10X Fund owns related warrants exercisable to purchase an aggregate of 6,469,038 shares of our common stock. As of December 31, 2017, we haveissued 2,379,632 shares of our common stock as dividends on the Series B Preferred Stock and 2,000,000 shares of our common stock on the exerciseof warrants by 10X Fund. In addition, James C. Czirr, a managing member of 10X Capital Management, LLC, the general partner of the 10X Fund andone of our directors, owns or controls approximately 906,000 shares of our common stock, including shares of Series A on an as converted basis, andhas the right to acquire 700,125 additional shares of our common stock upon the exercise of outstanding stock options (653,250 of which areexercisable as of December 31, 2017. As of December 31, 2017, on a fully diluted basis, assuming conversion of all Series B Preferred Stock andexercise of all outstanding warrants, the 10X Fund would own approximately 24% of our then outstanding shares of common stock, which, togetherwith the shares of our common stock that would be owned by Mr. Czirr (assuming exercise of all options at that date), would constitute approximately27% of the then fully diluted shares.As holder of Series B Preferred Stock, the 10X Fund is entitled to elect two directors in a separate class vote, nominate three directors for election by allshares entitled to vote, and provide or withhold consent to a range of fundamental corporate actions we may wish to undertake, such asrecapitalization, sale of our Company, and other matters. Such concentration of stock ownership and related rights could have the effect of delaying,deterring or preventing corporate events that our other security holders may desire or consider beneficial to the Company, such as sales of additionalsecurities of the Company needed to fund the ongoing clinical trial program of the Company. In addition to the conversion rights and the right to electand nominate directors noted above, the 10X Fund, as holder of the Series B Preferred Stock, has certain approval rights, including the right to approvecertain financing transactions, as well as the right to participate in certain financing transactions. These rights could negatively impact our ability toraise capital in the future, which could materially and adversely affect our business.We may issue additional common stock, which might dilute the net tangible book value per share of our common stock.Our board of directors has the authority, without action or vote of our stockholders, to issue all or a part of our authorized but unissued shares. Suchstock issuances could be made at a price that reflects a discount to, or a premium from, the then-current market price of our common stock. In addition,in order to raise capital, we may need to issue securities that are convertible into or exchangeable for a significant amount of our common stock. We arecurrently contemplating additional capital raising transactions within the next twelve months, which would likely result in issuances of additionalshares which would be dilutive to current shareholders. These issuances would dilute the percentage ownership interest, which would have the effect ofreducing your influence on matters on which our stockholders vote, and might dilute the net tangible book value per share of our common stock. Youmay incur additional dilution if holders of stock options, whether currently outstanding or subsequently granted, exercise their options, or if warrantholders exercise their warrants to purchase shares of our common stock.A sale of a substantial number of shares of the common stock may cause the price of our common stock to decline.Finance transactions resulting in a large amount of newly issued shares that become readily tradable, or other events that cause current stockholders tosell shares, could place downward pressure on the trading price of our 28Table of Contentsstock. Some of our shareholders have registration rights to facilitate sales of large blocks of our common stock. We have filed a shelf registrationstatement to allow registered sales of up to 9.7 million shares by these shareholders. We may consider additional capital raising transactions within thenext twelve months, which would likely result in issuances of additional shares which would be dilutive to current shareholders. In addition, the lackof a robust resale market may require a stockholder who desires to sell a large number of shares of common stock to sell the shares in increments overtime to mitigate any adverse impact of the sales on the market price of our stock.If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons substantial amounts of our common stock in thepublic market, including shares issued upon the exercise of outstanding options or warrants, the market price of our common stock could fall. Sales of asubstantial number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time andprice that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management’s attentionand harm our business.We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future.We have never paid cash dividends on our capital stock and do not anticipate paying cash dividends on our capital stock in the foreseeable future. Thepayment of dividends on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us atsuch time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on yourinvestment will only occur if the market price of our common stock price appreciates.At times, our shares of common stock and warrants have been thinly traded, so you may be unable to sell at or near ask prices or even at all if youneed to sell your shares or warrants to raise money or otherwise desire to liquidate your shares or warrants.We cannot predict the extent to which an active public market for our common stock and warrants will develop or be sustained. Our common stock iscurrently traded on The NASDAQ Capital Market and experiences periods when it could be considered “thinly-traded.” This situation may beattributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers,institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention ofsuch persons, they tend to be risk averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchaseof our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days, weeks or months whentrading activity in our shares is minimal, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generallysupport continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public tradingmarket for our common stock will be sustained, or that current trading levels will be sustained or not diminish. Item 1B.Unresolved Staff CommentsNone. Item 2.PropertiesWe lease 3,610 square feet for our executive offices located at 4960 Peachtree Industrial Blvd., Norcross, GA. We also lease on a month-to-monthbasis approximately 300 square feet in Natick, MA, for use by research and development consultants and which is collocated with one of our researchand development service vendors. We believe these spaces are suitable for our present operations. 29Table of ContentsItem 3.Legal ProceedingsFrom time to time, the Company is exposed to litigation relating to its operations. The Company is not currently engaged in any legalproceedings that are expected, individually or in the aggregate, to have a material, adverse effect on its financial condition or results of operations,except as noted below:Shareholder Class Actions and Derivative LawsuitsOn August 1 and 25, 2014, persons claiming to be Galectin shareholders filed putative shareholder derivative complaints in the Nevada DistrictCourt, seeking recovery on behalf of the Company against certain of the Company’s directors and officers. On September 10, 2014, the Nevada DistrictCourt entered an order consolidating the two cases, relieving the defendants of any obligation to respond to the initial complaints, and providing thatdefendants may respond to a consolidated complaint to be filed by the plaintiffs. On January 5, 2015, the Nevada District Court granted Defendants’motion to transfer the consolidated putative derivative litigation to the United States District Court for the Northern District of Georgia (hereinafterreferred to as the “Georgia Federal Derivative Action.”). The plaintiffs filed a consolidated complaint on February 27, 2015. On April 6, 2015, theCompany and defendants filed motions to dismiss the consolidated complaint. Rather than respond to those motions, the plaintiffs sought andobtained leave to file an amended complaint. Plaintiffs filed their amended complaint (the “Complaint”) on May 26, 2015. The Complaint alleges thatcertain of the Company’s directors and officers (the “Derivative Action Individual Defendants”) breached their fiduciary duties to the Company’sshareholders by causing or permitting the Company to make allegedly false and misleading public statements concerning the Company’s financial andbusiness prospects. The Complaint also alleges that the Derivative Action Individual Defendants violated the federal securities laws by allegedlymaking false or misleading statements of material fact in the Company’s proxy filings, committed waste of corporate assets, were unjustly enriched, andthat certain defendants breached their fiduciary duties through allegedly improper sales of Galectin stock. In addition, the Complaint alleges that theDerivative Action Individual Defendants and one of the Company’s shareholders aided and abetted the alleged breaches of fiduciary duties. TheComplaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits andcompensation by the defendants, costs, and attorneys’ and experts’ fees. The Company and defendants filed motions to dismiss the Complaint onJuly 8, 2015. On December 30, 2015, the United States District Court for the Northern District of Georgia dismissed the Georgia Federal DerivativeAction with prejudice and entered a final judgment in favor of the defendants. Plaintiffs filed a notice of appeal seeking review of the dismissal orderand final judgment. On July 7, 2016, the United States Court of Appeals for the Eleventh Circuit dismissed the appeal as the Plaintiffs failed to timelyfile their appeal brief. In September 2016, the Board received a demand letter from one of the plaintiffs in the Georgia Federal Derivative Action. Thedemand letter, among other things, requests that the Board investigate the conduct alleged in the Complaint and implement certain remedial measurespurportedly designed to address the alleged conduct. It is expected that the Board will consider the demand letter in due course and in light of therelated pending shareholder litigation described herein.On August 29, 2014, another alleged Galectin shareholder filed a putative shareholder derivative complaint in state court in Las Vegas, Nevada,seeking recovery on behalf of the Company against the same Galectin directors and officers who are named as defendants in the derivative litigationpending in the Georgia Federal Derivative Action. The plaintiff in the Nevada action subsequently filed first and second amended complaints. Thesecond amended complaint alleges claims for breach of fiduciary duties, unjust enrichment, and waste of corporate assets, based on allegations that aresubstantially similar to those asserted in the Georgia Federal Derivative Action (except that the Nevada action does not allege violations of the federalsecurities laws and does not assert any claim against the Galectin shareholder named as a defendant in the Georgia Federal Derivative Action), andseeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation bythe defendants, costs, and attorneys’ and experts’ fees. The Company and defendants filed motions to dismiss the second amended complaint onApril 22, 2015. On April 29, 2015, the plaintiffs in the Georgia Federal Derivative Action (the “Intervenor Plaintiffs”) filed a 30Table of Contentsmotion to intervene in the Nevada action which, among other things, raised questions regarding the Nevada plaintiff’s standing. Thereafter, the Nevadaplaintiff filed a motion to join additional plaintiffs. At a hearing held on June 11, 2015, the Nevada court: (i) granted the Intervenor Plaintiffs’ motionto intervene; (ii) directed the Intervenor Plaintiffs to file a complaint in intervention; (iii) directed the Nevada plaintiff to file a motion for leave to filea further amended complaint to add additional plaintiffs; (iv) stated that the defendants’ motions to dismiss the second amended complaint weredenied “at this point;” (v) ordered the Nevada action stayed until December 11 , 2015; and (vi) directed the parties to submit a status report onDecember 11, 2015, updating the court on the progress and status of the Georgia Federal Derivative Action. On July 9, 2015, pursuant to the NevadaState Court’s instruction, the Intervenor Plaintiffs filed a complaint-in-intervention in Nevada State Court, asserting similar claims to the ones theyalleged in the Georgia Federal Derivative Action described above. On December 11, 2015, further to the Nevada State Court’s instruction, the partiessubmitted status reports detailing the status of the Georgia Federal Derivative Action. On January 5, 2016, the Nevada State Court held a statusconference during which the dismissal of the Georgia Federal Derivative Action was discussed. Subsequent to that conference, on January 19, 2016, thedefendants filed a motion to dismiss the Nevada State Court litigation based on the dismissal of the similar Georgia Federal Derivative Action, amongother grounds. Following full briefing and a hearing on March 3, 2016, the Nevada State Court granted dismissal of the Nevada State Court litigation.Notice of Entry of the Nevada State Court’s order dismissing the Nevada State Court litigation was docketed on June 21, 2016. The Nevada plaintiffand Intervenor Plaintiffs (“Appellants”) filed notices of appeal seeking review of the Nevada State Court’s order and judgment dismissing the claims.The appeal is now fully briefed and awaiting a decision from the Nevada Supreme Court.Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree ofjudgment, particularly where the matters involve indeterminate claims for monetary damages, are in the early stages of the proceedings, and are subjectto appeal. In addition, because most legal proceedings are resolved over extended periods of time, potential losses are subject to change due to, amongother things, new developments, changes in legal strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlementposture and their evaluation of the strength or weakness of their case against us. For these reasons, we are currently unable to predict the ultimatetiming or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, the matters described above. Based oninformation currently available, the Company does not believe that any reasonably possible losses arising from currently pending legal matters will bematerial to the Company’s results of operations or financial condition. However, in light of the inherent uncertainties involved in such matters, anadverse outcome in one or more of these matters could materially and adversely affect the Company’s financial condition, results of operations or cashflows in any particular reporting period. Item 4.Mine Safety DisclosuresNot applicable. 31Table of ContentsPART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesPrice Range of Common StockOur common stock began trading on The NASDAQ Capital Market under the symbol GALT effective March 23, 2012. The high and low saleprices for our common stock as reported on the NASDAQ Capital Market, for the periods indicated as shown below. High Low Fiscal Year Ended December 31, 2017 First Quarter $2.45 $0.94 Second Quarter $3.68 $2.04 Third Quarter $2.52 $1.51 Fourth Quarter $3.84 $1.28 Fiscal Year Ended December 31, 2016 First Quarter $1.82 $1.08 Second Quarter $1.75 $1.25 Third Quarter $3.05 $1.10 Fourth Quarter $1.18 $0.49 Holders of Common StockAs of February 28, 2018, there were 240 shareholders of record of our common stock. Because shares of our common stock are held bydepositaries, brokers and other nominees, the number of beneficial holders of our shares is substantially larger than the number of record holders. Basedon information available to us, we believe there are approximately 11,363 non-objecting beneficial owners of our shares of our common stock inaddition to the record holders.DividendsThere have been no cash dividends declared on our common stock since our Company was formed. Dividends are declared at the sole discretionof our Board of Directors. Our intention is not to declare cash dividends and retain all cash for our operations. Item 6.Selected Financial DataNot applicable. Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking StatementsIn addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operationscontains forward-looking statements as defined under Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safeharbor created therein for forward-looking statements. Such statements include, but are not limited to, statements concerning our anticipated operatingresults, research and development, clinical trials, regulatory proceedings, and financial resources, and can be identified by use of words such as, forexample, “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and “would,” “should,” “could” or “may.” All statements, other thanstatements of historical facts, included herein that address activities, events, or developments that the Company expects or anticipates will or mayoccur in the future, are forward-looking statements, including statements regarding: plans and 32Table of Contentsexpectations regarding clinical trials; plans and expectations regarding regulatory approvals; our strategy and expectations for clinical developmentand commercialization of our products; potential strategic partnerships; expectations regarding the effectiveness of our products; plans for research anddevelopment and related costs; statements about accounting assumptions and estimates; expectations regarding liquidity and the sufficiency of cash tofund currently planned operations through at least March 31, 2019; our commitments and contingencies; and our market risk exposure. Forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which Galectin Therapeuticsoperates, and management’s beliefs and assumptions. These statements are not guarantees of future performance and involve certain known andunknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks anduncertainties are related to and include, without limitation, • our early stage of development, • we have incurred significant operating losses since our inception and cannot assure you that we will generate revenue or profit, • our dependence on additional outside capital, • we may be unable to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of ourproposed product candidates, • uncertainties related to any litigation, including shareholder class actions and derivative lawsuits filed, • uncertainties related to our technology and clinical trials, including expected dates of availability of clinical data, • we may be unable to demonstrate the efficacy and safety of our developmental product candidates in human trials, • we may be unable to improve upon, protect and/or enforce our intellectual property, • we are subject to extensive and costly regulation by the U.S. Food and Drug Administration (FDA) and by foreign regulatory authorities,which must approve our product candidates in development and could restrict the sales and marketing and pricing of such products, • competition and stock price volatility in the biotechnology industry, • limited trading volume for our stock, concentration of ownership of our stock, and other risks detailed herein and from time to time in ourSEC reports, andWe caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-lookingstatements as a result of various factors including, but not limited to, those described above and in the Risk Factors section of this annual report onForm 10-K. We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it isnot possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, orcombination of risks, may cause actual results to differ from those contained in any forward-looking statements. Readers should not place unduereliance on forward-looking statements. We undertake no obligation to publicly release the result of any revision of these forward-looking statementsto reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.Results of Operations from the Years Ended December 31, 2017 and 2016Research and Development Expense Year endedDecember 31, 2017 as Compared to 2016 2017 2016 $ Change % Change (in thousands, except %) Research and development $11,721 $15,325 $(3,604) (24)% 33Table of ContentsWe generally categorize research and development expenses as either direct external expenses, comprised of amounts paid to third party vendorsfor services, or all other research and development expenses, comprised of employee payroll and general overhead allocable to research anddevelopment. We consider a clinical program to have begun upon acceptance by the FDA, or similar agency outside of the United States, to commencea clinical trial in humans, at which time we begin tracking expenditures by the product candidate. Clinical program expenses comprise payments tovendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug manufacture, patient dosing and monitoring,data collection and management, oversight of the trials and reports of results. Pre-clinical expenses comprise all research and development amountsincurred before human trials begin, including payments to vendors for services related to product experiments and discovery, toxicology,pharmacology, metabolism and efficacy studies, as well as manufacturing process development for a drug candidate. We have two product candidates,GR-MD-02 and GM-CT-01; however only GR-MD-02 is in active development.Our research and development expenses were as follows: Year EndedDecember 31, 2017 2016 (in thousands) Direct external expenses: Clinical programs $9,362 $11,994 Pre-clinical activities 194 856 Other research and development expenses: Payroll and other including stock based compensation 2,165 2,475 $11,721 $15,325 Clinical programs expenses decreased primarily due to costs related to our Phase 2 clinical trials during the year ended December 31, 2017 ascompared to the same period in 2016. As we have completed our NASH-CX Phase 2 trial in 2017, we expect our clinical activities costs will furtherdecrease absent additional clinical trials commencing. Pre-clinical activities decreased primarily because we have completed pre-clinical work directlyrelated to our Phase 2 clinical trial program.Both the time required and costs we may incur in order to commercialize a drug candidate that would result in material net cash inflow aresubject to numerous variables, and therefore we are unable at this stage of our development to forecast useful estimates. Variables that make estimatesdifficult include the number of clinical trials we may undertake, the number of patients needed to participate in the clinical trial, patient recruitmentuncertainties, trial results as to the safety and efficacy of our products, and uncertainties as to the regulatory agency response to our trial data prior toreceipt of marketing approval. Moreover, the FDA or other regulatory agencies may suspend clinical trials if we or an agency believes patients in thetrial are subject to unacceptable risks or find deficiencies in the conduct of the clinical trial. Delays or rejections may also occur if governmentalregulation or policy changes during our clinical trials or in the course of review of our clinical data. Due to these uncertainties, accurate andmeaningful estimates of the ultimate cost to bring a product to market, the timing of costs and completion of our program and the period during whichmaterial net cash inflows will commence are unavailable at this time.General and Administrative Expense Year endedDecember 31, 2017 as Compared to 2016 2017 2016 $ Change % Change (in thousands, except %) General and administrative $4,526 $6,156 $(1,630) (26)% 34Table of ContentsGeneral and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance,investor relations, business development and other office related expenses. The primary reasons for the decrease for the year ended December 31, 2017as compared to the same period for 2016 are due to, decreased legal expenses of $251,000, decreased stock-based compensation of $1,068,000 anddecreased investor relations expenses of $352,000.Other Income and ExpenseDuring the year ended December 31, 2017, other income and expense consisted of interest income offset by amortization of the warrants issuedwith a line of credit entered into in December 2017 of $12,000 which is classified as interest expense.Results of Operations from the Years Ended December 31, 2016 and 2015Research and Development Expense Year endedDecember 31, 2016 as Compared to 2015 2016 2015 $ Change % Change (in thousands, except %) Research and development $15,325 $13,114 $2,211 17% Our research and development expenses were as follows: Year EndedDecember 31, 2016 2015 (in thousands) Direct external expenses: Clinical programs $11,994 $9,177 Pre-clinical activities 856 1,531 Other research and development expenses: Payroll and other including stock-based compensation 2,475 2,406 $15,325 $13,114 Clinical programs expenses increased primarily due to costs related to our Phase 2 clinical trials during the year ended December 31, 2016 ascompared to the same period in 2015. As we have completed enrollment in our NASH-CX Phase 2 trial and complete the patient treatments in 2017, weexpect our clinical activities costs will increase and may fluctuate from quarter to quarter as the trial progresses. Pre-clinical activities decreasedprimarily because we have completed pre-clinical work directly related to our Phase 2 clinical trial program.General and Administrative Expense Year endedDecember 31, 2016 as Compared to 2015 2016 2015 $ Change % Change (in thousands, except %) General and administrative $6,156 $6,965 $(809) (12)% General and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance,investor relations, business development and other office related expenses. The primary reasons for the decrease for the year ended December 31, 2016as compared to the same period for 2015 are due to, decreased accounting expenses of $98,000, decreased stock-based compensation of $663,000 anddecreased travel related expenses of $130,000 somewhat offset by increases in legal expenses of $122,000. 35Table of ContentsOther Income and ExpenseDuring the year ended December 31, 2016, other income and expense consisted of interest income.Liquidity and Capital ResourcesAs described above in the Overview and elsewhere in this Annual Report on Form 10-K, we are in the development stage and have not generatedany revenues to date. Since our inception on July 10, 2000, we have financed our operations from proceeds of public and private offerings of debt andequity. As of December 31, 2017, we raised a net total of $132.0 million from these offerings. At December 31, 2017, the Company had $3.1 ofunrestricted cash and cash equivalents available to fund future operations. In December 2017, the Company announced a new $10 million unsecuredline of credit facility with stockholder and director, Richard E. Uihlein. Additionally, in January 2018, the Company received $4,452,000 in proceedsfrom the exercise of common stock purchase warrants originally issued in November 2015. The Company believes there is sufficient cash, includingavailability of the line of credit, to fund currently planned operations at least through March 31, 2019. We will require more cash to fund ouroperations after March 31, 2019 and believe we will be able to obtain additional financing. However, there can be no assurance that we will besuccessful in obtaining such new financing or, if available, that such financing will be on terms favorable to us. If we are unsuccessful in raisingadditional capital to fund operations before March 31, 2019, we may be required to cease operations.2017 compared to 2016Net cash used in operations decreased by $517,000 to $15,892,000 for 2017, as compared to $16,409,000 for 2016. Cash operating expensesdecreased principally due to decreased research and development activities primarily related to our Phase 2 clinical programs.There were no equipment purchases or other investing activities in 2017.Net cash provided by financing activities was $3,583,000 during 2017 as compared to $5,925,000 during 2016, due primarily to the transactionsdescribed below.In 2017, we completed a private placement of common stock with warrants totaling $200,000 and sales of common stock through At the Marketissuances totaling $3,383,000. In 2016, we completed sales of Series B-3 preferred stock with warrants totaling $2,508,000, private placements ofcommon stock and warrants totaling $3,000,000 and sales of common stock through At the Market issuances totaling $417,000.2016 compared to 2015Net cash used in operations decreased by $574,000 to $16,409,000 for 2016, as compared to $16,983,000 for 2015. Cash operating expensesincreased principally due to increased research and development activities primarily related to our Phase 2 clinical programs.There were no equipment purchases or other investing activities in 2016.Net cash provided by financing activities was $5,925,000 during 2016 as compared to $13,701,000 during 2015, due primarily to thetransactions described below.In 2016, we completed sales of Series B-3 preferred stock with warrants totaling $2,508,000, private placements of common stock and warrantstotaling $3,000,000 and sales of common stock through At the Market issuances totaling $417,000. In 2015, we completed an offering of commonstock and warrants for net proceeds of $9,129,000 and $4,572,000 from sales of our common stock through At the Market issuances. 36Table of ContentsOperating leasesIn September 2012, the Company entered into an operating lease for office space in Norcross, GA for a term of twenty-six months, beginning onOctober 1, 2012 and ending November 30, 2014 at a rate of approximately $3,000 per month. In June 2014, the Company signed an amendment to thelease extending the term through November 30, 2017 with a base monthly rental of approximately $3,300 through the extended term. The Companysigned an additional amendment in 2017 to extend the term through December 31, 2018 with a base rental of approximately $4,000 per month. Theoriginal lease provided for free rent for the first two months of the lease and required a security deposit of $6,000. In addition to base rental paymentsincluded in the contractual obligations table above, the Company is responsible for our pro-rata share of the operating expenses for the building.In October 2012, the Company entered into an operating lease for office space collocated with lab space for research and development activities.The lease is for a period of one year, beginning on October 1, 2012, for a rate of $15,000 for the term, payable in equal monthly increments. This leasewas continued on a month to month basis from October 1, 2013.Other. We have engaged outside vendors for certain services associated with our clinical trials. These services are generally available fromseveral providers and, accordingly, our arrangements are typically cancellable on 30 days notice.Off-Balance Sheet ArrangementsWe have not created, and are not a party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt oroperating parts of our business that are not consolidated into our financial statements. We do not have any arrangements or relationships with entitiesthat are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability of capitalresources.Contractual Obligations and CommitmentsThe following table summarizes contractual obligations and commitments as of December 31, 2017: Payments due by period (in thousands) Contractual Obligations Total Less than1 year 1-3years 3-5years More than5 years Operating Leases $48 $48 Total $48 $48 Critical Accounting Policies and EstimatesOur significant accounting policies are more fully described in Note 2 to our consolidated financial statements included elsewhere in this annualreport on Form 10-K. Certain of our accounting policies, however, are critical to the portrayal of our financial position and results of operations andrequire the application of significant judgment by our management, which subjects them to an inherent degree of uncertainty. In applying ouraccounting policies, our management uses its best judgment to determine the appropriate assumptions to be used in the determination of certainestimates. Our more significant estimates include stock option and warrant liability valuations and performance vesting features of certain of theseinstruments, accrued liabilities, deferred income taxes and cash flow. These estimates are based on our historical experience, terms of existing contracts,our observance of trends in the industry, information available from other outside sources, and on various other factors that we believe to beappropriate under the circumstances. We believe that the critical accounting policies discussed below involve more complex management judgmentdue to the sensitivity of the methods, assumptions and estimates necessary in determining the related asset, liability, revenue and expense amounts. 37Table of ContentsAccrued Expenses. As part of the process of preparing our consolidated financial statements, we are required to estimate accrued expenses. Thisprocess involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associatedcost incurred on these services as of each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses includecontract service fees in conjunction with pre-clinical and clinical trials, professional service fees, such as those arising from the services of attorneysand accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the statusand timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs thathave been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could beunderstated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost ofservices are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance withaccounting principles generally accepted in the U.S.Research and Development Expenses. Costs associated with research and development are expensed as incurred. Research and developmentexpenses include, among other costs, salaries and other personnel-related costs, and costs incurred by outside laboratories and other accreditedfacilities in connection with clinical trials and preclinical studies.Stock-Based Compensation. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognizedas expense over the service period, which generally represents the vesting period. For awards that have performance-based vesting conditions theCompany recognizes the expense over the estimated period that the awards are expected to be earned. The Company generally uses the Black-Scholesoption-pricing model to calculate the grant date fair value of stock options. For options that only vest upon the achievement of market conditions, theCompany values the options using a Monte Carlo model to calculate the grant date fair value of the stock options. The expense related to options thatvest based on market conditions is not reversed should those options not ultimately vest. The expense recognized over the service period is required toinclude an estimate of the awards that will be forfeited. Stock options issued to non-employees are accounted for in accordance with the provisions ofASC Subtopic 505-50, Equity-Based Payments to Non-employees, which requires valuing the stock options using an option pricing model (theCompany uses Black-Scholes) and measuring such stock options to their current fair value when they vest. Item 7A.Quantitative and Qualitative Disclosures About Market RiskDue to the nature of our operations, assets and absence of debt, we are not exposed to any significant market risks at December 31, 2017 and2016. Item 8.Financial Statements and Supplementary DataThe financial statements required by this item are attached to this Annual Report on Form 10-K beginning on Page F-1. Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone. Item 9A.Controls and Procedures(a) Evaluation of Disclosure Controls and ProceduresAs required by Rule 13a-15 under the Securities Exchange Act of 1934, (the “Exchange Act”) as of the end of the period covered by this AnnualReport, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, ofthe effectiveness of our 38Table of Contentsdisclosure controls and procedures as of December 31, 2017. Our management has concluded, based on their evaluation, that our disclosure controlsand procedures were effective as of December 31, 2017 to ensure that information required to be disclosed by us in the reports we file or submit underthe Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’srules and forms.(b) Management’s Annual Report on Internal Control Over Financial ReportingManagement of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined inRule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by, or under the supervision of, a company’sprincipal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. It includes those policies and procedures that:a) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of theCompany;b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of a company are being made only in accordance with authorizations ofmanagement and the board of directors of the Company; andc) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assetsthat could have a material effect on its financial statements.Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.The Company’s management has used the criteria established in “Internal Control-Integrated Framework” issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework), or COSO, to evaluate the effectiveness of the Company’s internal controlover financial reporting. Management has selected the COSO 2013 framework for its evaluation as it is a control framework recognized by the SEC andthe Public Company Accounting Oversight Board, that is free from bias, permits reasonably consistent qualitative and quantitative measurement of theCompany’s internal controls, is sufficiently complete so that relevant controls are not omitted, and is relevant to an evaluation of internal controls overfinancial reporting. Management conducted an evaluation of internal controls based on the COSO 2013 framework. The evaluation included a fullscale, documented risk assessment, based on the principles described in the framework, and included identification of key controls. Managementcompleted documentation of its testing to verify the effectiveness of the key controls. Based on the evaluation, management concluded that ourinternal control over financial reporting was effective as of December 31, 2017.(c) Changes in Internal Control Over Financial ReportingThere was no change in our internal control over financial reporting that occurred during the fourth quarter of 2017 that has materially affected,or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B.Other InformationNone. 39Table of ContentsPART III Item 10.Directors, Executive Officers and Corporate GovernanceThe information required by this Item will be contained in our definitive Proxy Statement to be filed with the Securities and ExchangeCommission, or SEC, in connection with our Annual Meeting of Stockholders (the “2018 Proxy Statement”) under the captions “Election ofDirectors,” “Board of Directors Meetings and Committees of the Board,” “Executive Officers” and “Section 16(a) Beneficial Ownership ReportingCompliance” and is incorporated herein by reference.We have adopted a Code of Ethics that applies to all our directors, officers and employees. The Code of Ethics is publicly available on ourwebsite at www.galectintherapeutics.com. Amendments to the Code of Ethics and any grant of a waiver from a provision of the Code of Ethicsrequiring disclosure under applicable SEC rules will be disclosed on our website. Item 11.Executive CompensationThe information required by this Item will be incorporated by reference from the information under the caption “Compensation of NamedExecutive Officers” contained in our 2018 Proxy Statement. Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item will be incorporated by reference from the information under the caption “Security Ownership of CertainBeneficial Owners and Management” contained in our 2018 Proxy Statement. Item 13.Certain Relationships, Related Transactions and Director IndependenceThe information required by this item will be incorporated by reference from the information under the caption “Certain Relationships andRelated Transactions” contained in our 2018 Proxy Statement. Item 14.Principal Accountant Fees and ServicesThe information required by this item will be incorporated by reference from the information under the captions “Audit Fees”, “Audit-RelatedFees,” “Tax Fees,” “All Other Fees” and “Pre-Approval Policies and Procedures” contained in our 2018 Proxy Statement. 40Table of ContentsPART IV Item 15.Exhibits and Financial Statement Schedules(a) 1. Consolidated Financial Statement SchedulesThe Consolidated Financial Statements are filed as part of this report.2. Consolidated Financial Statement SchedulesAll schedules are omitted because of the absence of conditions under which they are required or because the required information isincluded in the Consolidated Financial Statements or notes thereto.3. Exhibits ExhibitNumber Description of Document 3.1 Amended and Restated Articles of Incorporation of Galectin Therapeutics Inc. (Incorporated by reference to the Company’s CurrentReport on Form 8-K filed with the Commission on May 30, 2012.) 3.2 Amended and Restated Bylaws of Galectin Therapeutics Inc., as amended (Incorporated by reference to the Company’s CurrentReport on Form 8-K filed with the Commission on September 27, 2016.) 3.3 Certificate of Designation of Preferences, Rights and Limitations of Series A 12% Convertible Preferred Stock of ProPharmaceuticals, Inc., as filed with the Secretary of State of the State of Nevada on October 5, 2007. (Incorporated by reference tothe Company’s Current Report on Form 8-K filed with the Commission on October 9, 2007.) 3.4 First Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series A 12% Convertible Preferred Stockof Galectin Therapeutics, Inc., as filed with the Secretary of State of the State of Nevada on May 15, 2017. (Incorporated byreference to the Company’s Current Report on Form 8-K filed with the Commission on May 19, 2017.) 3.5 Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Convertible PreferredStock, Series B-2 Convertible Preferred Stock and Series B-3 Convertible Preferred Stock of Galectin Therapeutics, Inc., as filed withthe Secretary of State of the State of Nevada on September 22, 2016. (Incorporated by reference to the Company’s Current Report onForm 8-K filed with the Commission on September 27, 2016.) 3.6 First Amendment to Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-1Convertible Preferred Stock, Series B-2 Convertible Preferred Stock and Series B-3 Convertible Preferred Stock of GalectinTherapeutics, Inc., as filed with the Secretary of State of the State of Nevada on May 15, 2017. (Incorporated by reference to theCompany’s Current Report on Form 8-K filed with the Commission on May 19, 2017.) 3.7 Certificate of Designation of Preferences, Rights and Limitations of Common Stock (Class W) of Galectin Therapeutics, Inc., as filedwith the Secretary of State of the State of Nevada on February 13, 2017. (Incorporated by reference to the Company’s Current Reporton Form 8-K filed with the Commission on February 17, 2017.) 3.8 First Amendment to Certificate of Designation of Preferences, Rights and Limitations of Common Stock (Class W) of GalectinTherapeutics, Inc., as filed with the Secretary of State of the State of Nevada on May 15, 2017. (Incorporated by reference to theCompany’s Current Report on Form 8-K filed with the Commission on May 19, 2017.) 41Table of ContentsExhibitNumber Description of Document 3.9 Certificate of Designation of Preferences, Rights and Limitation of Series C Super Dividend Convertible Preferred Stock ofPro-Pharmaceuticals, Inc., as filed with the Secretary of State of Nevada on December 30, 2010. (Incorporated by reference to theCompany’s Current Report on Form 8-K as filed with the Commission on January 6, 2011.) 3.10 Certificate of Change as filed with the Nevada Secretary of State on March 1, 2012. (Incorporated by reference to the Company’sCurrent Report on Form 8-K as filed with the Commission on March 23, 2012.) 4.1 Form of Class A-1 Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filedwith the Commission on February 18, 2009.) 4.2 Form of Class A-2 Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filedwith the Commission on February 18, 2009.) 4.3 Form of Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filedwith the Commission on February 18, 2009.) 4.4 Amended Form of Class A-1 Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form8-K as filed with the Commission on January 27, 2011.) 4.5 Amended Form of Class A-2 Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form8-K as filed with the Commission on January 27, 2011.) 4.6 Amended Form of Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form8-K as filed with the Commission on January 27, 2011.) 4.7 Form of Warrant Agreement between Galectin Therapeutics Inc. and Continental Stock Transfer and Trust Company, as warrant agent(including form of warrant certificate) (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with theCommission on March 23, 2012.) 4.8 Form of Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with theCommission on November 20, 2015.) 4.9 Form of Class B-3 Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filedwith the Commission on September 27, 2016.) 4.10 Form of Lock-Up Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filedwith the Commission on September 27, 2016.) 4.11 Form of Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with theCommission on December 29, 2016.) 4.12 Form of Common Stock Purchase Warrant issued to Richard E. Uihlein (Incorporated by reference to the Company’s Current Reporton Form 8-K as filed with the Commission on December 19, 2017.) 10.1† Pro-Pharmaceuticals, Inc. 2001 Stock Incentive Plan. (Incorporated by reference to the Company’s Quarterly Report on Form 10-QSBfor the quarter ended September 30, 2001 filed with the Commission on November 14, 2001.) 10.2† Pro-Pharmaceuticals, Inc. 2003 Non-employee Director Stock Incentive Plan. (Incorporated by reference to the Company’sRegistration Statement on Form S-8, as filed with the Commission on October 22, 2003.) 10.3† Form of Incentive Stock Option Agreement (under the 2001 Stock Incentive Plan). (Incorporated by reference to the Company’sQuarterly Report on Form 10-Q for the period ended September 30, 2004 as filed with the Commission on November 19, 2004.) 42Table of ContentsExhibitNumber Description of Document 10.4† Form of Non-Qualified Stock Option Agreement (under the 2003 Non-Employee Director Stock Incentive Plan). (Incorporated byreference to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2004 as filed with the Commissionon November 19, 2004.) 10.5 Form of Common Stock Purchase Warrant. (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with theCommission on February 15, 2008.) 10.6 Registration Rights Agreement dated February 12, 2009 between Pro Pharmaceuticals, Inc. and 10X Fund, L.P. (Incorporated byreference to the Company’s Current Report on Form 8-K filed with the Commission on February 18, 2009.) 10.7†* Pro-Pharmaceuticals, Inc. 2009 Incentive Compensation Plan (as amended). 10.8† Form of Restricted Stock Grant Agreement (under the 2009 Incentive Compensation Plan). (Incorporated by reference to theCompany’s Annual Report on Form 10-K as filed with the Commission on March 30, 2009.) 10.9† Form of Non-Qualified Stock Option Grant Agreement (under the 2009 Incentive Compensation Plan). (Incorporated by reference tothe Company’s Annual Report on Form 10-K as filed with the Commission on March 30, 2009.) 10.10† Form of Incentive Stock Option Grant Agreement (under the 2009 Incentive Compensation Plan). (Incorporated by reference to theCompany’s Annual Report on Form 10-K as filed with the Commission on March 30, 2009.) 10.11 Agreement with the 10X Fund L.P., dated February 11, 2010. (Incorporated by reference to the Company’s Current Report on Form8-K as filed with the Commission on February 17, 2010.) 10.12† Common Stock Purchase Warrant dated August 3, 2010 issued to Peter Traber. (Incorporated by reference to the Company’sQuarterly Report on Form 10-Q as filed with the Commission on August 13, 2010.) 10.13 Letter Agreement Between 10X Fund, L.P. and Pro-Pharmaceuticals, Inc. (Incorporated by reference to the Company’s QuarterlyReport on Form 10-Q as filed with the Commission on August 13, 2010.) 10.14 Form of Securities Purchase Agreement for Series C Super Dividend Convertible Preferred Stock (Incorporated by reference to theCompany’s Current Report on Form 8-K as filed with the Commission on January 6, 2011.) 10.15 Agreement dated January 21, 2011, between Pro-Pharmaceuticals, Inc. and 10X Fund L.P. (Incorporated by reference to theCompany’s Current Report on Form 8-K as filed with the Commission on January 27, 2011.) 10.16† Non-Qualified Stock Option Agreement dated March 7, 2011 (Incorporated by reference to the Company’s Current Report on Form8-K as filed with the Commission on March 9, 2011.) 10.17† Employment Agreement dated March 31, 2011 between Eli Zomer and Pro-Pharmaceuticals, Inc. (Incorporated by reference to theCompany’s Current Report on Form 8-K as filed with the Commission on April 6, 2011.) 10.18 Agreement dated April 22, 2011, between Pro-Pharmaceuticals, Inc. and Sigma-Aldrich, Inc. (Incorporated by reference to theCompany’s Current Report on Form 8-K as filed with the Commission on April 28, 2011.) 10.19† Employment Agreement dated May 6, 2016 between Peter Traber, and Galectin Therapeutics Inc. (Incorporated by reference to theCompany’s Quarterly Report on Form 10-Q as filed with the Commission on May 10, 2016.) 43Table of ContentsExhibitNumber Description of Document 10.20† Employment Agreement dated June 28, 2011 between James C. Czirr, and Galectin Therapeutics Inc. (Incorporated by reference tothe Company’s Current Report on Form 8-K as filed with the Commission on July 5, 2011.) 10.21† Non-Qualified Stock Option Agreement for Peter G. Traber, M.D. (Incorporated by reference to the Company’s RegistrationStatement on Form S-8, as filed with the Commission on August 15, 2011.) 10.22† Non-Qualified Stock Option Agreement for James C. Czirr (Incorporated by reference to the Company’s Registration Statement onForm S-8, as filed with the Commission on August 15, 2011.) 10.23† Amended and Restated Employment Agreement dated December 11, 2014 between Harold H. Shlevin and Galectin TherapeuticsInc. (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on December 12, 2014.) 10.24† Amended and Restated Master Services Agreement dated February 1, 2013 between Galectin Therapeutics Inc. and CTI ClinicalTrial Services, Inc. and CTI Clinical Consulting Services Inc. (Incorporated by reference to the Company’s Quarterly Report on Form10-Q as filed with the Commission on May 10, 2013.) 10.25 Amended Form of Class A-2 Common Stock Purchase Warrant (Incorporated by reference to the Company’s Quarterly Report onForm 10-Q as filed with the Commission on August 14, 2013.) 10.26 Amended Form of Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s Quarterly Report on Form10-Q as filed with the Commission on August 14, 2013.) 10.27 Employment Agreement dated June 20, 2013 between Jack W. Callicutt and Galectin Therapeutics Inc. (Incorporated by reference tothe Company’s Quarterly Report on Form 10-Q as filed with the Commission on August 14, 2013.) 10.28† Amendment to Employment Agreement dated August 11, 2017 between Jack W. Callicutt and Galectin Therapeutics Inc.(Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Commission on August 14, 2017.) 10.29† Stock Option Agreement with Thomas A. McGauley dated June 19, 2013 (Incorporated by reference to the Company’s QuarterlyReport on Form 10-Q as filed with the Commission on August 14, 2013.) 10.30† Project Addendum (with Master Services Agreement), dated March 6, 2015, by and between Galectin Therapeutics Inc. and PPDDevelopment, L.P. (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission onMarch 12, 2015.)*** 10.31 Securities Purchase Agreement, dated November 19, 2015, by and among Galectin Therapeutics Inc. and the Purchasers identifiedtherein (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on November 20,2015.) 10.32 Placement Agency Agreement, dated November 19, 2015, by and between Galectin Therapeutics Inc. and Roth Capital Partners,LLC (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on November 20,2015.) 10.33 Registration Rights Agreement, dated November 19, 2015, by and between Galectin Therapeutics Inc. and the Purchasers signatorythereto (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on November 20,2015.) 10.34 Project Addendum Modification, dated March 11, 2016, by and between Galectin Therapeutics, Inc. and PPD Development, L.P.(Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the Commission on March 15, 2016.)*** 44Table of ContentsExhibitNumber Description of Document 10.35 Jack W. Callicutt Retention Bonus Letter Agreement (Incorporated by reference to the Company’s Current Report on Form 8-K asfiled with the Commission on June 20, 2016.) 10.36† Harold H. Shlevin, Ph.D. Retention Bonus Letter Agreement (Incorporated by reference to the Company’s Current Report on Form8-K as filed with the Commission on June 20, 2016.) 10.37† Securities Purchase Agreement, dated September 22, 2016, by and between Galectin Therapeutics Inc. and 10X Fund, L.P.(Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on September 27, 2016.) 10.38 Registration Rights Agreement, dated September 22, 2016, by and between Galectin Therapeutics Inc. and 10X Fund, L.P.(Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on September 27, 2016.) 10.39 Lock-Up Agreement, dated September 22, 2016, by and between Galectin Therapeutics Inc. and 10X Fund, L.P. (Incorporated byreference to the Company’s Current Report on Form 8-K as filed with the Commission on September 27, 2016.) 10.40 Form of Subscription Agreement entered into between Galectin Therapeutics Inc. and certain purchasers (Incorporated by referenceto the Company’s Current Report on Form 8-K as filed with the Commission on December 29, 2016.) 10.41 Amendment to Securities Purchase Agreement, dated December 23, 2016, by and between Galectin Therapeutics Inc. and 10XFund, L.P. (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on December 29,2016.) 10.42 At Market Issuance Sales Agreement, dated May 19, 2017, by and between Galectin Therapeutics Inc. and FBR Capital Markets &Co. (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on May 19, 2017.) 10.43 Line of Credit Agreement, dated December 19, 2017, by and between Galectin Therapeutics Inc. and Richard E. Uihlein.(Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on December 19, 2017.) 21.1* Subsidiaries of Galectin Therapeutics Inc. 23.1* Consent of Cherry Bekaert LLP, an independent registered public accounting firm. 31.1* Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. 31.2* Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. 32.1*# Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2*# Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS* XBRL Instance document.101.SCH* XBRL Taxonomy Extension Schema Document.101.CAL* XBRL Taxonomy Calculation Linkbase Document.101.DEF* XBRL Taxonomy Definition Linkbase Document.101.LAB* XBRL Taxonomy Label Linkbase Document.101.PRE* XBRL Taxonomy Presentation Linkbase Document. *Filed herewith.#Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 45Table of Contents***Galectin Therapeutics, Inc. has requested confidential treatment with respect to portions of this exhibit. Those portions have been omitted fromthe exhibit and filed separately with the U.S. Securities and Exchange Commission.†Executive Compensation Arrangement pursuant to 601(b)(10)(iii)(A) of Regulation S-K 46Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on March 29, 2018. GALECTIN THERAPEUTICS INC.By: /S/ PETER G. TRABER Name: Peter G. Traber, M.D.Title: Chief Executive Officer and PresidentPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signature Title Date/S/ PETER G. TRABERPeter G. Traber, M.D. Chief Executive Officer and President(principal executive officer) March 29, 2018/S/ JACK W. CALLICUTTJack W. Callicutt Chief Financial Officer(principal financial and accounting officer) March 29, 2018/S/ MARC RUBINMarc Rubin, M.D. Director and Chairman of the Board March 29, 2018/S/ GILBERT F. AMELIOGILBERT F. AMELIO Director March 29, 2018 JAMES C. CZIRR Director March 29, 2018/S/ KEVIN D. FREEMANKEVIN D. FREEMAN Director March 29, 2018/s/ JOEL LEWISJoel Lewis Director March 29, 2018/S/ GILBERT S. OMENNGILBERT S. OMENN Director March 29, 2018/s/ STEPHEN SHULMANStephen Shulman Director March 29, 2018/s/ RICHARD E. UIHLEINRichard E. Uihlein Director March 29, 2018 Theodore Zucconi Director March 29, 2018 47Table of ContentsGalectin Therapeutics Inc. and subsidiariesTable of Contents 1. Reports of Independent Registered Public Accounting Firm F-1 2. Consolidated Balance Sheets as of December 31, 2017 and 2016 F-2 3. Consolidated Statements of Operations for the years ended December 31, 2017 and 2016 F-3 4. Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years endedDecember 31, 2017 and 2016 F-4 5. Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016 F-7 6. Notes to Consolidated Financial Statements F-8 48Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders of Galectin Therapeutics, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Galectin Therapeutics, Inc. and subsidiaries (the “Company”) as of December 31,2017 and 2016, and the related consolidated statements of operations, changes in redeemable convertible preferred stock and stockholders’ equity(deficit), and cash flows for each of the years then ended and the related notes (collectively referred to as the financial statements). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, andthe results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the UnitedStates of America.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theCompany’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Companyis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required toobtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error orfraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts anddisclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates madeby management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonablebasis for our opinion.CHERRY BEKAERT LLPWe have served as the Company’s auditor since 2015/s/ CHERRY BEKAERT LLPAtlanta, GeorgiaMarch 29, 2018 F-1Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, 2017 2016 (in thousands) ASSETS Current assets: Cash and cash equivalents $3,053 $15,362 Prepaid expenses and other current assets 766 432 Total current assets 3,819 15,794 Property and equipment, net — — Other 342 — Intangible assets, net — 1 Total assets $4,161 $15,795 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT)EQUITY Current liabilities: Accounts payable $608 $910 Accrued expenses 2,292 2,802 Accrued dividends payable 68 68 Total current liabilities 2,968 3,780 Total liabilities 2,968 3,780 Commitments and contingencies (Note 9) Series C super dividend redeemable convertible preferred stock; 1,000 shares authorized, 176 issued and outstanding atDecember 31, 2017 and 2016, redemption value: $8,036,000, liquidation value: $1,786,000 at December 31, 2017 1,723 1,723 Stockholders’ (deficit) equity: Undesignated stock, $0.01 par value; 20,000,000 shares authorized at December 31, 2017 and 2016, 20,000,000 and14,001,000 shares designated at December 31, 2016 and 2015, respectively — — Series A 12% convertible preferred stock; 1,742,500 shares authorized, 1,377,500 issued and outstanding at December 31,2017 and 2016, respectively, liquidation value $1,418,000 at December 31, 2017 557 557 Series B-1 12% convertible preferred stock; 900,000 shares authorized, issued and outstanding at December 31, 2017 and2016, liquidation value $1,800,000 at December 31, 2017 1,761 1,761 Series B-2 12% convertible preferred stock; 2,100,000 shares authorized, issued and outstanding at December 31, 2017and 2016, liquidation value $4,200,000 at December 31, 2017 3,697 3,697 Series B-3 8% convertible preferred stock; 2,508,000 shares authorized, 2,508,000 issued and outstanding atDecember 31, 2017 and 2016, liquidation value $2,508,000 at December 31, 2017 1,224 1,224 Common stock, $0.001 par value; 50,000,000 shares authorized at December 31, 2017 and 2016, 35,789,388 and32,912,942 issued and outstanding at December 31, 2017 and 2016, respectively 36 33 Additional paid-in capital 173,363 166,721 Retained deficit (181,168) (163,701) Total stockholders’ (deficit) equity (530) 10,292 Total liabilities, redeemable convertible preferred stock and stockholders’ (deficit) equity $4,161 $15,795 See notes to consolidated financial statements. F-2Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2017 2016 (in thousands, except pershare amounts) Operating expenses: Research and development $11,721 $15,325 General and administrative 4,526 6,156 Total operating expenses 16,247 21,481 Total operating loss (16,247) (21,481) Other income (expense): Interest income 24 45 Interest expense (12) — Total other income (expense) 12 45 Net loss $(16,235) $(21,436) Preferred stock dividends (1,232) (741) Preferred stock accretion — (173) Net loss applicable to common stockholders $(17,467) $(22,350) Basic and diluted net loss per share $(0.49) $(0.76) Shares used in computing basic and diluted net loss per share 35,521 29,216 See notes to consolidated financial statements. F-3Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’EQUITY (DEFICIT)For the Years Ended December 31, 2017 and 2016(amounts in thousands except share data) Series B-1 12%RedeemableConvertiblePreferred Stock Series B-2 12%RedeemableConvertiblePreferred Stock Series C SuperDividend RedeemableConvertiblePreferred Stock Number ofShares Amount Number ofShares Amount Number ofShares Amount Balance at December 31, 2015 900,000 $1,748 2,100,000 $3,537 176 $1,723 Accretion of Series B redeemable convertible preferred stock 13 119 Accretion of beneficial conversion feature for Series B-2 41 Reclassification of Series B-1 and B-2 convertible stock tostockholders’ equity upon elimination of redemption feature (900,000) (1,761) (2,100,000) (3,697) Balance at December 31, 2016 — $— — $— 176 $1,723 Balance at December 31, 2017 — $— — $— 176 $1,723 See notes to consolidated financial statements. F-4Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’EQUITY (DEFICIT) — (Continued)For the Years Ended December 31, 2017 and 2016(amounts in thousands except share data) Series A 12%ConvertiblePreferred Stock Series B-1 12%ConvertiblePreferred Stock Series B-2 12%ConvertiblePreferred Stock Series B-3 8%ConvertiblePreferred Stock Common Stock Number ofShares Amount Number ofShares Amount Number ofShares Amount Number ofShares Amount Number ofShares Amount AdditionalPaid-InCapital RetainedDeficit TotalStockholders’Equity(Deficit) Balance at December 31,2015 1,377,500 $557 28,825,033 $28 $157,504 $(140,049) $18,040 Accretion of Series Bredeemable convertiblepreferred stock (132) (132) Accretion of beneficialconversion feature forSeries B-2 (41) (41) Reclassification of Series B-1 and B-2 convertiblestock to stockholders’equity upon eliminationof redemption feature 900,000 1,761 2,100,000 3,697 5,458 Issuance of Series B-3 8%convertible preferredstock 2,508,000 1,224 2,585 (1,301) 2,508 Series A 12% convertiblepreferred stock dividend 27,550 34 (34) Series B-1 12% convertiblepreferred stock dividend 155,020 192 (192) Series B-2 12% convertiblepreferred stock dividend 361,713 1 446 (447) Series B-3 8% convertiblepreferred stock dividend 32,289 31 (31) Series C super dividendconvertible preferredstock dividend 29,938 38 (38) Issuance of common stockand warrants in privateplacements 2,814,230 3 2,997 3,000 Issuance of common stock 329,234 416 416 Issuance of common stockupon vesting of stockgrants to directors 337,935 1 (1) Stock-based compensationexpense 2,479 2,479 Net loss (21,436) (21,436) Balance at December 31,2016 1,377,500 $557 900,000 $1,761 2,100,000 $3,697 2,508,000 $1,224 32,912,942 $33 $166,721 $(163,701) $10,292 See notes to consolidated financial statements. F-5Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’EQUITY (DEFICIT) — (Continued)For the Years Ended December 31, 2017 and 2016(amounts in thousands except share data) Series A 12%ConvertiblePreferred Stock Series B-1 12%ConvertiblePreferred Stock Series B-2 12%ConvertiblePreferred Stock Series B-3 8%ConvertiblePreferred Stock Common Stock Number ofShares Amount Number ofShares Amount Number ofShares Amount Number ofShares Amount Number ofShares Amount AdditionalPaid-InCapital RetainedDeficit TotalStockholders’Equity (Deficit) Balance at December 31,2016 1,377,500 $557 900,000 $1,761 2,100,000 $3,697 2,508,000 $1,224 32,912,942 $33 $166,721 $(163,701) $10,292 Series A 12% convertiblepreferred stock dividend 27,550 62 (62) Series B-1 12% convertiblepreferred stock dividend 103,691 257 (257) Series B-2 12% convertiblepreferred stock dividend 241,945 599 (599) Series B-3 8% convertiblepreferred stock dividend 95,998 237 (237) Series C super dividendredeemable convertiblepreferred stock dividend 35,200 77 (77) Issuance of common stock 2,213,360 3 3,380 3,383 Issuance of common stockand warrants in privateplacements 102,368 200 200 Issuance of common stockfor services 18,677 33 33 Issuance of restrictedcommon stock todirectors 37,657 4 4 Issuance of warrants inconnection with line ofcredit 696 696 Stock-based compensationexpense 1,097 1,097 Net loss (16,235) (16,235) Balance at December 31,2017 1,377,500 $557 900,000 $1,761 2,100,000 $3,697 2,508,000 $1,224 35,789,388 $36 $173,363 $(181,168) $(530) See notes to consolidated financial statements. F-6Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2017 2016 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(16,235) $(21,436) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1 7 Stock-based compensation expense 1,101 2,479 Issuance of common stock for services 33 — Non-cash interest expense 12 — Changes in operating assets and liabilities: Prepaid expenses and other assets 8 122 Accounts payable and accrued expenses (812) 2,419 Net used in from operating activities (15,892) (16,409) CASH FLOWS FROM INVESTING ACTIVITIES: Net cash from investing activities — — CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock and warrants 3,583 5,925 Net cash from financing activities 3,583 5,925 NET DECREASE IN CASH AND CASH EQUIVALENTS (12,309) (10,484) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 15,362 25,846 CASH AND CASH EQUIVALENTS, END OF PERIOD $3,053 $15,362 NONCASH FINANCING ACTIVITIES: Payment of preferred stock dividends in common stock $1,232 $742 Common stock purchase warrants issued in connection with line of credit $696 — See notes to consolidated financial statements. F-7Table of ContentsGALECTIN THERAPEUTICS INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.Nature of Business and Basis of PresentationGalectin Therapeutics Inc. and subsidiaries (the “Company”) is a clinical stage biopharmaceutical company that is applying its leadership ingalectin science and drug development to create new therapies for fibrotic disease and cancer. These candidates are based on the Company’stargeting of galectin proteins which are key mediators of biologic and pathologic function. These compounds also may have application fordrugs to treat other diseases and chronic health conditions.The Company was founded in July 2000, was incorporated in the State of Nevada in January 2001 under the name “Pro-Pharmaceuticals, Inc.,”and changed its name to “Galectin Therapeutics Inc.” on May 26, 2011. On March 23, 2012, the Company effected a one-for-six reverse stocksplit. All common share and per share amounts in these financial statements have been adjusted to reflect the effect of the reverse split.The Company has operated at a loss since its inception and has had no revenues. The Company anticipates that losses will continue for theforeseeable future. At December 31, 2017, the Company had $3,053,000 of unrestricted cash and cash equivalents available to fund futureoperations. In December 2017, the Company announced a new $10 million unsecured line of credit facility with stockholder and director,Richard E. Uihlein (See Note 8). Additionally, in January 2018, the Company received $4,452,000 in proceeds from the exercise of commonstock purchase warrants originally issued in November 2015. The Company believes there is sufficient cash, including availability of the line ofcredit, to fund currently planned operations at least through March 31, 2019. We will require more cash to fund our operations after March 31,2019 and believe we will be able to obtain additional financing. However, there can be no assurance that we will be successful in obtaining suchnew financing or, if available, that such financing will be on terms favorable to us. If we are unsuccessful in raising additional capital to fundoperations before March 31, 2019, we may be required to cease operations.The Company is subject to a number of risks similar to those of clinical stage companies, including dependence on key individuals, uncertaintyof product development and generation of revenues, dependence on outside sources of capital, risks associated with clinical trials of products,dependence on third-party collaborators for research operations, need for regulatory approval of products, risks associated with protection ofintellectual property, and competition with larger, better-capitalized companies. Successful completion of the Company’s development programand, ultimately, the attainment of profitable operations is dependent upon future events, including obtaining adequate financing to fulfill itsdevelopment activities and achieving a level of revenues adequate to support the Company’s cost structure. There are no assurances that theCompany will be able to obtain additional financing on favorable terms, or at all, or successfully market its products. 2.Summary of Significant Accounting PoliciesThe accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in theUnited States (“GAAP”).Basis of Consolidation. The consolidated financial statements include the accounts of the Company and Galectin Therapeutics Security Corp.,its wholly-owned subsidiary, which was incorporated in Delaware on December 23, 2003 and Galectin Sciences LLC (see Note 11). Allintercompany transactions have been eliminated.Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, equity, revenue,expenses and related disclosure of contingent assets and liabilities. Management’s estimates and judgments include assumptions used in stockoption and warrant liability valuations, useful lives of property and equipment and intangible assets, accrued F-8Table of Contentsliabilities, deferred income taxes and various other assumptions that are believed to be reasonable under the circumstances. Actual results maydiffer from those estimates under different assumptions or conditions.Fair Value Measurements. The Company has certain financial assets and liabilities recorded at fair value. Fair values determined by Level 1inputs utilize observable data such as quoted prices in active markets. Fair values determined by Level 2 inputs utilize data points other thanquoted prices in active markets that are observable either directly or indirectly. Fair values determined by Level 3 inputs utilize unobservabledata points in which there is little or no market data, which require the reporting entity to develop its own assumptions. The estimated value ofaccounts payable and accrued expenses approximates their carrying value due to their short-term nature. There were no Level 2 or 3 assets orliabilities at December 31, 2017 or 2016.Cash and Cash Equivalents. The Company considers all highly-liquid investments with original maturities of 90 days or less at the time ofacquisition to be cash equivalents. The Company had no cash equivalents at December 31, 2017 or 2016.Prepaid Expenses and Other Current Assets. Prepaid expenses and other assets consist principally of prepaid insurance and deferred financingcosts (see Note 8).Property and Equipment. Property and equipment, including leasehold improvements, are stated at cost, net of accumulated depreciation andamortization, and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets of generallythree years for computers and office equipment, five years for furniture and fixtures and the shorter of the useful life or life of the lease forleasehold improvements.Security Deposit. At December 31, 2017 and 2016, the Company had a security deposit of $6,000 for leased office space included in PrepaidExpenses and Other Current Assets.Intangible Assets. Intangible assets include patent costs, consisting primarily of related capitalized legal fees, which are amortized over anestimated useful life of five years from issuance. Amortization expense in 2017 and 2016 was approximately $1,000 and $7,000, respectively.Gross intangible assets at December 31, 2017 and 2016 totaled $78,000 each year, and accumulated amortization at December 31, 2017 and2016 totaled $78,000 and $77,000, respectively.Long-Lived Assets. The Company reviews all long-lived assets for impairment whenever events or circumstances indicate the carrying amount ofsuch assets may not be recoverable. Recoverability of assets to be held or used is measured by comparison of the carrying value of the asset to thefuture undiscounted net cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment recognized ismeasured by the amount by which the carrying value of the asset exceeds the discounted future cash flows expected to be generated by the asset.Accrued Expenses. As part of the process of preparing our consolidated financial statements, we are required to estimate accrued expenses. Thisprocess involves identifying services that third parties have performed on our behalf and estimating the level of service performed and theassociated cost incurred on these services as of each balance sheet date in our consolidated financial statements. Examples of estimated accruedexpenses include contract service fees in conjunction with clinical trials, professional service fees, such as those arising from the services ofattorneys and accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by ourunderstanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that wedo not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reportedexpenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performedon or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts andcircumstances known to us in accordance with accounting principles generally accepted in the U.S.Warrants. The Company has issued common stock warrants in connection with the execution of certain equity and debt financings. The fairvalue of warrants is determined using the Black-Scholes option-pricing F-9Table of Contentsmodel using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free interest rates at each periodend. There were no warrant liabilities as of December 31, 2017 or 2016.Research and Development Expenses. Costs associated with research and development are expensed as incurred. Research and developmentexpenses include, among other costs, salaries and other personnel-related costs, and costs incurred by outside laboratories and other accreditedfacilities in connection with clinical trials and preclinical studies.Income Taxes. The Company accounts for income taxes in accordance with the accounting rules that requires an asset and liability approach toaccounting for income taxes based upon the future expected values of the related assets and liabilities. Deferred income tax assets and liabilitiesare determined based on the differences between the financial reporting and tax bases of assets and liabilities and for tax loss and credit carryforwards, and are measured using the expected tax rates estimated to be in effect when such basis differences reverse. Valuation allowances areestablished, if necessary, to reduce the deferred tax asset to the amount that will, more likely than not, be realized.Concentration of Credit Risk. Financial instruments that subject the Company to credit risk consist of cash and cash equivalents and certificatesof deposit. The Company maintains cash and cash equivalents and certificates of deposit with well-capitalized financial institutions. At times,those amounts may exceed federally insured limits. The Company has no significant concentrations of credit risk.Stock-Based Compensation. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognizedas expense over the service period, which generally represents the vesting period. For awards that have performance based vesting conditions theCompany recognizes the expense over the estimated period that the awards are expected to be earned. The Company generally uses the Black-Scholes option-pricing model to calculate the grant date fair value of stock options. For options that only vest upon the achievement of marketconditions, the Company values the options using a Monte Carlo model to calculate the grant date fair value of the stock options. The expenserelated to options that vest based on market conditions is not reversed should those options not ultimately vest. The expense recognized over theservice period is required to include an estimate of the awards that will be forfeited. Stock options issued to non-employees are accounted for inaccordance with the provisions of ASC Subtopic 505-50, Equity-Based Payments to Non-employees, which requires valuing the stock optionsusing an option pricing model (the Company uses Black-Scholes) and measuring such stock options to their current fair value when they vest.New Accounting Pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognizethe most leases on the balance sheet. The provisions of this guidance are effective for the annual periods beginning after December 15, 2018, andinterim periods within those years, with early adoption permitted. The Company is evaluating the requirements of this guidance and has not yetdetermined the impact of the adoption on our financial position or results of operations. 3.Property and EquipmentProperty and equipment consists of the following at December 31: 2017 2016 (in thousands) Leasehold improvements $2 $2 Computer and office equipment 13 13 Furniture and fixtures 59 59 Total 74 74 Less accumulated depreciation and amortization (74) (74) Property and equipment — net $— $— F-10Table of ContentsDepreciation and amortization expense for the years ended December 31, 2017 and 2016 was $0 and $0, respectively. 4.Accrued ExpensesAccrued expenses consist of the following at December 31: 2017 2016 (in thousands) Legal and accounting fees $74 $14 Accrued compensation 790 614 Accrued research and development costs and other 1,428 2,174 Total $2,292 $2,802 5.Stockholders’ EquityAt December 31, 2017, the Company had 50,000,000 shares of common stock and 20,000,000 undesignated shares authorized. As ofDecember 31, 2017, 1,742,500 shares have been designated for Series A 12% Convertible Preferred Stock, 900,000 shares have been designatedfor Series B-1 Convertible Preferred Stock, 2,100,000 shares have been designated for Series B-2 Convertible Preferred Stock, 1,000 shares havebeen designated for Series C Super Dividend Convertible Preferred Stock, 2,508,000 shares have been designated for Series B-3 ConvertiblePreferred Stock, 12,748,500 have been designated as common stock and no shares remain undesignated.At Market Issuances of Common StockOn March 30, 2014, the Company entered into an At Market Issuance Sales Agreement (the “2014 At Market Agreement”) with a sales agentunder which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $30.0 million from time totime through the sales agent. Sales of the Company’s common stock through the sales agent, if any, will be made by any method that is deemedan “at the market” offering as defined by the U.S. Securities and Exchange Commission. The Company will pay to the sales agent a commissionrate equal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through the sales agent under the 2014 At MarketAgreement. In 2017 and 2016, the Company issued 1,496,797 and 329,234 shares of common stock for net proceeds of approximately$1,946,000 and $416,000, respectively, under the 2014 At Market Agreement.On May 19, 2017, the Company entered into an At Market Issuance Sales Agreement (the “2017 At Market Agreement”) with a sales agent underwhich the Company may issue and sell shares of its common stock having an aggregate offering price of up to $30.0 million from time to timethrough the sales agent. Sales of the Company’s common stock through the sales agent, if any, will be made by any method that is deemed an “atthe market” offering as defined by the U.S. Securities and Exchange Commission. The Company will pay to the sales agent a commission rateequal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through the sales agent under the 2017 At MarketAgreement. During the year ended December 31, 2017, the Company issued 716,563 shares of common stock for net proceeds of approximately$1,437,000 under the 2017 At Market Agreement.2016 Private PlacementIn December 2016, the Company closed two transactions with individual investors through private placements of common stock and warrants. Intotal, the Company issued approximately 2,814,000 shares of common stock for proceeds of $3,000,000. The Company also issued, to the twoinvestors, warrants to purchase 2,110,672 shares of common stock at $5.00 per share. The warrants have an expiration date in late F-11Table of ContentsDecember 2023. The warrants are exercisable beginning in late June 2017. The exercise price of each warrant is adjustable in the event of a stocksplit or stock combination, capital reorganization, merger or similar event. The warrants were valued at $1,258,000 as of the issuance dates in lateDecember 2016, using a weighted average closing price of $0.97, a life of 7 years, a volatility of 96% and a risk free interest rate of 1.90%. Basedupon the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” theCompany has determined that warrants issued in connection with this financing transaction were not derivative liabilities and therefore, wererecorded as additional paid-in capital.2017 Private PlacementOn February 28, 2017, the Company closed a transaction with five individual investors through a private placement of common stock andwarrants. In total, the Company issued 102,368 shares of common stock for proceeds of $200,000. The Company also issued, to the fiveinvestors, warrants to purchase 76,776 shares of common stock at $5.00 per share. The warrants have an expiration date of February 28, 2024. Theexercise price of each warrant is adjustable in the event of a stock split or stock combination, capital reorganization, merger or similar event. Thewarrants were valued at approximately $101,000 as of the issuance, using the closing price of $1.86, a life of 7 years, a volatility of 97% and arisk-free interest rate of 1.92%. Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging —Contracts in Entity’s Own Equity” the Company has determined that warrants issued in connection with this financing transaction were notderivative liabilities and therefore, were recorded as additional paid-in capital.OtherIn 2017, the Company entered an agreement with a vendor whereby the Company will issue common stock to the vendor in lieu of paying incash in amount up to $100,000 for the year. Through December 31, 2017, the Company issued 18,667 shares of common stock and 1,867warrants to purchase shares of common stock at $5.00 per share pursuant to this agreement and the value of such shares and warrants, totalingapproximately $33,000, has been recorded as research and development expense.Series A 12% Convertible Preferred Stock — February 4, 2008 Private PlacementOn February 4, 2008, the Company closed a private placement begun in October 2007 of its Series A 12% Convertible Preferred Stock (“SeriesA”) and related warrants. In this transaction, the Company sold units of securities at $6.00 per unit, each unit comprised of (i) one share of SeriesA Preferred, (ii) a warrant to purchase one share of common stock for $9.00, and (iii) a warrant to purchase one share of common stock for $12.00.Each share of the Series A is entitled to dividends at the rate of 12% per annum payable at the Company’s option in cash or shares of commonstock valued at the higher of $6.00 per share or 100% of the value weighted average price of the Company’s share price for the 20 consecutivetrading days prior to the applicable dividend payment date. Dividends are payable semi-annually on March 30 and September 30. The dividendpaid on the initial dividend payment date is calculated from the date the Company deposited each subscription advance.The shares of Series A are entitled to vote as a class with the Company’s common stock and each share of Series A is convertible at any time toone-sixth of a share of common stock, subject to adjustment in the event of a stock dividend, stock split or combination, reclassification orsimilar event. The Company has the right to require conversion if the closing price of the common stock exceeds $18.00 for 15 consecutivetrading days and a registration statement covering the resale of the shares of common stock issuable upon conversion of the Series A is then ineffect. Each warrant is exercisable solely for cash beginning August 3, 2008 and expired on February 4, 2012. The exercise price of each warrantis adjustable in the event of a stock split or stock combination, capital reorganization, merger or similar event. F-12Table of ContentsAs of December 31, 2007, the Company had received subscription advances of $1,667,500 for Series A. In 2008, the Company receivedadditional subscription advances of $75,000 resulting in total gross proceeds of $1,742,500. On February 4, 2008 the Company closed theprivate placement. The Company incurred $52,000 of cash transaction costs resulting in net cash proceeds of $1,691,000. In addition, theCompany incurred $3,000 of costs for 1,400 warrants exercisable at $9.00 issued to placement agents. Proceeds of $984,000 were allocated toinvestor warrants using the Black-Scholes method with the following assumptions as of February 4, 2008: risk free interest rate 2.51%, volatility95%, fair market value of the Company’s common stock on February 4, 2008, and the share price on the closing date of the transaction of $3.54.The warrants were originally accounted for as freestanding derivative instruments in the consolidated balance sheet formerly under the caption“Warrant Liabilities”. These warrants were originally classified as a liability because the February 2006 warrants contain an anti-dilutionprovision in the event of a subsequent dilutive issuance and the potential number of shares issuable exceeded the Company’s authorized shares.Changes in fair value were recognized as either a gain or loss in the consolidated statement of operations under the caption “Change in fair valueof warrant liabilities”. In the second quarter of 2008, the warrants were reclassified to equity as a result of an amendment to the Company’sarticles of incorporation approved at the May 21, 2008 annual meeting of shareholders increasing the Company’s authorized common. ThroughMay 21, 2008, these warrants were marked to market resulting in a reduction in warrant liabilities in the balance sheet and an offsetting credit tochange in fair value of warrant liabilities in the statement of operations in the amount of $100,000. The remaining fair value of $502,000 wascredited to additional paid-in capital in the balance sheet.There were no shares of Series A converted into shares of common stock in 2017 or 2016. Prior to 2016, a total of 360,000 shares of Series A hadbeen converted into 60,888 shares of common stock.Series B Redeemable Convertible Preferred StockOn February 12, 2009, the Company entered into a securities purchase agreement (the “10X Agreement”) pursuant to which it agreed to issue andsell to 10X Fund LP, at two or more closings, up to: (i) 3,000,000 shares its Series B-1 and B-2 convertible preferred stock with an aggregatestated value of $6.0 million and convertible into 2,000,000 shares of common stock at December 31, 2011 and (ii) warrants to purchase6,000,000 shares of common stock.Through a series of closings from February 2009 through May 2010, the Company issued and sold, pursuant to the 10X Agreement, a total of(i) 900,000 shares of Series B-1 convertible preferred stock (“Series B-1 convertible preferred stock” or “Series B-1”) and related common stockwarrants for 1,800,000 shares of common stock and (ii) 2,100,000 shares of Series B-2 convertible preferred stock (“Series B-2 convertiblepreferred stock” or “Series B-2”) and related warrants for 4,200,000 shares of common stock for total net proceeds of $5,483,000.On September 22, 2016, the Company entered into a securities purchase agreement (the “B-3 Agreement”) pursuant to which it agreed to issueand sell to 10X Fund LP: (i) 1,500,000 shares its Series B-3 convertible preferred stock (“Series B-3 preferred stock” or “Series B-3”) with anaggregate stated value and proceeds of $1.5 million and convertible into 892,349 shares of common stock, and (ii) warrants to purchase up to669,262 shares of common stock. Also, pursuant to agreements signed on September 22, 2016 with 10X Fund LP, the Company issued 875,000warrants to purchase common stock in exchange in exchange for the 10X Fund LP agreeing not to sell any shares of common or preferred stock inthe Company for 18 months, except in limited circumstances. Additionally, as previously agreed to by the 10X Fund LP, the sole holder of theCompany’s Series B-1, Series B-2 and Series B-3 preferred stock (collectively, with the Series B-1 and Series B-2, the “Series B”), in the SecondAmended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B preferred stock we removed the ability of theholders of the Series B to cause a redemption of their shares of Series B. Accordingly, the Company accounted for the removal of this redemptionfeature as a modification and reclassified the Series B-1 and Series B-2 preferred stock into permanent equity at September 30, 2016 and forward. F-13Table of ContentsOn December 23, 2016, the Company and 10X Fund LP amended the B-3 Agreement whereby the Company agreed to issue and sell to 10X FundLP an additional (i) 1,008,000 shares of its B-3 preferred stock with an aggregate stated value and proceeds of $1.0 million and convertible into896,997 shares of common stock, and (ii) warrants to purchase up to 924,780 shares of common stock.The terms of the Series B are as follows:Dividends. Holders of the Series B will be entitled to receive cumulative dividends at the rate of 12% for Series B-1 and B-2 and 8% for Series B-3 per annum (compounding monthly) payable quarterly which may, at the Company’s option, be paid in cash or common stock. Pursuant to anagreement with the holder of all shares of Series B, on January 26, 2011, the Company amended and restated the Certificate of Designation ofPreferences, Rights and Limitations for the Series B-1 and Series B-2, to provide that dividends are payable in cash or shares of Common Stockvalued at 100% of the volume weighted average price of the Common Stock for the 20 consecutive trading days prior to the dividend paymentdate on and after September 30, 2011. If the Company does not pay any dividend on the Series B, dividends will accrue at the rate of 15% perannum (compounding monthly).Conversion Rights. Each share of Series B-1 and B-2 is convertible into two-thirds (approximately 0.667) shares of common stock at theconversion price of $3.00 per share at the option of the holder, at any time. The shares of Series B-3 are convertible into 1,789,346 shares ofcommon stock at the option of the holder, at any time.Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders ofSeries B-1 and B-2 will receive $2 per share and holders of B-3 will receive $1 per share plus accrued and unpaid dividends, payable prior and inpreference to any distributions to the holders of Common Stock but pari passu with the holders of the Series A 12% Convertible Preferred Stock.Voting Rights. Except as noted below, the holder of each share of Series B-3 shall be entitled to the number of votes equal to the number of sharesof Common Stock into which such share of Series B-3 would be convertible, and shall otherwise have voting rights and powers equal to thevoting rights and powers of the Common Stock. With respect to the election of directors, the holders of the Series B-3, together with the holdersof Series B-1 and Series B-2, shall vote together as a separate class to elect two (2) members of the Board of Directors (the “Series B Directors”),and the Company shall take all reasonably necessary or desirable actions within its control (including, without limitation, calling specialmeetings of the Board of Directors, nominating such persons designated by the holders of the Series B as directors on the applicable proxystatements and recommending their election) to permit the holders of the Series B to appoint three additional (3) members of the Board ofDirectors (the “Series B Nominees”), who shall be subject to election by all shares of voting stock of the Company voting together as a singlegroup,) until there are no longer any shares of Series B outstanding. The holders of Series B shall vote together with the holders of CommonStock and other voting capital stock of the Company to elect all other members of the Board of Directors.Other Restrictions. So long as any shares of the Series B remain outstanding, the Company may not, without the approval of the holders of amajority of the shares of Series B outstanding, among other things, (i) change the size of the Company’s Board of Directors; (ii) amend or repealthe Company’s Articles of Incorporation or Bylaws or file any articles of amendment designating the preferences, limitations and relative rightsof any series of preferred stock, that would alter or change the preferences, rights, privileges or powers of, or restriction provided for the benefit ofthe Series B; (iii) create or increase the authorized amount of any additional class or series of shares of stock that is equal to or senior to Series B;(iv) increase or decrease the authorized number of shares of the Series B; (v) purchase, redeem or otherwise acquire for value any shares of anyclass of capital stock; (vi) merge or consolidate the Company into or with any other corporation or sell, assign, lease, pledge, encumber orotherwise dispose of all or substantially all of the Company’s assets or those of any subsidiary; (vii) voluntarily or involuntarily liquidate,dissolve or wind up the Company or the Company’s business; (viii) pay or declare dividends on any capital stock other than the F-14Table of ContentsPreferred Stock, unless the Series B share ratably in such dividend and all accrued dividends payable with respect to the Series B have been paidprior to the payment or declaration of such dividend; (ix) acquire an equitable interest in, or the assets or business of any other entity in any formof transaction; (x) create or commit us to enter into a joint venture, licensing agreement or exclusive marketing or other distribution agreementwith respect to the Company’s products, other than in the ordinary course of business; (xi) permit the Company or any subsidiary to sell or issueany security of such subsidiary to any person or entity other than the Company; (xii) enter into, create, incur, assume or guarantee anyindebtedness for borrowed money of any kind (other than indebtedness existing on the initial closing date and approved by Series Bshareholders); (xiii) enter into, create, incur or assume any liens of any kind (other than certain permitted liens); (xiv) issue any common stock orcommon stock equivalents; (xv) increase the number of shares of the Company’s common stock that may be issued pursuant to options, warrantsor rights to employees, directors, officers, consultants or advisors above the number of shares that were authorized for issuance under our 2001Stock Incentive Plan, 2003 Non-Employee Director Stock Incentive Plan and 2009 Incentive Compensation Plan as of September 9, 2016.Warrants. Each Series B-1 or B-2 related warrant is exercisable at $3.00 per share of common stock at any time on or after the date of issuanceuntil the fifth anniversary of the respective issue date. The Company may, upon 30 days’ notice and so long as an effective registration statementregarding the underlying shares of common stock is in effect, issue a termination notice with respect to (i) each Class A-1 warrant on any tradingday on which the market value of the common stock for each of the 15 previous trading days exceeded $7.50 per share and (ii) each Class A-2warrant on any trading day on which the market value of the common stock for each of the 15 previous trading days exceeded $10.50 per share.All Class A-1 warrants were exercised for cash proceeds of $3,000,000 in 2011 and 500,000 of the Class A-2 warrants were exercised for cashproceeds of $1,500,000 in 2013. Subsequently, in January 2014, the remaining 500,000 Class A-2 warrants were exercised for cash proceeds of$1,500,000.The fair value of the warrants issued in connection with the Series B-1 was $1,296,000 at the date of issuance based on the followingassumptions: an expected life of 5 years, volatility of 118%, risk free interest rate of 1.79% and zero dividends. The Company allocated the grossproceeds based on the relative fair value of the Series B-1 and the related warrants, resulting in $1,105,000 of the proceeds being allocated toadditional paid-in capital. The Company analyzed the Series B-1, post-allocation of the gross proceeds, and determined that there was nobeneficial conversion feature at the date of issuance. The issuance costs of the Series B-1 and the amounts allocated to warrants were recorded asa reduction to the carrying value of the Series B-1 when issued, and are accreted to the redemption value of the Series B-1 through the earliestredemption date. Due to the redemption feature, the Company has presented the Series B-1 outside of permanent equity, in the mezzanine of theconsolidated balance sheets at December 31, 2015. As noted above, the Series B-1 preferred was reclassified to permanent equity as ofSeptember 30, 2016 and forward and accretion was ended.The fair value of the warrants issued during the year ended December 31, 2010 in connection with the Series B-2 was $4,148,000 at the dates ofissuance based on the following assumptions: an expected life of 5 years, volatility of 126% to 129%, risk free interest rates of 2.27% to 2.43%and zero dividends. The fair value of the warrants issued during the year ended December 31, 2009 in connection with the Series B-2 was$5,333,000 at the dates of issuance based on the following assumptions: an expected life of 5 years, volatility of 124% to 127%, risk free interestrates of 1.98% to 2.70% and zero dividends. The Company allocated the gross proceeds based on the relative fair value of the Series B-2 and therelated warrants, resulting in $1,028,000 and $1,732,000 of the proceeds being allocated to additional paid-in capital for the years endedDecember 31, 2010 and 2009, respectively. The issuance costs of the Series B-2 and the amounts allocated to warrants were recorded as areduction to the carrying value of the Series B-2 when issued, and are accreted to the redemption value of the Series B-2 through the earliestredemption dates. Due to the redemption feature, the Company has presented the Series B-2 outside of permanent equity, in the mezzanine of theconsolidated balance sheets at December 31, 2015. As noted above, the Series B-2 preferred was reclassified to permanent equity as ofSeptember 30, 2016 and forward and accretion was ended. F-15Table of ContentsThe Company analyzed the Series B-2, post-allocation of the gross proceeds, and determined that there was a beneficial conversion feature at thedates of issuance. Because the closing price of the common stock on the closing date was greater than the effective conversion price, $388,000and $628,000 of the proceeds (limited to the allocation of the proceeds) during the years ended December 31, 2010 and 2009, respectively, wereallocated to an embedded beneficial conversion feature of the Series B-2. The amount allocated to the beneficial conversion feature was recordedas a discount to the Series B-2 is being accreted, with such accretion being charged through the earliest redemption dates. As noted above, theSeries B-2 preferred was reclassified to permanent equity as of September 30, 2016 and forward and accretion was ended.All warrants issued in the Series B-3 transaction are exercisable at $3.00 per share of common stock at any time on or after the date of issuanceuntil the seventh anniversary of the respective issue date.The fair value of the warrants issued in connection with the September 22, 2016, Series B-3 was $2,262,000 at the date of issuance based on thefollowing assumptions: an expected life of 7 years, volatility of 95%, risk free interest rate of 1.42% and zero dividends. The Company allocatedthe gross proceeds of $1.5 million based on the relative fair value of the Series B-3 and the related warrants, resulting in $890,000 of the proceedsbeing allocated to additional paid-in capital and $610,000 being allocated to the Series B-3.The Company analyzed the September 22, 2016, Series B-3, post-allocation of the gross proceeds, and determined that there was a beneficialconversion feature at the dates of issuance. Because the closing price of the common stock on the closing date was greater than the effectiveconversion price, an embedded beneficial conversion feature of the Series B-3 amounting to $991,000 was charged to additional paid in capitaland accumulated deficit.The fair value of the warrants issued in connection with the December 23, 2016, Series B-3 was $658,000 at the date of issuance based on thefollowing assumptions: an expected life of 7 years, volatility of 96%, risk free interest rate of 2.35% and zero dividends. The Company allocatedthe gross proceeds of $1.008 million based on the relative fair value of the Series B-3 and the related warrants, resulting in $394,000 of theproceeds being allocated to additional paid-in capital and $614,000 being allocated to the Series B-3.The Company analyzed the December 23, 2016, Series B-3, post-allocation of the gross proceeds, and determined that there was a beneficialconversion feature at the dates of issuance. Because the closing price of the common stock on the closing date was greater than the effectiveconversion price, an embedded beneficial conversion feature of the Series B-3 amounting to $310,000 was charged to additional paid in capitaland accumulated deficit.Series C 6% Super Dividend Redeemable Convertible Preferred StockOn December 29, 2010, the Company designated and authorized the sale and issuance of up to 1,000 shares of Series C Super DividendRedeemable Convertible Preferred Stock (“Series C”) with a par value of $0.01 and a stated value equal to $10,000 (the “Stated Value”).On December 30, 2010, the Company sold and issued 212 shares of Series C at a price of $10,000 per share for gross proceeds of $2,120,000. TheCompany incurred $47,000 of cash transaction costs resulting in net cash proceeds of $2,073,000. In addition, the Company issued 500 warrantsexercisable at $7.20 to a placement agent which had a de minimis value. Additionally, in January 2011, the Company sold and issued 13 sharesof Series C at a price of $10,000 per share for gross proceeds of $130,000.The terms of the Series C are as follows:Conversion Rights. Each holder of Series C may convert all, but not less than all, of his Series C shares plus accrued and unpaid dividends intoCommon Stock at the price of $6.00 per share of Common Stock (“Conversion Price”), such that approximately 1,667 shares of Common Stockwill be issued per each converted share of Series C (accrued and unpaid dividends will be issued as additional shares). At December 31, 2017 and2016, the 176 outstanding shares of Series C were convertible into a total of approximately 293,340 shares of Common Stock. F-16Table of ContentsSubject to the continuing obligation to pay post conversion dividends, the Company may convert all, but not less than all, of the Series C (plusall accrued and unpaid dividends) into Common Stock, at the Conversion Price, upon such time that the closing price of the Common Stock is noless than $18.00 per share for 15 consecutive trading days.Dividends. Holders of Series C shall be entitled to receive cumulative non-compounding dividends at the rate per share of Series C equal to thegreater of (i) 6% per annum of the Stated Value (also defined as the “Floor”) or (ii) 2.5% of net sales until the total dividends paid is equal to theinitial investment and 1.25% of net sales thereafter. The maximum amount each Series C shareholder will receive in dividend payments is equalto $100,000 (the “Maximum Payout”). For purposes of this dividend calculation, net sales shall mean gross revenues actually received by theCompany, from the sale or licensing of the product DAVANAT® (GM-CT-01), less chargebacks, returns, expenses attributable to product recalls,duties, customs, sales tax, freight, insurance, shipping expenses, allowances and other customary deductions.The dividend shall be payable in arrears semiannually on March 31 and September 30, beginning with the first such date after the original issuedate; provided, however, that all dividends and all other distributions shall cease, and no further dividends or other distributions shall be paid, inrespect of each share of Series C from and after such time that the Maximum Payout has been paid in respect of such share of Series C. Suchdividends shall be payable at the Company’s option either in cash or in duly authorized, fully paid and non-assessable shares of Common Stockvalued at the higher of (i) $3.00 per share or (ii) the average of the Common Stock trading price for the ten (10) consecutive trading days endingon the trading day that is immediately prior to the dividend payment date.Series C Post Conversion Dividend Right. In the event that any share of Series C is converted into Common Stock before the Maximum Payout ispaid in respect of such converted share of Series C, then the holder shall have the right to continue to receive dividends in respect of suchconverted share of Series C equal to the remaining payout (the “Series C Preferred Stock Post Conversion Dividend Right”) which shall be equalto the Maximum Payout less the cumulative dividends received through the conversion date. One share of Series C Preferred Stock PostConversion Dividend Right shall be issued for each such converted share of Series C. The holder of each Series C Preferred Stock PostConversion Dividend Right shall receive the remaining payout on an equal basis and in conjunction with the then outstanding shares of Series Cand all the other then outstanding Series C Post Conversion Dividend Rights, in the same manner and subject to the same terms and conditions asapplicable to the payment of dividends on each share of Series C, except that for purposes of calculating the dividend the Floor shall not apply.The Series C Preferred Stock Post Conversion Dividend Right shall have no stated value, liquidation preference or right to any dividends ordistributions other than the remaining payout. The Series C Preferred Stock Post Conversion Right is subject to redemption in the same manneras outstanding Series C shares.At the date of issuance, the Series C have an embedded dividend right to continue to receive dividend payments after conversion to commonstock (the Series C Post Conversion Dividend Right) which requires bifurcation. The value of this post conversion dividend right on the date ofissuance was determined to be de minimis due to the fact that the payment of a dividend stream other than the 6% dividend and conversion ofSeries C prior to the Company achieving sales of GM-CT-01 was deemed improbable at that time. Upon a conversion of the Series C, theCompany will be required to record a liability and the related expense during the period of conversion.In July 2011, 5 shares of Series C were converted into 8,334 shares of common stock and 5 Series C Post Conversion Dividend Rights (DividendRights) were issued. In 2013, 24 shares of Series C were converted into 40,193 shares of common stock and 24 Dividend Rights were issued. In2014, 20 shares of Series C were converted into 33,756 shares of common stock and 20 Dividend Rights were issued. Per the terms of the SeriesC, these Dividend Rights shall continue to participate in dividends, however the Floor shall not apply. At December 31, 2016 and 2015, theseDividend Rights were determined to have a de minimis value, as the payment of a dividend is considered improbable at this time. The Companywill continue to evaluate and assess the Series C Post Conversion Dividend Right for each reporting period. F-17Table of ContentsLiquidation Rights. In the event of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders ofSeries C will receive $10,000 per share plus accrued and unpaid dividends, payable prior and in preference to any distributions to the holders ofCommon Stock but after and subordinate to the Series A 12% Convertible Preferred Stock (“Series A”), Series B-1 and Series B-2, subject to theMaximum Payout.Redemption. Upon a sale of the Company, the Company shall redeem all of the then outstanding shares of Series C and Series C Preferred StockPost Conversion Rights within thirty (30) days after the transaction constituting the sale of the Company is closed and such closing is fullyfunded. The price to redeem a share of Series C and each redeemed Series C Preferred Stock Post Conversion Redemption Right shall be equal to(i) (A) the applicable return on investment (“ROI”) percentage, multiplied by (B) $10,000, minus (ii) the cumulative dividends received throughthe redemption date. The redemption price shall be payable at the Company’s option either in cash or in shares of common stock valued at thehigher of (i) $3.00 per share or (ii) the average market price for the ten consecutive trading days ending immediately prior to the date ofredemption. The ROI Percentage shall mean the percentage that applies as of the redemption date, as follows:ROI Percentage 200% before the second anniversary of the date of issuance;250% on or after the second anniversary of the date of issuance, but before the third anniversary of the date of issuance;300% on or after the third anniversary of the date of issuance, but before the fourth anniversary of the date of issuance;350% on or after the fourth anniversary of the date of issuance, but before the fifth anniversary of the date of issuance;400% on or after the fifth anniversary of the date of issuance, but before the sixth anniversary of the date of issuance;450% on or after the sixth anniversary of the date of issuance, but before the seventh anniversary of the date of issuance;500% on or after the seventh anniversary of the date of issuance, but before the eighth anniversary of the date of issuance; and550% on or after the eighth anniversary of the date of issuance, but before the ninth anniversary of the date of issuance.Due to the redemption feature, the Company has presented the Series C outside of permanent equity, in the mezzanine of the consolidatedbalance sheets at December 31, 2017 and 2016. At December 31, 2017, the Series C redemption value was $8,036,000.Voting Rights. The Series C shares have no voting rights.6. WarrantsWarrant activity is summarized as follows: Outstanding at December 31, 2015 8,908,586 Issued 4,579,710 Cancelled — Exercised — Outstanding at December 31, 2016 13,488,296 Issued 1,078,643 Cancelled (1,337,161) Exercised — Outstanding at December 31, 2017 13,229,778 F-18Table of ContentsThe following table summarizes information with regard to outstanding warrants issued in connection with equity and debt financings andconsultants as of December 31, 2017. Issued in Connection With NumberIssued ExercisePrice Exercisable Date Expiration Date February 12, 2009 Series B-1 Transaction $3.00 Investor Warrants — Class B 1,200,000 $3.00 February 12, 2009 February 12, 2019 May 13, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B 600,000 $3.00 May 13, 2009 May 13, 2019 June 30, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B 333,333 $3.00 June 30, 2009 June 30, 2019 August 12, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B 200,000 $3.00 August 12, 2009 August 12, 2019 September 30, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B 216,666 $3.00 September 30, 2009 September 30, 2019 November 4, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B 206,666 $3.00 November 4, 2009 November 4, 2019 December 8, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B 216,667 $3.00 December 8, 2009 December 8, 2019 January 29, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B 216,667 $3.00 January 29, 2010 January 29, 2020 March 8, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B 223,334 $3.00 March 8, 2010 March 8, 2020 April 30, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B 206,667 $3.00 April 30, 2010 April 30, 2020 May 10, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B 380,000 $3.00 May 10, 2010 May 10, 2020 November 25, 2015 Offering Warrants 3,571,425 $2.50 May 25, 2016 May 25, 2021 September 22, 2016 Series B-3 Transaction $3.00 Investor Warrants 698,158 $3.00 September 22, 2016 September 22, 2023 September 29, 2016 Series B-3 Transaction $3.00 Investor Warrants 846,100 $3.00 September 29, 2016 September 29, 2023 December 22, 2016 Private placement warrants 1,466,204 $5.00 December 22, 2016 December 23, 2023 December 23, 2016 Series B-3 Transaction $3.00 Investor Warrants 924,780 $3.00 December 23, 2016 December 23, 2023 December 28, 2016 Private placement warrants 644,468 $5.00 December 28, 2016 December 28, 2023 February 27, 2017 Private placement warrants 76,776 $5.00 February 27, 2017 February 27, 2024 2017 Warrants issued for services 1,867 $5.00 Various dates in 2017 Various dates in 2024 December 19, 2017 Line of credit warrants 1,000,000 $5.00 December 19, 2017 December 19, 2024 Total outstanding warrants 13,229,778 Offering WarrantsOn March 28, 2012, the Company sold and issued 1,333,361 Units (2,666,722 shares of common stock and related $5.63 warrants to purchase1,333,361 shares of common stock) for gross proceeds of $12.0 million (net cash proceeds of $10,403,000 after the underwriting discount andoffering costs). The warrants were valued at $4,445,000 as of the issuance date of March 28, 2012, using the closing price of $4.20, a life of F-19Table of Contents5 years, a volatility of 119% and a risk free interest rate of 1.05%. Based upon the Company’s analysis of the criteria contained in ASC Topic815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” the Company has determined that warrants issued in connection withthis financing transaction were not derivative liabilities and therefore, were recorded as additional paid-in capital. The remaining balance of1,317,161 of these warrants expired on March 28, 2017. 7.Stock-Based CompensationSummary of Stock-Based Compensation PlansAt December 31, 2017, the Company has a stock-based compensation plan where the Company’s common stock has been made available forequity-based incentive grants as part of the Company’s compensation programs. In February 2009, the Company adopted the 2009 IncentiveCompensation Plan (the “2009 Plan”) which originally provided for the issuance of up to 3,333,334, which was subsequently increased to4,733,334 in May 2014 and to 5,733,334 in December 2017, shares of the Company’s common stock in the form of options, stock appreciationrights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. At December 31,2017, 464,134 shares were available for future grant under the 2009 Plan.In addition, the Company has awarded 1,477,379 non-plan stock option grants to employees and non-employees. These non-plan grants havevesting periods and expiration dates similar to those options granted under the Incentive Plans. At December 31, 2017, 1,416,669 non-plangrants were outstanding.Stock-Based CompensationFollowing is the stock-based compensation expense related to common stock options, restricted common stock and common stock warrants: Year Ended December 31, 2017 2016 Research and development $521 $831 General and administrative 580 1,648 Total stock-based compensation expense $1,101 $2,479 The fair value of the options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptionswere used: 2017 2016 Risk-free interest rate 2.05% 1.49% Expected life of the options 5.5 years 6 years Expected volatility of the underlying stock 103% 96% Expected dividend rate 0% 0% As noted above, the fair value of stock options is determined by using the Black-Scholes option pricing model. For all options granted sinceJanuary 1, 2006 the Company has generally used option terms of between 5 to 10 years, generally with 5 to 6 years representing the estimatedlife of options granted to employees. The volatility of the common stock is estimated using historical volatility over a period equal to theexpected life at the date of grant. The risk-free interest rate used in the Black-Scholes option pricing model is determined by reference tohistorical U.S. Treasury constant maturity rates with terms equal to the expected terms of the awards. An expected dividend yield of zero is usedin the option valuation model, because the Company does not expect to pay any cash dividends in the foreseeable future. At December 31, 2017,the Company does not anticipate any option awards will be forfeited in the calculation of compensation expense due to the limited number ofemployees that receive stock option grants and the Company’s historical employee turnover. F-20Table of ContentsThe following table summarizes the stock option activity in the stock based compensation plans: Number ofShares WeightedAverageExercisePrice WeightedAverageRemainingContractualLife(in years) AggregateIntrinsic Value(in thousands) Outstanding, December 31, 2015 3,342,325 $5.70 Granted 1,434,750 0.97 Forfeited/Cancelled (120,187) 3.41 Exercised — — Outstanding, December 31, 2016 4,656,888 $4.30 Granted 498,375 2.39 Forfeited/Cancelled — — Exercised — — Outstanding, December 31, 2017 5,155,263 $4.11 6.23 $4,824 Exercisable, December 31, 2017 4,526,679 $4.37 5.77 $4,175 The aggregate intrinsic value in the table above represents the total pre-tax amount, net of exercise price, which would have been received byoption holders if all option holders had exercised all options with an exercise price lower than the market price on December 31, 2017, based onthe closing price of the Company’s common stock of $3.34 on that date.The weighted-average grant-date fair values of options granted during 2017 and 2016 were $1.88 and $0.97, respectively. As of December 31,2017 and 2016, there were unvested options to purchase 628,584 and 1,272,650 shares of common stock, respectively. Total expectedunrecognized compensation cost related to such unvested options is $1,036,000 at December 31, 2017, which is expected to be recognized overa weighted-average period of 0.94 years.There were no options exercised during the years ended December 31, 2017 or 2016.During the years ended December 31, 2017 and 2016, 1,142,441 and 963,126 options became vested, respectively. The total grant date fair valueof options vested during the years ended December 31, 2017 and 2016 was $1,066,000 and $3,682,000, respectively.The following table summarizes additional information regarding outstanding and exercisable options under our stock-based compensationplans at December 31, 2017: Options Outstanding Options Exercisable ExercisePrice (Range) Number ofShares WeightedAverageRemainingContractualLife WeightedAverageExercisePrice Number ofShares WeightedAverageExercisePrice (in years) $0.87 – 1.00 1,157,250 8.9 $0.88 1,157,250 $0.88 $1.37 – 1.83 341,668 7.2 1.45 266,522 1.48 $2.32 – 2.93 1,308,375 6.9 2.32 759,999 2.25 $3.45 – 3.97 364,517 6.8 3.50 359,455 3.50 $4.41 – 7.80 1,666,953 3.5 6.69 1,666,953 6.69 $13.38 316,500 6.0 13.38 316,500 13.38 5,155,263 6.2 $4.11 4,526,679 $4.37 F-21Table of ContentsRestricted Stock IssuancesOn March 12, 2015, the Company granted 81,352 shares of restricted stock to non-employee directors as a component of their compensation. Atotal of 77,784 shares were issued to seven directors representing non-cash compensation cost of $280,000 which will be recognized on astraight-line basis from the grant date through December 15, 2016, when the restricted shares vested in full. A total of 3,568 shares were issued totwo directors, who were not nominated for reelection, representing non-cash compensation cost of $12,845 that will be recognized on a straight-line basis from the grant date through December 15, 2016, when the restricted shares vested in full.On April 8, 2015, the Company granted 177,618 shares of restricted stock to non-employee directors in exchange for cancelation of 222,615stock options. As the exchange was made at fair value, there was no additional non-cash compensation expense recorded in accordance withFASB ASC 718-20. Additionally, on April 8, 2015, the Company granted 71,378 shares of restricted stock to one non-employee directorrepresenting $236,975 of non-cash compensation expense which was recorded on a straight-line basis from grant date to December 15, 2016,when the restricted shares vested in full. Also, in April and May 2015, the Company granted a total of 7,587 shares of restricted stock to four non-employee directors for service as committee chairs or lead independent director representing $23,500 of non-cash compensation expense whichwas be recorded on a straight-line basis from grant date to December 15, 2016, when the restricted shares vested in full.In December 2017, two directors elected to take restricted stock grants in lieu of cash retainers for 2018. A total of 37,657 shares of restrictedstock valued at approximately $90,000 will be amortized to expense on a straight-line basis until December 14, 2018 when the stock vests infull. 8.Line of CreditOn December 19, 2017, the Company entered into a $10 million Line of Credit arrangement with Richard E. Uihlein, a director and shareholderwho has an approximate 7% ownership interest in the Company on a fully-diluted basis at December 31, 2017. Borrowings may be made by theCompany through December 31, 2018. Borrowings bear interest at the Applicable Federal Rate for short term loans published by the InternalRevenue Service (1.51% on December 19, 2017). All borrowings and interest are due on December 31, 2019 but may be prepaid without penalty.In connection with the Line of Credit agreement, the Company issued to Mr. Uihlein warrants to purchase 1 million shares of the Company’scommon stock for $5 per share. Half of the warrants vested at closing of the Line of Credit and the other half vest ratably with borrowings underthe agreement. There were no borrowings under the Line of Credit during the year ended December 31, 2017.The fair value of the 500,000 warrants vested at closing was $696,000 at the date of issuance based on the following assumptions: an expectedlife of 7 years, volatility of 98%, risk free interest rate of 2.05% and zero dividends. The fair value of the vested warrants was recorded in othercurrent assets and other assets (non-current) as a deferred financing cost and will be amortized on a straight-line basis from December 19, 2017through December 31, 2019. Amortization for the year ended December 31, 2017 of $12,000 was recorded as interest expense. The fair value ofwarrants that vest in the future based on borrowings will be computed when those borrowings occur and amortized over the remaining periodthrough December 31, 2019. 9.Loss Per ShareBasic net loss per common share is computed by dividing the net loss available to common stockholders by the weighted average number ofcommon shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss available to commonstockholders by the weighted average number of common shares and other potential common shares then outstanding. Potential common sharesconsist of common shares issuable upon the assumed exercise of in-the-money stock options and warrants and potential common shares related tothe conversion of the preferred stock. The computation of diluted F-22Table of Contentsnet loss per share does not assume the issuance of common shares that have an anti-dilutive effect on net loss per share. Year Ended December 31, (in thousands, exceptper share amounts) 2017 2016 Net loss $(16,235) $(21,436) Preferred stock dividends (1,232) (741) Preferred stock accretion — (173) Net loss applicable to common stockholders $(17,467) $(22,350) Basic and diluted net loss per share $(0.49) $(0.76) Shares used in computing basic and diluted net loss per share 35,521 29,216 Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculationbecause their affect would have been anti-dilutive are as follows: Year EndedDecember 31, 2017(Shares) 2016(Shares) Warrants to purchase shares of common stock 13,229,778 13,488,296 Options to purchase shares of common stock 5,155,263 4,656,888 Shares of common stock issuable upon conversion preferred stock 4,312,282 4,312,282 22,697,323 22,457,466 10.Commitments and ContingenciesLease CommitmentsIn September 2012, the Company entered into an operating lease for office space in Norcross, GA for a term of twenty-six months, beginning onOctober 1, 2012 and ending November 30, 2014 at a rate of approximately $3,000 per month. In June 2014, the Company signed an amendmentto the lease extending the term through November 30, 2017 with a base monthly rental of approximately $3,300 through the extended term. TheCompany signed an additional amendment in 2017 to extend the term through December 31, 2018 with a base rental of approximately $4,000per month. The original lease provided for free rent for the first two months of the lease and required a security deposit of $6,000. In addition tobase rental payments included in the contractual obligations table above, the Company is responsible for our pro-rata share of the operatingexpenses for the building.Rent expense under this operating lease was $49,000 and $50,000 for the years ended December 31, 2017 and 2016, respectively. Futureminimum payments under this lease as of December 31, 2017 are as follows (in thousands): Year ended December 31, 2018 48 Total $48 Shareholder Class Actions and Derivative LawsuitsOn August 1 and 25, 2014, persons claiming to be Galectin shareholders filed putative shareholder derivative complaints in the NevadaDistrict Court, seeking recovery on behalf of the Company against certain F-23Table of Contentsof the Company’s directors and officers. On September 10, 2014, the Nevada District Court entered an order consolidating the two cases, relievingthe defendants of any obligation to respond to the initial complaints, and providing that defendants may respond to a consolidated complaint to befiled by the plaintiffs. On January 5, 2015, the Nevada District Court granted Defendants’ motion to transfer the consolidated putative derivativelitigation to the United States District Court for the Northern District of Georgia (hereinafter referred to as the “Georgia Federal Derivative Action.”).The plaintiffs filed a consolidated complaint on February 27, 2015. On April 6, 2015, the Company and defendants filed motions to dismiss theconsolidated complaint. Rather than respond to those motions, the plaintiffs sought and obtained leave to file an amended complaint. Plaintiffsfiled their amended complaint (the “Complaint”) on May 26, 2015. The Complaint alleges that certain of the Company’s directors and officers (the“Derivative Action Individual Defendants”) breached their fiduciary duties to the Company’s shareholders by causing or permitting the Companyto make allegedly false and misleading public statements concerning the Company’s financial and business prospects. The Complaint also allegesthat the Derivative Action Individual Defendants violated the federal securities laws by allegedly making false or misleading statements of materialfact in the Company’s proxy filings, committed waste of corporate assets, were unjustly enriched, and that certain defendants breached theirfiduciary duties through allegedly improper sales of Galectin stock. In addition, the Complaint alleges that the Derivative Action IndividualDefendants and one of the Company’s shareholders aided and abetted the alleged breaches of fiduciary duties. The Complaint seeks unspecifiedmonetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants,costs, and attorneys’ and experts’ fees. The Company and defendants filed motions to dismiss the Complaint on July 8, 2015. On December 30,2015, the United States District Court for the Northern District of Georgia dismissed the Georgia Federal Derivative Action with prejudice andentered a final judgment in favor of the defendants. Plaintiffs filed a notice of appeal seeking review of the dismissal order and final judgment. OnJuly 7, 2016, the United States Court of Appeals for the Eleventh Circuit dismissed the appeal as the Plaintiffs failed to timely file their appeal brief.In September 2016, the Board received a demand letter from one of the plaintiffs in the Georgia Federal Derivative Action. The demand letter,among other things, requests that the Board investigate the conduct alleged in the Complaint and implement certain remedial measures purportedlydesigned to address the alleged conduct. It is expected that the Board will consider the demand letter in due course and in light of the relatedpending shareholder litigation described herein.On August 29, 2014, another alleged Galectin shareholder filed a putative shareholder derivative complaint in state court in Las Vegas,Nevada, seeking recovery on behalf of the Company against the same Galectin directors and officers who are named as defendants in the derivativelitigation pending in the Georgia Federal Derivative Action. The plaintiff in the Nevada action subsequently filed first and second amendedcomplaints. The second amended complaint alleges claims for breach of fiduciary duties, unjust enrichment, and waste of corporate assets, based onallegations that are substantially similar to those asserted in the Georgia Federal Derivative Action (except that the Nevada action does not allegeviolations of the federal securities laws and does not assert any claim against the Galectin shareholder named as a defendant in the Georgia FederalDerivative Action), and seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits,benefits and compensation by the defendants, costs, and attorneys’ and experts’ fees. The Company and defendants filed motions to dismiss thesecond amended complaint on April 22, 2015. On April 29, 2015, the plaintiffs in the Georgia Federal Derivative Action (the “Intervenor Plaintiffs”)filed a motion to intervene in the Nevada action which, among other things, raised questions regarding the Nevada plaintiff’s standing. Thereafter,the Nevada plaintiff filed a motion to join additional plaintiffs. At a hearing held on June 11, 2015, the Nevada court: (i) granted the IntervenorPlaintiffs’ motion to intervene; (ii) directed the Intervenor Plaintiffs to file a complaint in intervention; (iii) directed the Nevada plaintiff to file amotion for leave to file a further amended complaint to add additional plaintiffs; (iv) stated that the defendants’ motions to dismiss the secondamended complaint were denied “at this point;” (v) ordered the Nevada action stayed until December 11 , 2015; and (vi) directed the parties tosubmit a status report on December 11, 2015, updating the court on the progress and status of the Georgia Federal Derivative Action. On July 9,2015, pursuant to the Nevada State Court’s instruction, the Intervenor Plaintiffs filed a complaint-in-intervention in Nevada State Court, assertingsimilar claims to the F-24Table of Contentsones they alleged in the Georgia Federal Derivative Action described above. On December 11, 2015, further to the Nevada State Court’s instruction,the parties submitted status reports detailing the status of the Georgia Federal Derivative Action. On January 5, 2016, the Nevada State Court held astatus conference during which the dismissal of the Georgia Federal Derivative Action was discussed. Subsequent to that conference, on January 19,2016, the defendants filed a motion to dismiss the Nevada State Court litigation based on the dismissal of the similar Georgia Federal DerivativeAction, among other grounds. Following full briefing and a hearing on March 3, 2016, the Nevada State Court granted dismissal of the Nevada StateCourt litigation. Notice of Entry of the Nevada State Court’s order dismissing the Nevada State Court litigation was docketed on June 21, 2016. TheNevada plaintiff and Intervenor Plaintiffs (“Appellants”) filed notices of appeal seeking review of the Nevada State Court’s order and judgmentdismissing the claims. The appeal is now fully briefed and awaiting a decision from the Nevada Supreme Court.Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degreeof judgment, particularly where the matters involve indeterminate claims for monetary damages, are in the early stages of the proceedings, and aresubject to appeal. In addition, because most legal proceedings are resolved over extended periods of time, potential losses are subject to change dueto, among other things, new developments, changes in legal strategy, the outcome of intermediate procedural and substantive rulings and otherparties’ settlement posture and their evaluation of the strength or weakness of their case against us. For these reasons, we are currently unable topredict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, the mattersdescribed above. Based on information currently available, the Company does not believe that any reasonably possible losses arising from currentlypending legal matters will be material to the Company’s results of operations or financial condition. However, in light of the inherent uncertaintiesinvolved in such matters, an adverse outcome in one or more of these matters could materially and adversely affect the Company’s financialcondition, results of operations or cash flows in any particular reporting period.Other Legal ProceedingsThe Company records accruals for such contingencies to the extent that the Company concludes that their occurrence is probable and the relateddamages are estimable. There are no other pending legal proceedings except as noted above. 11.Galectin Sciences LLCIn January 2014, we created Galectin Sciences, LLC (the “LLC” or “Investee”), a collaborative joint venture co-owned by SBH Sciences, Inc.(“SBH”), to research and develop small organic molecule inhibitors of galectin-3 for oral administration. The LLC was initially capitalized with a$400,000 cash investment to fund future research and development activities, which was provided by the Company, and specific in-processresearch and development (“IPR&D”) contributed by SBH. The estimated fair value of the IPR&D contributed by SBH, on the date ofcontribution, was $400,000. Initially, the Company and SBH have a 50% equity ownership interest in the LLC, with neither party having controlover the LLC. Accordingly from inception through the fourth quarter of 2014, the Company accounted for its investment in the LLC using theequity method of accounting. Under the equity method of accounting, the Company’s investment was initially recorded at cost with subsequentadjustments to the carrying value to recognize additional investments in or distributions from the Investee, as well as the Company’s share of theInvestee’s earnings, losses and/or changes in capital. The estimated fair value of the IPR&D contributed to the LLC was immediately expensedupon contribution as there was no alternative future use available at the point of contribution. The operating agreement provides that if eitherparty does not desire to contribute its equal share of funding required after the initial capitalization, then the other party, providing all of thefunding, will have its ownership share increased in proportion to the total amount contributed from inception. In the fourth quarter of 2014, afterthe LLC had expended the $400,000 in cash, SBH decided not to contribute its share of the funding required. As a result, the Companycontributed the $73,000 needed for the fourth F-25Table of Contentsquarter of 2014 expenses of the LLC. The Company contributed $201,000, $659,000 and $687,000 for the LLC expenses in 2017, 2016 and2015, respectively, and SBH contributed $73,000 and $50,000 in 2017 and 2016, respectively. As of December 31, 2017, the Company’sownership percentage in the LLC was 79.6%. The Company accounts for the interest in the LLC as a consolidated, less than wholly ownedsubsidiary. Because the LLC’s equity is immaterial, the value of the non-controlling interest is also deemed to be immaterial. The Company’sportion of the LLC’s net loss for 2014, prior to the change in accounting discussed previously, was $400,000, which includes the Company’sproportionate share of the non-cash charge associated with the contributed IPR&D of $200,000. 12.Income TaxesOn December 22, 2017, the Tax Cuts and Jobs Act (2017 Tax Act) was enacted. The 2017 Tax Act includes a number of changes to existing U.S.tax laws that impact the Company, most notably a reduction of the U.S. corporate tax rate from 34% to 21%, for tax years beginning afterDecember 31, 2017. The 2017 Tax Act also provides for the implementation of a territorial tax system, a one-time transition tax on certainforeign earnings, the acceleration of depreciation for certain assets placed into service after September 27, 2017 and other prospective changesbeginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of researchand development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest.Pursuant to the SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, the Company has notfinalized its accounting for the income tax effects of the 2017 Tax Act. This includes a provisional amount related to the re-measurement ofdeferred tax assets based on the rates at which they are expected to reverse in the future, which is generally 21% plus the applicable state tax rate,with a corresponding change to the valuation allowance as of December 31, 2017. The impact of the 2017 Tax Act may differ from this estimateduring the one-year measurement period due to, among other things, further refinement of the Company’s calculation, changes in interpretationsand assumptions the Company has made, additional guidance that may be issued and actions the Company may take as a result of the 2017 TaxAct.The components of the net deferred tax assets are as follows at December 31: 2017 2016 (in thousands) Operating loss carryforwards $34,173 $44,219 Tax credit carryforwards 1,195 1,195 Other temporary differences 4,064 5,707 39,432 51,121 Less valuation allowance (39,432) (51,121) Net deferred tax asset $— $— The primary factors affecting the Company’s income tax rates were as follows: 2017 2016 Tax benefit at U.S. statutory rates (34%) (34%) State tax benefit (3.8%) (3.7%) Permanent differences 1.7% 2.3% Impact of the 2017 Tax Act 113.1% — Other (4.9%) — Expiring state NOL’s — 1.6% Changes in valuation allowance (72.1%) 33.8% 0% 0% F-26Table of ContentsAs of December 31, 2017, the Company has federal and state net operating loss carryforwards totaling $136,202,000 and $94,255,000respectively, which expire through 2036. The net operating losses include Federal and State excess benefits related to stock options of$1,414,000 that will be charged to additional paid-in capital when utilized. In addition, the Company has federal and state research anddevelopment credits of $998,000 and $196,000, respectively, which expire through 2034. Ownership changes, as defined by Section 382 of theInternal Revenue Code, may have limited the amount of net operating loss carryforwards that can be utilized annually to offset future taxableincome. Past and subsequent ownership changes could further affect the limitation in future years. Because of the Company’s limited operatinghistory and its recorded losses, management has provided, in each of the last two years, a 100% valuation allowance against the Company’s netdeferred tax assets.The Company is subject to taxation in the U.S. and various states. Based on the history of net operating losses all jurisdictions and tax years areopen for examination until the operating losses are utilized or the statute of limitations expires. As of December 31, 2017 and 2016, theCompany does not have any significant uncertain tax positions. F-27Exhibit 21.1SUBSIDIARIES OF REGISTRANTThe following is a list of the Corporation’s subsidiaries as of December 31, 2017. The Corporation owns, directly or indirectly, 100% of thevoting securities of each subsidiary, unless noted otherwise. NAME STATE OR JURISDICTIONOF ORGANIZATIONGalectin Therapeutics Security Corp. DelawareGalectin Sciences LLC GeorgiaExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statement Nos. 333-116629, 333-109893, 333-159247, 333-198070, 333-176306, and 333-176305 on Form S-8, and Registration Statement Nos. 333-194747, 333-172849, 333-150898, 333-148911, 333-132459, 333-118907, 333-115118, 333-111650, 333-109887, 333-208674, 333-213138, and 333-218112, on Form S-3 of our report dated March 29, 2018included in this Annual Report on Form 10-K of Galectin Therapeutics, Inc. and subsidiaries (the “Company”) relating to the consolidated balancesheets of the Company as of December 31, 2017, and the related consolidated statements of operations, changes in redeemable convertible preferredstock and stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2017./S/ CHERRY BEKAERT LLPAtlanta, GeorgiaMarch 29, 2018Exhibit 31.1Certification pursuant to Rule 13a-14(a) of the Securities Act of 1934I, Peter G. Traber, certify that: 1.I have reviewed this annual report on Form 10-K of Galectin Therapeutics Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe 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 inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we 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 withinthose 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto 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, tothe 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 arereasonably 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 internalcontrol over financial reporting. March 29, 2018 /s/ Peter G. Traber Name: Peter G. Traber, M.D. Title: Chief Executive Officer and President(principal executive officer)Exhibit 31.2Certification pursuant to Rule 13a-14(a) of the Securities Act of 1934I, Jack W. Callicutt, certify that: 1.I have reviewed this annual report on Form 10-K of Galectin Therapeutics Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe 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 inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we 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 withinthose 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto 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, tothe 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 arereasonably 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 internalcontrol over financial reporting. March 29, 2018 /s/ Jack W. Callicutt Name: Jack W. Callicutt Title: Chief Financial Officer(principal financial and accounting officer)Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Galectin Therapeutics Inc. (the “Company”) on Form 10-K for the period ended December 31, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter G. Traber, Chief Executive Officer and President of theCompany, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §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 result of operations of the Company. March 29, 2018 /s/ Peter G. Traber Name: Peter G. Traber, M.D. Title: Chief Executive Officer and President(principal executive officer)Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Galectin Therapeutics Inc. (the “Company”) on Form 10-K for the period ended December 31, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack W. Callicutt, Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §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 result of operations of the Company. March 29, 2018 /s/ Jack W. Callicutt Name: Jack W. Callicutt Title: Chief Financial Officer(principal financial and accounting officer)

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